Summary of FET Conference Call Company Overview - **Company**: Forum Energy Technologies (FET) - **Industry**: Oil, natural gas, industrial, and renewable energy sectors - **Segments**: - Drilling and completions - Artificial lift and downhole [1][2] Core Points and Arguments - **Market Share**: FET holds a **36% market share** in leadership markets, which include coil tubing, cased hole wireline, subsea, and sand and flow control systems for thermal oil sands [4][5] - **Innovation**: FET emphasizes innovation as a key driver for growth, with recent product introductions such as high-strength coil tubing suitable for corrosive environments and the Unity operating system for remotely operated vehicles (ROVs) [6][9] - **Operational Efficiency**: The company focuses on enhancing operational efficiency for customers, which has led to increased demand for its products. For instance, the number of frac stages per rig in the U.S. has increased by **9% annually** [9][10] - **International Growth**: FET sees significant growth potential in international markets, particularly in the Middle East and Argentina, where unconventional resource development is gaining traction [12][13] - **Vision 2030 Strategy**: The company aims to grow its market share in growth markets from **8% to 16%** over the next five years, potentially increasing revenue by nearly **$250 million** [27][28] Financial Performance - **Adjusted EBITDA Guidance**: FET's full-year 2025 adjusted EBITDA guidance is set at **$85 million**, reflecting a decrease from earlier projections due to reduced industry activity [43][44] - **Free Cash Flow**: The free cash flow outlook was raised to **$60 to $80 million**, attributed to improved working capital management and cost-saving initiatives [53][54] - **Share Repurchase Program**: The company has authorized a **$75 million share repurchase plan**, with approximately **579,000 shares** repurchased for about **$11 million** [55][56] Market Dynamics - **Pricing Sensitivity**: FET has faced challenges with pricing due to tariffs impacting raw materials, but has successfully passed some costs onto customers [22][49] - **Customer Demand**: There is a growing demand for FET's products as service companies seek to enhance efficiency and reduce costs, particularly in a constrained capital expenditure environment [21][23] Additional Insights - **Coil Line Pipe**: FET is optimistic about the growth potential of coil line pipe, which offers significant installation time savings compared to traditional steel pipe [32][33] - **Defense Market**: The company has a long history of supplying military and naval applications, with recent contracts indicating a growing interest in underwater technology [39][41] - **Incremental Margin Opportunities**: FET's leadership revenue constitutes about two-thirds of total revenue, providing strong incremental margin opportunities through innovation and market growth [7][36] Conclusion FET is strategically positioned to leverage its innovative products and strong market presence to capture growth opportunities in both leadership and growth markets. The company's Vision 2030 strategy aims to double revenue by 2030, supported by a capital-light business model and a focus on free cash flow generation.

HOUSTON--(BUSINESS WIRE)--Forum Energy Technologies, Inc. (NYSE: FET) announced today that Neal Lux, President and Chief Executive Officer, and Lyle Williams, Executive Vice President and Chief Financial Officer, will participate in a fireside chat with Water Tower Research on Thursday, September 18, 2025 at 10:00 a.m. Central Time. The event is open access and interested parties can register through the following link: https://us06web.zoom.us/webinar/register/2017575113620/WN_sntytto3SO-Kr-CF2. ...

Company Overview - Forum Energy Technologies (NYSE: FET) is a provider of equipment for offshore and onshore drilling, well completion, and production, serving oil companies and large oilfield service providers [1]. Business Strategy - The company's main strategy focuses on targeting high-margin niches with limited competition [1].

```markdown PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Unaudited H1 2025 financials show a shift to net income, stable assets, decreased liabilities, and positive operating cash flow [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) Q2 2025 net income of **$7.7 million** marks a turnaround from prior-year loss, driven by lower expenses despite slightly decreased revenue Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $199,764 | $205,209 | $393,043 | $407,601 | | **Gross Profit** | $59,356 | $63,073 | $117,717 | $126,832 | | **Operating Income** | $14,683 | $7,934 | $23,487 | $11,134 | | **Net Income (Loss)** | $7,700 | $(6,696) | $8,822 | $(17,011) | | **Diluted EPS** | $0.61 | $(0.54) | $0.70 | $(1.39) | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets slightly decreased, while total liabilities fell due to reduced debt, increasing total equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $487,732 | $495,637 | | **Total Assets** | $810,133 | $815,954 | | **Total Current Liabilities** | $202,264 | $201,856 | | **Long-term Debt, net** | $157,664 | $186,525 | | **Total Liabilities** | $475,913 | $496,054 | | **Total Equity** | $334,220 | $319,900 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) H1 2025 operating cash flow decreased, investing activities provided cash from a sale-leaseback, and financing used cash for debt and repurchases Six Months Ended June 30, Cash Flow Summary (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $25,099 | $28,073 | | **Net cash provided by (used in) investing activities** | $5,024 | $(154,476) | | **Net cash provided by (used in) financing activities** | $(37,296) | $114,908 | | **Net decrease in cash** | $(5,694) | $(14,339) | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Total equity increased to **$334.2 million** by June 30, 2025, driven by net income and currency translation, partially offset by stock repurchases - Key drivers for the change in equity during the first six months of 2025 include net income, stock-based compensation, treasury stock purchases, and currency translation adjustments[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies and financial items, including increased authorized common stock, revenue breakdown, debt, segment performance, and a sale-leaseback - On May 9, 2025, stockholders approved an increase in authorized common stock from **14.8 million** to **29.6 million** shares[26](index=26&type=chunk) - Contract liabilities increased by **$10.9 million (83%)** in the first six months of 2025, primarily due to the timing of milestone billings for projects in the Subsea product line[34](index=34&type=chunk) - In June 2025, the company completed a sale-leaseback of land and buildings, receiving net proceeds of **$8.8 million** and recognizing a gain, resulting in the recording of operating lease assets and liabilities of approximately **$7.6 million**[87](index=87&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=19&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20%28MD%26A%29) Management attributes H1 2025 revenue decline to reduced drilling and tariffs, while operating income increased due to a sale-leaseback gain and lower expenses [Overview](index=19&type=section&id=Overview) FET is a global manufacturer for oil, natural gas, defense, and renewable energy, with **80%** of H1 2025 revenue from consumable products - The company provides engineered capital equipment and consumable products to customers including oil and gas operators, service companies, defense contractors, and renewable energy firms[90](index=90&type=chunk) - For the six months ended June 30, 2025, approximately **80%** of revenue was from consumable products and activity-based equipment, with the remainder from capital products and services[90](index=90&type=chunk) [Market Conditions](index=20&type=section&id=Market%20Conditions) Q2 2025 market conditions saw lower oil prices, higher natural gas prices, and a **6.2%** decrease in global drilling rig count year-over-year Average Commodity Prices | Commodity | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **WTI ($/bbl)** | $64.57 | $82.79 | | **Brent ($/bbl)** | $68.07 | $84.68 | | **Henry Hub ($/Mcf)** | $3.19 | $2.07 | Average Active Drilling Rigs | Location | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **United States** | 571 | 603 | | **Canada** | 128 | 136 | | **International** | 897 | 962 | | **Global Total** | 1,596 | 1,701 | - Total inbound orders increased to **$263.1 million** in Q2 2025 from **$180.1 million** in Q2 2024, indicating potential future revenue growth[99](index=99&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Q2 2025 total revenue decreased **2.7%**, with Drilling and Completions operating income surging, while Artificial Lift and Downhole revenue and income declined Q2 2025 vs Q2 2024 Performance (in thousands) | Metric | Q2 2025 | Q2 2024 | Change % | | :--- | :--- | :--- | :--- | | **Total Revenue** | $199,764 | $205,209 | (2.7)% | | **Operating Income** | $14,683 | $7,934 | 85.1% | | **Net Income (Loss)** | $7,700 | $(6,696) | 215.0% | - **Drilling and Completions (Q2):** Revenue increased **0.2%** due to higher ROV project revenue, offset by declines in drilling and completion products. Operating income increased by **$4.4 million**, primarily due to reduced amortization expense[101](index=101&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) - **Artificial Lift and Downhole (Q2):** Revenue decreased **6.4%** due to tariff impacts on valve products. Operating income fell by **$3.1 million** due to lower market activity and unfavorable mix[101](index=101&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) H1 2025 vs H1 2024 Performance (in thousands) | Metric | H1 2025 | H1 2024 | Change % | | :--- | :--- | :--- | :--- | | **Total Revenue** | $393,043 | $407,601 | (3.6)% | | **Operating Income** | $23,487 | $11,134 | 110.9% | | **Net Income (Loss)** | $8,822 | $(17,011) | 151.9% | [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company had **$132.1 million** in total liquidity, utilizing capital for inventory, expenditures, debt repayment, and stock repurchases - As of June 30, 2025, the company had total liquidity of **$132.1 million**, consisting of **$39.0 million** in cash and **$93.1 million** in availability under the Credit Facility[122](index=122&type=chunk) - The company has a stock repurchase program with an aggregate authorization of **$75.0 million**. During the first six months of 2025, **331 thousand** shares were repurchased for approximately **$6.3 million**, leaving **$68.7 million** authorized[124](index=124&type=chunk) Cash Flow Summary - Six Months Ended June 30 (in millions) | Category | 2025 | 2024 | | :--- | :--- | :--- | | **Operating Activities** | $25.1 | $28.1 | | **Investing Activities** | $5.0 | $(154.5) | | **Financing Activities** | $(37.3) | $114.9 | [Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20qualitative%20disclosures%20about%20market%20risk) This disclosure is not required as the company qualifies as a "smaller reporting company" under Regulation S-K - The company is not required to provide this information as it is a "smaller reporting company"[130](index=130&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20procedures) Management concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls - Based on an evaluation as of June 30, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[131](index=131&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, these controls[132](index=132&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20proceedings) Legal proceedings are referenced in Note 10, with management not expecting any material adverse effect on financial position - The company is involved in various legal actions in the ordinary course of business, but management believes the ultimate liability will not have a material adverse effect[77](index=77&type=chunk)[133](index=133&type=chunk) [Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20factors) No new risk factors are disclosed in this report, referring to the 2024 Annual Report on Form 10-K for details - For information on risk factors, the report refers to Item 1A of the company's 2024 Annual Report on Form 10-K[134](index=134&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20sales%20of%20equity%20securities%20and%20use%20of%20proceeds) The company has a **$75.0 million** stock repurchase program, repurchasing **$4.3 million** in Q2 2025, with **$68.7 million** remaining - The Board of Directors approved a **$75.0 million** stock repurchase program in December 2024[135](index=135&type=chunk) Share Repurchases - Q2 2025 | Period | Total Shares Purchased | Average Price Paid | Remaining Authorization (in thousands) | | :--- | :--- | :--- | :--- | | **June 1-30, 2025** | 225,470 | $19.06 | $68,705 | - Subsequent to the quarter end, the company repurchased an additional **249 thousand** shares for **$5.0 million**[137](index=137&type=chunk) [Defaults Upon Senior Securities](index=29&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[138](index=138&type=chunk) [Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[139](index=139&type=chunk) [Other Information](index=29&type=section&id=Item%205.%20Other%20Information) No director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements during the quarter - No director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements during the quarter[140](index=140&type=chunk) [Exhibits](index=30&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO and CFO certifications and XBRL data files - Exhibits filed include CEO and CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906, and Inline XBRL documents[141](index=141&type=chunk) Signatures ```

Financial Data and Key Metrics Changes - Company achieved strong results with sequential growth in bookings, revenue, EBITDA, and free cash flow, with revenue of $200 million at the top end of guidance range [6][18] - Free cash flow for Q2 was $23 million, totaling $30 million for the first half of the year, marking a 27% year-over-year increase [7][26] - Full year 2025 free cash flow guidance raised to between $60 million and $80 million, a $20 million increase [8][27] Business Line Data and Key Metrics Changes - Subsea product lines saw significant bookings, particularly for ROVs and a large submersible rescue vehicle system [6][19] - Artificial lift and downhole segment revenue increased by 6%, driven by demand for higher margin products [26] - Drilling and Completion segment revenue increased by 1%, with growth in coiled line pipe offerings [24] Market Data and Key Metrics Changes - U.S. revenue was up 3% despite a 3% decline in rig count, while international revenue (excluding Canada) increased by 6% [19] - Bookings were up 31% from the previous quarter, with a book-to-bill ratio of 132% [20] - Company expects commodity prices to remain stable, anticipating a gradual decline in industry activity [29] Company Strategy and Development Direction - Company has refined its strategy into leadership and growth markets, with leadership markets accounting for two-thirds of revenue and a 36% market share [10][11] - Growth markets, estimated to be twice the size of leadership markets, present significant opportunities for revenue increase [12][13] - The "Beat the Market" strategy aims to grow profitable market share through targeted competition and leveraging competitive advantages [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining momentum despite a declining rig count, supported by a strong backlog and cost reduction efforts [29][80] - The company anticipates continued strong free cash flow and plans to reduce net leverage to 1.3 times by year-end [28][29] - Management highlighted the potential for significant growth in the defense market and the importance of their operating systems in driving sales [66][69] Other Important Information - Company repurchased approximately 5% of shares outstanding in 2025, with plans to repurchase an additional 10% based on current stock price levels [8][28] - The company aims to balance capital returns with strategic investments, focusing on organic growth opportunities while remaining open to acquisitions [106] Q&A Session Summary Question: Timeframe for Doubling Market Share in Growth Markets - Management indicated that achieving this goal would take three to five years, focusing on customer acquisition and geographic expansion [37][38] Question: Details on Offshore Defense Orders - Management noted a mix of short-term and long-term products, with some orders expected to deliver over the next two years [39][40] Question: Expectations for Shares Outstanding in Q3 and Q4 - Management expects to repurchase an additional 1.2 million shares, potentially reducing shares outstanding by nearly 15% by December [48] Question: Factors Contributing to Increased Free Cash Flow Guidance - The primary driver for increased cash flow is expected to be working capital reduction, with improvements in operational efficiency [50][90] Question: Competitive Positioning and Market Outlook - Management emphasized a strong balance sheet and the ability to invest in growth, positioning the company favorably against competitors [110][111]

Core Viewpoint - Forum Energy Technologies (FET) reported a quarterly loss of $0.1 per share, which was worse than the Zacks Consensus Estimate of $0.15, and compared to a loss of $0.07 per share a year ago [1][2] Financial Performance - The company posted revenues of $199.8 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 4.88%, but down from $205.2 million in the same quarter last year [3] - Over the last four quarters, Forum Energy has not surpassed consensus EPS estimates and has only topped consensus revenue estimates once [2][3] Stock Performance - Forum Energy shares have increased by approximately 20.9% since the beginning of the year, outperforming the S&P 500's gain of 7.9% [4] - The stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [7] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.48 on revenues of $195.47 million, and for the current fiscal year, it is $1.10 on revenues of $774.43 million [8] - The trend of estimate revisions for Forum Energy was unfavorable prior to the earnings release, which may impact future stock movements [6][7] Industry Context - Forum Energy operates within the Oil and Gas - Mechanical and Equipment industry, which is currently ranked in the top 41% of over 250 Zacks industries [9] - The performance of Forum Energy's stock may be influenced by the overall outlook for the industry [9]

[Second Quarter 2025 Performance and Outlook](index=1&type=section&id=Second%20Quarter%202025%20Performance%20and%20Outlook) [Q2 2025 Financial Highlights](index=1&type=section&id=Q2%202025%20Financial%20Highlights) Forum Energy Technologies reported Q2 2025 revenue of $200 million and GAAP net income of $8 million, achieving record backlog and raising free cash flow guidance Q2 2025 Key Financial Metrics (in millions) | Metric | Q2 2025 Value | | :--- | :--- | | Revenue | $200 million | | Net Income (GAAP) | $8 million | | Diluted EPS (GAAP) | $0.61 | | Net Loss (Adjusted) | $1 million | | Diluted EPS (Adjusted) | ($0.10) | | Adjusted EBITDA | $21 million | | Orders | $263 million | | Book-to-Bill Ratio | 132% | | Free Cash Flow | $23 million | - Full-year 2025 free cash flow guidance was increased to a range of **$60 - $80 million**, supported by strong performance and a positive outlook[2](index=2&type=chunk)[5](index=5&type=chunk) - The company achieved its **highest backlog in over ten years**, driven by strong bookings, particularly in offshore defense[4](index=4&type=chunk)[5](index=5&type=chunk) [Management Commentary and Capital Allocation](index=1&type=section&id=Management%20Commentary%20and%20Capital%20Allocation) Management highlighted strong sequential performance and positive free cash flow, prioritizing debt reduction and share repurchases to reduce net leverage - The company's capital returns framework prioritizes using free cash flow to reduce net debt and repurchase shares[2](index=2&type=chunk) - FET has repurchased **5% of its outstanding shares in 2025** and is on track to repurchase another **10%** based on updated guidance[3](index=3&type=chunk) - The company aims to reduce its net leverage to **1.3 times** by the end of 2025[3](index=3&type=chunk) [Financial Guidance](index=1&type=section&id=Financial%20Guidance) FET raised its full-year 2025 free cash flow guidance to between $60 and $80 million while maintaining its adjusted EBITDA forecast of approximately $85 million Financial Guidance Summary | Guidance Metric | Forecasted Range/Value | | :--- | :--- | | Full Year 2025 Free Cash Flow | $60 - $80 million | | Full Year 2025 Adjusted EBITDA | Approx. $85 million | | Q3 2025 Adjusted EBITDA | $19 - $23 million | [Segment Performance](index=2&type=section&id=Segment%20Performance) [Drilling and Completions](index=2&type=section&id=Drilling%20and%20Completions) Drilling and Completions revenue rose 1% to $117 million with orders up 35%, but adjusted EBITDA declined 8% due to an unfavorable product mix Drilling and Completions Segment Performance (in millions) | Metric (vs Q1 2025) | Q2 2025 Value | Sequential Change | | :--- | :--- | :--- | | Revenue | $117 million | +1% | | Adjusted EBITDA | $11 million | -8% | | Orders | $178 million | +35% | - Revenue growth was driven by coiled line pipe sales for the U.S and a large Middle East project, partially offset by lower demand for completions-related equipment[6](index=6&type=chunk) - The decrease in adjusted EBITDA was attributed to an unfavorable product mix from lower sales of higher-margin products[6](index=6&type=chunk) [Artificial Lift and Downhole](index=2&type=section&id=Artificial%20Lift%20and%20Downhole) Artificial Lift and Downhole revenue grew 6% to $83 million and adjusted EBITDA surged 24% to $17 million, driven by demand, favorable mix, and cost savings Artificial Lift and Downhole Segment Performance (in millions) | Metric (vs Q1 2025) | Q2 2025 Value | Sequential Change | | :--- | :--- | :--- | | Revenue | $83 million | +6% | | Adjusted EBITDA | $17 million | +24% | | Orders | $85 million | +24% | - Revenue growth was primarily due to higher demand for processing equipment technologies, downhole casing equipment, sand control products, and cable protection products[7](index=7&type=chunk) - The significant increase in adjusted EBITDA was a result of higher revenue, favorable product mix, and benefits from cost-saving initiatives[7](index=7&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) [Condensed Consolidated Statements of Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)) For Q2 2025, FET reported revenue of $199.8 million and net income of $7.7 million, a significant turnaround from a net loss in Q2 2024 Quarterly Income Statement Highlights (in millions) | Account | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Revenue | $199.8 | $193.3 | $205.2 | | Gross Profit | $59.4 | $58.4 | $63.1 | | Operating Income | $14.7 | $8.8 | $7.9 | | Net Income (Loss) | $7.7 | $1.1 | $(6.7) | Six-Month Income Statement Highlights (in millions) | Account | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Revenue | $393.0 | $407.6 | | Gross Profit | $117.7 | $126.8 | | Operating Income | $23.5 | $11.1 | | Net Income (Loss) | $8.8 | $(17.0) | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, FET's total assets were $810.1 million, with long-term debt reduced to $157.7 million and total equity increasing to $334.2 million Balance Sheet Highlights (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $39.0 | $44.7 | | Total current assets | $487.7 | $495.6 | | Total assets | $810.1 | $816.0 | | Long-term debt | $157.7 | $186.5 | | Total liabilities | $475.9 | $496.2 | | Total equity | $334.2 | $319.8 | [Condensed Consolidated Cash Flow Information](index=7&type=section&id=Condensed%20Consolidated%20Cash%20Flow%20Information) H1 2025 operating cash flow was $25.1 million, with a $37.3 million net outflow from financing activities driven by debt repayments and stock repurchases Six-Month Cash Flow Summary (in millions) | Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $25.1 | $28.1 | | Net cash provided by (used in) investing activities | $5.0 | $(154.5) | | Net cash provided by (used in) financing activities | $(37.3) | $114.9 | | Net decrease in cash | $(5.7) | $(14.3) | [Supplemental Financial Information](index=8&type=section&id=Supplemental%20Financial%20Information) [Detailed Segment and Orders Information](index=8&type=section&id=Detailed%20Segment%20and%20Orders%20Information) In Q2 2025, total orders reached $263.1 million, resulting in a strong company-wide book-to-bill ratio of 1.32, indicating robust demand growth Q2 2025 Orders and Book-to-Bill Ratio (in millions) | Segment | Orders (millions) | Revenue (millions) | Book-to-Bill Ratio | | :--- | :--- | :--- | :--- | | Drilling and Completions | $177.8 | $117.2 | 1.52 | | Artificial Lift and Downhole | $85.3 | $82.5 | 1.03 | | **Total** | **$263.1** | **$199.8** | **1.32** | - The company states that a book-to-bill ratio greater than one is indicative of improving market demand and provides insight into future revenues[27](index=27&type=chunk) [Reconciliation of GAAP to Non-GAAP Measures](index=11&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) The company provides non-GAAP reconciliations, adjusting Q2 2025 net income of $7.7 million to an adjusted net loss of $1.2 million after specific exclusions Q2 2025 GAAP to Non-GAAP Reconciliation (in millions) | Metric | As Reported (GAAP) | Adjustments | As Adjusted (Non-GAAP) | | :--- | :--- | :--- | :--- | | Operating Income | $14.7 | $(5.1) | $9.6 | | EBITDA | $27.7 | $(7.2) | $20.5 | | Net Income (Loss) | $7.7 | $(8.9) | $(1.2) | - Key adjustments in Q2 2025 included a **$6.9 million gain on sale-leaseback transactions**, a **$3.8 million foreign exchange gain**, and **$1.7 million in restructuring costs**[29](index=29&type=chunk) Q2 2025 Free Cash Flow Reconciliation (in millions) | Line Item | Amount | | :--- | :--- | | Net cash provided by operating activities | $15.8 | | Capital expenditures | $(1.0) | | Proceeds from sale-leaseback transactions | $8.0 | | **Free cash flow, before acquisitions** | **$22.9** | [Product Line Revenue Breakdown](index=15&type=section&id=Product%20Line%20Revenue%20Breakdown) In Q2 2025, Drilling and Completions accounted for 58.7% of total revenue, while Artificial Lift and Downhole made up the remaining 41.3% Q2 2025 Revenue by Product Line (in millions) | Segment / Product Line | Revenue | % of Total | | :--- | :--- | :--- | | **Drilling and Completions** | **$117.2** | **58.7%** | | - Stimulation and Intervention | $32.9 | 16.5% | | - Drilling | $32.8 | 16.4% | | - Coiled Tubing | $29.1 | 14.6% | | - Subsea | $22.4 | 11.2% | | **Artificial Lift and Downhole** | **$82.5** | **41.3%** | | - Downhole | $51.3 | 25.7% | | - Production Equipment | $20.7 | 10.4% | | - Valve Solutions | $10.5 | 5.2% | | **Total Revenue** | **$199.8** | **100.0%** |

Core Insights - Forum Energy Technologies (FET) experienced a significant share price increase of 32% in June due to securing a large contract with a military client [1] - The company announced a contract with the Indonesian Navy for a submarine rescue vehicle (SRV) system, which includes a custom-designed launch and recovery system and a decompression system [2][4] Contract Details - The SRV, named LR600, is designed for rescue operations, capable of operating at depths of up to 605 meters (1,985 feet) and can carry up to 20 people [4] - The LR600 will be integrated with a hyperbaric rescue facility, with construction taking place in England and Texas [4] Company Statements - CEO Neal Lux emphasized the company's advanced technologies and their importance in the subsea sector, highlighting the diverse product portfolio and technology capabilities [5] Financial Performance - Forum's annual sales have increased from just under $512.5 million in 2020 to over $816 million last year, indicating a strong growth trajectory [6][7] - The company has only reported a net profit once during this period, with a profit of $3.7 million in 2022, suggesting challenges in profitability despite revenue growth [7]

Summary of Forum Energy Technologies (FET) Conference Call Company Overview - **Company**: Forum Energy Technologies (FET) - **Ticker**: FET - **Industry**: Energy Equipment Manufacturing - **CEO**: Neil Lux - **Coverage Initiation**: Coverage launched with a $24 price target due to strong global presence and cash flow generation capabilities [2][10] Core Business and Financial Performance - FET does not drill wells or produce hydrocarbons but manufactures critical capital equipment and consumable products for energy production [6][7] - Revenue segments include: - **Artificial Lift and Downhole**: Products for maintaining production and increasing efficiency [8] - **Drilling and Completion**: Equipment for drilling rigs and well completion activities [9] - Financial performance highlights: - Revenue growth at a compound rate of 15% since 2021 [9] - EBITDA growth over 70% annually, with margins improving from under 4% in 2021 to over 12% in 2024 [10] - Approximately 50% of sales are outside the U.S. [9] Market Demand and Growth Drivers - Global energy demand is projected to increase by 30% over the next two decades, driven by population growth, energy security, and quality of life improvements [13][15] - Fossil fuels are expected to satisfy around two-thirds of energy demand by 2050, despite growth in alternative energy sources [16] - FET's revenue is closely correlated with global drilling rig counts, indicating that increased energy demand will drive revenue growth [17] Competitive Strategy - FET aims to grow market share through: - Developing differentiated products and technologies [20] - Competing in niche markets with limited competition [22] - Focusing on innovation to meet customer demands for efficiency and safety [24] - Examples of innovative products include: - EnviroLite greaseless cable for faster operations [25] - DuraCoil coil tubing for enhanced performance [26] - Veraperm Energy Services for customized sand and flow control solutions [27] Financial Guidance and Shareholder Returns - 2025 is expected to be a transitional year with a potential 2-5% decrease in global drilling activity [32] - Adjusted EBITDA guidance for 2025 is between $80 million to $105 million, with free cash flow guidance of $40 million to $60 million [32] - FET plans to utilize 50% of free cash flow for debt reduction and the remainder for strategic investments, including a $75 million share repurchase program [38][39] Risk Management and Market Conditions - The company is proactively managing risks related to geopolitical and macroeconomic uncertainties, including price increases to offset tariffs [34][35] - FET's low capital expenditure requirements (less than 1% of revenue) allow for better cash flow generation compared to traditional oilfield service companies [54][56] Conclusion - FET presents a compelling investment opportunity with a strong track record of performance, significant free cash flow yield, and a robust growth strategy [39][40] - The company is well-positioned to capitalize on increasing energy demand while maintaining a focus on innovation and shareholder returns [41][63]

Financial Performance & Growth - Forum Energy Technologies (FET) reported Q1 2025 revenue of $193 million[7] - The company's revenue has grown from $541 million in 2021 to $816 million in 2024[7] - Adjusted EBITDA increased from $20 million in 2021 to $100 million in 2024[7] - EBITDA margin has improved from 4% in 2021 to 12% in 2024[7] - The company anticipates 2025 EBITDA to be in the range of $85 million to $105 million and free cash flow between $40 million and $60 million[39] Strategy & Market Position - FET's geographical revenue split is 51% US and 49% international (TTM ended March 31, 2025)[7] - The company has a $75 million share repurchase program and repurchased $2 million of shares in Q1 2025[10, 42] - The company focuses on niche markets with competitive advantages and high barriers to entry[20, 22] - FET aims to allocate 50% of free cash flow to net debt reduction[41] Debt Reduction - The company has substantially deleveraged since 2019, with net debt decreasing from $344 million to $146 million as of March 31, 2025[44] - Net leverage ratio has decreased from 473x in December 31, 2019 to 156x in March 31, 2025[44]