Summary of Forum Energy Technologies (NYSE:FET) FY Conference Company Overview - **Company Name**: Forum Energy Technologies (FET) - **Ticker**: NYSE:FET - **Industry**: Oil and Gas Equipment and Services - **Segments**: - Artificial Lift and Downhole - Drilling and Completions - **Global Reach**: Approximately 50% of sales are international, with a focus on high-value consumables and capital equipment [4][6][7] Financial Performance - **Revenue Growth**: Revenue increased by approximately 15% from 2021 to 2024 [8] - **EBITDA Growth**: EBITDA grew from $20 million to $100 million from 2021 to 2024, with margins increasing from 4% to 12% [8] - **Stock Performance**: - 5-year annualized stock price return of 19% compared to Russell 2000's 10% [9] - 1-year return of 73% versus Russell 2000's 9% [9] - **Cash Flow Growth**: Compound annual growth rate of cash flow at 73% compared to Russell's negative growth [10] Investment Value - **Valuation Metrics**: - Adjusted cash flow yield is nearly four times higher than Russell 2000 [10] - Enterprise value to EBITDA and price to sales ratios are significantly lower than Russell 2000 [10][11] - **Debt Reduction**: Net debt reduced from $344 million in 2019 to $114 million, with a net leverage ratio decrease from 3.9 to 1.3 times [11][12] - **Share Repurchase**: 7% of shares retired since the start of the year [12] Growth Strategy - **Market Strategy**: Focus on targeted markets with limited competition and differentiated product offerings [13][14] - **Leadership Markets**: Represent about two-thirds of revenue with a 36% market share in a $1.5 billion addressable market [17] - **Growth Markets**: Addressable market of approximately $3 billion with lower current market share [20][22] - **Product Innovations**: New applications in defense and coiled line pipe, enhancing existing assets [20][21] Market Outlook - **Industry Growth**: Anticipated market growth of 9% annually, with potential revenue doubling to $1.6 billion by 2030 [25][26] - **Operating Leverage**: 25-35% of incremental revenue expected to convert to EBITDA, with a potential tripling of free cash flow by 2030 [26] - **Service Intensity**: Increased efficiency in drilling operations expected to drive demand for FET's products [24][25] Key Takeaways - **Competitive Position**: FET aims to maintain a leadership position in niche markets with few competitors [30] - **Geographic Expansion**: Opportunities for growth in international markets, particularly in the Middle East [31] - **Oil Price Sensitivity**: Company performance is linked to oil price thresholds that influence spending decisions [32] This summary encapsulates the key points discussed during the Forum Energy Technologies FY Conference, highlighting the company's financial performance, investment value, growth strategy, and market outlook.

Financial Data and Key Metrics Changes - Company reported revenue of $196 million for Q3 2025, approaching the top end of guidance, with a 13% increase in consolidated EBITDA to $23 million, exceeding expectations [13][16] - Free cash flow increased by 23% to $28 million, enabling significant shareholder returns and raising full-year guidance to $70 million to $80 million [19][20] - Net leverage ratio improved to 1.3 times, one quarter ahead of schedule, with net debt reduced by nearly 10% to $114 million [20] Business Line Data and Key Metrics Changes - Offshore revenue grew to 22% of total revenue, driven by increases in drilling and subsea product lines, while U.S. revenue declined by 10% due to a 5% drop in rig count [13][14] - Coiled Line Pipe sales increased by 28%, contributing to market share gains, while the subsea product line revenue rose by 5% [16][9] - Artificial lift and down-hole segment revenue decreased by 4%, but EBITDA increased by 2% due to favorable product mix and cost savings [17] Market Data and Key Metrics Changes - International revenue surpassed U.S. sales, with Middle East and Canadian revenue each increasing by over 10% [13] - Book-to-bill ratio was 122%, indicating strong demand across segments, with subsea bookings exceeding 200% [14][15] - U.S. rig count decline impacted overall revenue, but international markets showed resilience [13] Company Strategy and Development Direction - Company aims to double revenue by 2030 through a "beat-the-market" strategy, focusing on targeted markets and differentiated technologies [10][11] - Leadership markets estimated at $1.5 billion with a 36% market share, while growth markets are approximately $3 billion with an 8% market share [7][8] - Strategic consolidation of manufacturing facilities is expected to enhance efficiency and reduce costs, with anticipated annualized savings of $15 million [18][19] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about long-term growth despite current market challenges, emphasizing the need for efficiency in a potentially lower oil price environment [60][62] - The company is well-positioned for 2026 with a strong backlog and ongoing market share gains [12][46] - Management highlighted the importance of new product development to drive future growth, particularly in artificial lift and subsea technologies [49][56] Other Important Information - Company repurchased 635,000 shares for $15 million in Q3, totaling 8% of shares outstanding for the year [20] - Increased tariffs on steel imports have been a challenge, but the company is implementing strategies to mitigate these impacts [17][18] Q&A Session Summary Question: Changes in sales incentive systems - Management indicated ongoing improvements in sales processes and alignment with the beat-the-market strategy have contributed to increased bookings [30] Question: Margins in backlog and new orders - Management noted that the mix of bookings, particularly from subsea, may exert downward pressure on margins, but cost-saving initiatives will provide benefits [31] Question: Revenue-generating potential of manufacturing base post-consolidation - Management expressed confidence in the ability to grow revenue significantly despite facility consolidations, maintaining capacity for a 50% revenue increase [32] Question: Share repurchase capacity - Management confirmed that share repurchase capacity is limited by net leverage and free cash flow, with approximately $15 million available for Q4 [34] Question: Cycle status in different geographies - Management emphasized opportunities exist across all markets, with a focus on leveraging successful products globally [43] Question: Growth potential of Coiled Line Pipe - Management acknowledged the potential for significant growth in Coiled Line Pipe, with a goal to double market share over time [47] Question: New product introductions for 2026 - Management highlighted ongoing development in artificial lift and subsea technologies, with promising new products expected to drive growth [49] Question: Impact of lower oil prices on technology adoption - Management indicated that lower oil prices could increase demand for efficiency-enhancing products, positioning the company favorably [53] Question: Backlog timing and revenue recognition - Management noted that a significant portion of the backlog will be recognized over the next few quarters, with some projects extending into 2027 [63]