Core Insights - Forum Energy Technologies, Inc. announced a fireside chat featuring Neal Lux, President and CEO, and Lyle Williams, Executive Vice President and CFO [1] Company Participation - The event is scheduled for Thursday, September 18, 2025, at 10:00 a.m. Central Time [1] - The fireside chat will be accessible to interested parties who can register via a provided link [1]

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]

Summary of FET Conference Call Company Overview - FET provides technological solutions to the oil, natural gas, industrial, and renewable energy industries, focusing on operational efficiency and environmental impact reduction [3][4][5] - The company operates in two segments: drilling and completions, and artificial lift and downhole [3] Macro Outlook - Current oil price outlook is uncertain due to global demand growth and OPEC supply adjustments, leading to potential curbing of activity by oil producers [4][6] - Customers are adapting to economic uncertainty, with expectations of stable drilling and completions activity in Q2 2025 [6][7] - Historical trends indicate that declining oil prices lead to reduced rig activity within three to six months [6][7] - If oil prices remain low, rig counts are expected to decrease in the latter half of the year, impacting EBITDA, projected at around $85 million for 2025 [7][8] Industry Dynamics - Natural gas prices remain strong, with a significant portion of drilling activity directed towards gas [13][15] - Increased gas-directed drilling could positively impact FET's business, as the company is agnostic to whether customers are drilling for oil or gas [15][16] - Tariff impacts are significant, particularly in the valve solutions product line, leading to price increases and potential buyer strikes [18][19][20] Strategic Positioning - FET's "beat the market" strategy aims to outperform market trends through innovation and market share growth [24][26] - The company has a strong market share in leadership markets (30-40%) and is expanding in growth markets [26][28] - Revenue per rig has grown at a 5% compound annual growth rate over the past five years, indicating effective market share gains [29][75] Financial Performance - FET's revenue per rig was approximately $455,000 in Q1 2025, reflecting a positive trend in market share [74][75] - The company expects to generate free cash flow between $40 million and $60 million in 2025, despite potential lower EBITDA [70][71] - FET has a share repurchase plan in place, allocating 50% of free cash flow towards debt reduction and strategic investments [80][82] Future Opportunities - The company is exploring opportunities in adjacent markets such as defense and offshore wind, which are expected to be margin accretive [64][66] - Demand for FET's products is anticipated to grow due to the increasing complexity of drilling operations and the need for higher pressure equipment [48][49] - The Middle East and Argentina are key markets for FET, with significant growth potential in unconventional oil and gas production [52][54] Conclusion - FET is well-positioned to navigate current market challenges while capitalizing on long-term growth opportunities through its strategic initiatives and innovative product offerings [96][97][98]