Forum Energy (FET) Conference June 11, 2025 10:00 AM ET Speaker0 Morning, everyone, and welcome to Sidoti Small Cap Virtual Conference. I'm Steve Ferrizani, an analyst at Sidoti. So pleased to be joined this morning by CEO Neil Lux of Forum Energy Technologies. The ticker is FET. We launched coverage just a month ago. If you haven't seen the report, please reach out to your sales institutional sales rep. Otherwise, it's on our website. You can find it on Bloomberg or fax that we did initiate with a $24 pric ...

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]