Forum Energy Technologies Q1 2026 Earnings Call Transcript

Quartr
Provided by Quartr
May 1, 2026

Key Takeaways

  • Positive Sentiment: FET reported a strong Q1 with revenue +8% YoY, adjusted EBITDA +14% and net income +300%, while orders rose 10% and backlog hit an 11‑year high (backlog +44% YoY) with a book‑to‑bill of 106%.
  • Positive Sentiment: Management raised the midpoint of full‑year adjusted EBITDA guidance to $103 million (+20% vs 2025) and forecasts Q2 EBITDA of $24–30 million (midpoint +32% YoY), while keeping revenue guidance unchanged.
  • Positive Sentiment: Structural cost actions have delivered $15 million of annualized savings, the company repurchased ~93k shares (~$5M) and extended its credit facility to 2031, with net leverage targeted below 1.0x by year‑end.
  • Neutral Sentiment: New products — DuraCoil 95, the Unity ROV OS, DuraLine, rig‑floor automation and a stationary data‑center cooling design — are gaining commercial traction and beginning to appear in backlog, though subsea orders remain meaningful and carry lower contribution margins and some coiled‑tubing deliveries were pushed into Q2.
  • Neutral Sentiment: The Middle East conflict caused some logistics and freight disruptions but no facility damage and limited exposure (~10% of revenue); management sees potential medium‑ to long‑term industry tailwinds if global inventories remain depleted.
AI Generated. May Contain Errors.
Earnings Conference Call
Forum Energy Technologies Q1 2026
00:00 / 00:00

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Operator

Good morning, ladies and gentlemen, and welcome to the Forum Energy Technologies First Quarter 2026 Earnings Conference Call. My name is Daniel, and I will be your coordinator for today's call. There is a process for entering the question-and-answer queue. To ask a question during this session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. At this time, all participants are in a listen-only mode, and all lines have been placed on mute to prevent any background noise. This conference call is being recorded for replay purposes and will be available on the company's website. I will now turn the conference over to Rob Kukla, Director of Investor Relations. Please proceed, sir.

Rob Kukla
Rob Kukla
Director of Investor Relations at Forum Energy Technologies

Thank you, Daniel. Good morning, everyone, and welcome to FET's First Quarter 2026 Earnings Conference Call. With me today are Neal Lux, our President and Chief Executive Officer, and Lyle Williams, our Chief Financial Officer. Yesterday, we issued our earnings release, which is available on our website. Today, we are relying on federal safe harbor protections for forward-looking statements. Listeners are cautioned that our remarks today will contain information other than historical information. These remarks should be considered in the context of all factors that affect our business, including those disclosed in FET's Form 10-K and other SEC filings. Finally, management statements may include non-GAAP financial measures. For reconciliation of these measures, please refer to our earnings release and website. During today's call, all statements related to EBITDA refer to adjusted EBITDA. Unless otherwise noted, all comparisons are first quarter 2026 to fourth quarter 2025.

Rob Kukla
Rob Kukla
Director of Investor Relations at Forum Energy Technologies

I will now turn the call over to Neal.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

Thank you, Rob, and good morning, everyone. Our first quarter results reinforced our confidence in the path we presented with FET 2030. Year-over-year, we increased revenue 8%, EBITDA 14%, and net income 300%. The execution of our beat the market strategy drove these results. Impressively, we grew revenue per global rig 12% from a year ago and positioned our company for future gains with strong bookings. Orders were up 10% year-over-year with a book-to-bill of 106%. We entered the year with our highest backlog in 11 years, and we grew that backlog again. Compared to the first quarter of last year, our backlog is up 44%. Following the completion of our structural cost-saving initiatives, we are now a more efficient organization. These efforts have achieved $15 million of annualized savings.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

In addition, we continued our share repurchase program and strengthened the balance sheet by extending our credit facilities maturity to 2031. Overall, this was the kind of start we wanted to see, providing momentum into the second quarter and beyond. Looking ahead, our results should increase substantially, driven by market share gains, backlog conversion, and cost savings. We are forecasting second quarter EBITDA of between $24 million-$30 million, which at the midpoint is up 32% from a year ago. These results would deliver incremental margins of 51%, with EBITDA margin approaching 13%. This sequential improvement is driven solely by the execution of our plan. Turning to the full year, we are raising the midpoint of our EBITDA guidance to $103 million, up 20% compared with 2025.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

Importantly, while we are seeing signs of increased activity, which is consistent with some analyst expectations, our forecast conservatively assumes a flat market. Should the market pick up, I would expect to see further upside to our forecast. During the first quarter, we continued gaining market share through innovation and new customer adoption. This is a key part of our strategy. Let me provide an update on a few products we have recently commercialized. First, DuraCoil 95, coiled tubing for sour service environments, is continuing to gain traction and is now active on three continents. This is an ideal product for Venezuela and the Middle East, especially if work over activity accelerates to bring production back online. Another innovation I want to mention is Unity, our next generation operating system for remote ROV operations. We recently had the opportunity to showcase this technology at a large international trade show.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

In a real-time demonstration, our customers were able to control an ROV positioned hundreds of miles away from a terminal in our booth. It was a powerful demonstration of Unity's capabilities and has ignited interest in our product. The next product I want to highlight is DuraLine, our manifold system for multi-well frack applications. Compared to our competition, DuraLine is significantly safer and more efficient. Also, it is a great example of technology developed for U.S. shale applications that can be exported to international locations. In the first quarter, we received a significant order for multiple systems to be deployed in Argentina this year. Another innovative area for FET is rig floor automation. We have developed patent-pending software for the FR120 Iron Roughneck that automates the drill pipe makeup and breakout process with the push of a button.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

Our solution dramatically simplifies rig floor operations, reduces non-productive time, and increases drilling efficiency by 30%. This software will be packaged with new Iron Roughnecks and sold as an upgrade to existing ones. I am very excited about this development. Shifting to the power generation and data center markets, we have seen increased interest in the cooling solutions offered by our Global Heat Transfer product family. Based on customer feedback, we have developed a stationary power cooling solution. This new design gives us an opportunity to address a bigger part of the market. Since its introduction, we have developed a strong commercial funnel. These innovations are great examples of how our product pipeline is supporting both near term share gains and the long term ambitions of FET 2030. Shifting to the Middle East conflict and its impact.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

First and foremost, I am thankful all our employees in the region are safe. That is our primary concern. Operationally, we have not suffered any facility damage. We have experienced some disruptions that are having a slight impact on our business, particularly around logistics and freight costs. Our teams did an excellent job finding creative solutions to these challenges, and we were able to increase revenue in the Middle East during the quarter. While uncertainty remains high, we are not forecasting any material negative impact from the conflict. For context, Middle East revenue is only 10% of our total, limiting the company's exposure. This conflict is creating medium to longer term tailwinds for our industry. A significant portion of the world's oil and gas supply has been disrupted for 62 days and counting.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

Even if oil shipments through the Strait of Hormuz resume quickly, global oil inventories will be meaningfully reduced. Barring a material downturn in global demand, we expect investment in oil and gas production to increase over time to replace depleted inventories and support energy security. Some analysts have suggested that our industry will experience a prolonged upcycle beginning later this year or early 2027. This upcycle aligns with the growth market scenario of our FET 2030 vision. Under this scenario, our addressable markets grow at a rate of 9% annually, and we expand our market share to 22% by 2030. The combination of market expansion and share gains doubles revenue to $1.6 billion, quadruples EBITDA, and nearly triples free cash flow in that timeframe.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

This scenario underscores our strategy's long-term value creation potential, while our near-term focus remains on disciplined execution and cash flow generation. Now, to provide more detail on our first quarter results and near-term financial outlook, I will turn the call over to Lyle.

Lyle Williams
Lyle Williams
EVP and CFO at Forum Energy Technologies

Thank you, Neal. Good morning. I will begin with first quarter results and our guidance, then shift to a discussion of cash flow and our capital allocation strategy. First quarter revenue of $209 million came in near the top end of our guidance. Growth in offshore and international markets led the revenue increase of 3%, outpacing global rig count. Our international revenue was up 7%, with Canada, Europe and Latin America each delivering double-digit gains. This is the third consecutive quarter when international exceeded U.S. revenue. Offshore revenue expanded 10%, driven by a 20% increase in our subsea product line as the team begins to execute orders secured last year. Adjusted EBITDA for the quarter was $23 million, in line with our guidance, as cost savings benefits were largely offset by product mix.

Lyle Williams
Lyle Williams
EVP and CFO at Forum Energy Technologies

Adjusted net income of $6 million increased 11% on favorable income tax expense rate that benefited from geographic income mix. We grew backlog again in the first quarter, even after very strong bookings in 2025. Both segments posted a book-to-bill ratio greater than 100%. We saw higher demand for capital equipment in the stimulation and intervention, and the drilling product lines, and increased demand for wireline cables. Valve orders increased nicely, bouncing back from tariff related impacts throughout 2025. Let me continue with additional color on our segment results. Drilling and Completions revenue was $127 million, flat with the previous quarter. The subsea product line increased 20% as we recognized revenue on ROVs and the Submarine Rescue Vehicle project. The stimulation and intervention product line increased 7%, supported by power end and wireline cable demand.

Lyle Williams
Lyle Williams
EVP and CFO at Forum Energy Technologies

To note, our quality wireline product family set a new record this quarter in revenue and in greaseless cable sales. coiled tubing revenue was down 17%, coming off strong U.S. sales last quarter and due to customer-requested delivery push outs into the second quarter. Despite flat revenue, segment EBITDA was up 6%, benefiting from cost savings and improved plant utilization related to our facility consolidations. Artificial Lift and Downhole revenue was $82 million, up 9%, with increased sales volumes across all three product lines. EBITDA was roughly flat, reflecting a combination of product mix, timing of incentive expense, and lower absorption at one facility, which we expect to improve in the coming quarters. Consolidated free cash flow was $1 million, consistent with our guidance. As a reminder, our free cash flow is typically back-half-weighted.

Lyle Williams
Lyle Williams
EVP and CFO at Forum Energy Technologies

For example, roughly two-thirds of our free cash flow was generated in the second half of 2025. Despite the seasonally lower free cash flow, we still remained active on share buybacks. We repurchased almost 93,000 shares for approximately $5 million under our share repurchase authorization. These purchases averaged $49 per share, about 20% lower than our stock price at yesterday's close. In addition, we paid $9 million for withholding taxes associated with our stock-based compensation program, avoiding the issuance of roughly 180,000 shares and ultimately benefiting our shareholders. These payments, along with transaction costs associated with the credit facility amendment, resulted in a modest and temporary increase in net debt. We ended the quarter with net debt of $121 million, with a net leverage ratio still at a comfortable level of under 1.4 times.

Lyle Williams
Lyle Williams
EVP and CFO at Forum Energy Technologies

While this is higher than where we ended last year, we expect net leverage to decline to under one times by the end of the year. Liquidity of $91 million remains strong, with $54 million available under our revolving credit facility. During the quarter, we extended our credit facility maturity to February 2031 with improved pricing and greater letters of credit capacity. This amendment, combined with our strong balance sheet, provides significant flexibility for FET to fund strategic initiatives, including long-term debt retirement, organic growth, and acquisitions. Now, turning to our guidance. For the second quarter, as Neal mentioned earlier, our results should increase substantially, driven primarily by backlog conversion, cost savings, and market share gains.

Lyle Williams
Lyle Williams
EVP and CFO at Forum Energy Technologies

We are forecasting revenue between $200 million and $225 million and EBITDA between $24 million and $30 million, which at the midpoints are up 6% and 32% from a year ago. Adjusted net income expected for the second quarter is between $6 million and $11 million. Our full year guidance issued in February assumed relative flat market activity compared to the back half of 2025. With strong first quarter results and increased expectations for the second quarter, we are raising the bottom end of our EBITDA guidance range from $90 million-$95 million. We are maintaining our revenue guidance of $800 million-$880 million, for adjusted net income, we are guiding between $21 million and $38 million.

Lyle Williams
Lyle Williams
EVP and CFO at Forum Energy Technologies

In addition, we reaffirm our full year free cash flow guidance of $55 million-$75 million as we remain confident in our ability to convert approximately 65% of EBITDA into free cash flow. Let me conclude with our capital allocation expectations. We discussed last quarter, our balance sheet is in great shape. We consider any further net leverage reduction as dry powder for incremental strategic investments, including acquisitions and share repurchases. With our M&A framework, we seek to acquire companies with differentiated products, competing in targeted markets at valuations that would be accretive to FET per share metrics, and we compare these acquisitions with repurchasing FET shares. This year, our bonds allow total repurchases of around $30 million. Long as our net leverage remains below 1.5 times, we believe FET remains a compelling investment. With that, I'll turn the call back to Neal for closing remarks.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

Thank you, Lyle. Over the last few years, we have implemented a strategy to make FET a better and stronger company. We are gaining share through commercial excellence and innovation. We are leveraging our global footprint, delivering our solutions to customers around the world. We are creating significant value for our shareholders, and we have been successful despite market headwinds. We may be closer to finally having a market tailwind that can supercharge our efforts going forward. Thank you for joining us today. Daniel, please take the first question.

Operator

Our first question comes from Jeff Robertson with Water Tower Research. Your line is open.

Jeff Robertson
Managing Director of Natural Resources at Water Tower Research

Thank you. Good morning. Neal, with respect to the Unity ROV system in the trade show, are you seeing demand for that product outside of traditional energy? Secondly, if we think about Unity and the cooling systems you all have, are there orders for those systems that are in the backlog, or are you working on that?

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

Yeah. Good question. Starting with Unity first, Jeff, you know, it's still a fairly new system. We're gathering more and more field data, as well as understanding how much it benefits our customers. That's early stages there. I do think it would have an application outside oil and gas for control, as an ROV. But yeah, I think the interest is high. We do have a number of Unity systems already in the backlog, that we'll continue to add to what we've already delivered. Again, I think as we build that field experience, I think we'll then, you know, look at other applications outside oil and gas.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

Again, I think defense would be a great application for it as well. On our cooling systems, we didn't mention the call, but we formerly had a cooling system that's mobile for data centers that we call the Powertron. The system I mentioned in the script is a new design that's actually a permanent, so it's not mobile. This is brand new, one that we are quoting actively, and we are again building up a nice opportunity queue. We don't have orders for that system yet, but I think all indications are we have a great product and would expect that going forward.

Jeff Robertson
Managing Director of Natural Resources at Water Tower Research

Can you comment, Neal or Lyle, on what the margin profile looks like in the backlog?

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

I think, again, let me start with the new products and innovations. I think generally our innovative products have higher margins than our standard, you know, standard overall margin. Again, I think the innovations we develop, you know, we're addressing specific customer needs, so we're able to get more value out of that. I think, you know, as we talked about our backlog coming into the year, about 11% was new innovations or new products that we developed recently. I would think, you know, overall, our average margin would be on higher because of that.

Lyle Williams
Lyle Williams
EVP and CFO at Forum Energy Technologies

Jeff, maybe a little color to add to that. Last year, we booked a large amount of orders for subsea. Their book-to-bill was basically off the charts in a combination of defense and traditional oil and gas, ROVs, and the rescue submarine. Typically, we see our subsea business with slightly lower contribution margins. There's a lot of pass-through material and electronics, et cetera, that go through on those subsea orders that tends to pull the average margin down. I'd say the subsea portion of backlog, which is meaningful, is a little bit lower. As Neal mentioned, our other products we're putting through are coming in at higher margins.

Jeff Robertson
Managing Director of Natural Resources at Water Tower Research

If I could have one more. With respect to the Middle East and, like Qatar's LNG part of it's gone offline, are there conversations underway with customers in the Middle East that would increase demand for FET's business as the oil producers or and gas producers maybe look to diversify their production capacity and maybe put a bigger emphasis on developing their own natural gas for internal consumption?

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

Yeah. I think it's maybe early on that rebuilding discussion, Jeff. You know, we're still staying close with our customers. I think as we mentioned, We did increase revenue in the Middle East during the quarter. You know, one area that, you know, we didn't cover specifically was Venezuela. We are seeing an increase there in demand especially for our short cycle activity base, you know, like coiled tubing, wireline, things like that. I think as we maybe get farther from the conflict, I think there will absolutely be an opportunity in the Middle East. I think interestingly, we are finding some nice opportunities already in Venezuela.

Jeff Robertson
Managing Director of Natural Resources at Water Tower Research

Thank you.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

Thanks, Jeff.

Operator

Thank you. Our next question comes from Steve Ferazani with Sidoti. Your line is open.

Steve Ferazani
Steve Ferazani
Analyst at Sidoti & Company

Morning, Neal. Morning, Lyle. Appreciate all the detail on the call. Neal, in terms of the guidance raised this early in the year, obviously you wouldn't do it without confidence. Just trying to get a better sense of the components that led you to that decision. You covered it a little bit, but to me, the surprise here was the strength in orders given the fact that we haven't seen a pickup in North America yet, given the conflict in the Middle East, given you would assume a lot more uncertainty on that on behalf of customers. Were you surprised by the? We are certainly surprised by the strength in the order book for Q1. Was that the major contributor? Were there other factors in the guidance raise?

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

Yeah, I think, you know, having a book-to-bill over 100% does give you a lot of, like, lot of confidence when you, when you look out a quarter, for sure. I think that helped. You know, some of the orders that we booked, I mentioned in the call a DuraLine for Argentina. That's one we've worked on for a long time and got to the finish line in Q1. That helps. That helped increase. Another area where we're seeing some great strength is in Canada, with our Variperm product line. You know, they're delivering great results. I think the, you know, with oil prices up, I think that's an area where, you know, we're gonna see more and more investment.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

you know, that's been a big part of this. I think, you know, Variperm being strong as well as, you know, some of our, more of, the ability to use our backlog coming into the quarter, I think gave us a lot of confidence in increasing that. Again, we're not assuming yet an increase in activity.

Steve Ferazani
Steve Ferazani
Analyst at Sidoti & Company

Right

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

... kind of assume keeping our assumptions. I do have to say we are, you know, getting initial, let's call it, indications of some increase in activity. It's uneven so far, so I don't wanna call it a trend. You know, if the activity does increase, I think we will be aggressive in following it up.

Steve Ferazani
Steve Ferazani
Analyst at Sidoti & Company

In terms of the strength in Q1, it sounds like you are also impacted by some delivery push outs, given the higher Q2 guidance. Fair to assume those deliveries were either completed or will be for sure completed in Q2?

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

Yes. Yes. I think we're specifically talking about coiled tubing, which, you know, we had customers a little unsure at the end of the quarter and just waited.

Steve Ferazani
Steve Ferazani
Analyst at Sidoti & Company

Sure.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

That is actually an area where we're seeing customers now kind of accelerate. That's one of the initial indications that we've received.

Steve Ferazani
Steve Ferazani
Analyst at Sidoti & Company

Got it. Have we seen the full benefit of your cost reductions now with the plant consolidation or can we expect more to contribute to margins as the year goes on?

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

I think that the Q2 guidance fully assumes all of our cost reductions, where I think we still had some being taken care of in Q1. I think we also had some, you know, just operationally, you know, when you, when you consolidate facilities, we, you know, you always have some challenges there. But going forward in Q2, we feel really good about the cost savings and our ability to execute there.

Steve Ferazani
Steve Ferazani
Analyst at Sidoti & Company

Got it. That's helpful. Lyle, I do have to circle around on operating cash flow. Clearly, Q1 is always the lowest, and you had pointed it out going into this quarter. That being said, operating cash flow was lower than the previous two years. When I am looking through the numbers, it looks like it is a timing issue with receivables collection as the delta between the last two years. Is that fair? It is reasonable to think it is more timing than anything, and there is no reason to think you are not still on track for full year cash flow.

Lyle Williams
Lyle Williams
EVP and CFO at Forum Energy Technologies

Steve, the way I would answer is first, the seasonality is driven by incentive comp payments and property tax payments.

Steve Ferazani
Steve Ferazani
Analyst at Sidoti & Company

Okay

Lyle Williams
Lyle Williams
EVP and CFO at Forum Energy Technologies

that go out in Q1. That's the big drag on from a working capital perspective.

Steve Ferazani
Steve Ferazani
Analyst at Sidoti & Company

Yep

Lyle Williams
Lyle Williams
EVP and CFO at Forum Energy Technologies

... really timing. quarter-to-quarter, we'll see pretty good movements in DSOs, for example. Those can go swing up and down based on projects, project timing for our bigger projects, and kind of just what's happening with shipments and when those flow in. We did see a little bump up in DSOs in the first quarter, but again, we think that'll unwind in the second and third quarter. Yeah, maybe a little bit of movement in receivables and payables, but really the big driver for Q1 are those annual payments that we make every year.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

We feel like we are on track absolutely for the full year, Steve.

Steve Ferazani
Steve Ferazani
Analyst at Sidoti & Company

In terms of the use of it, any change to your buyback strategy?

Lyle Williams
Lyle Williams
EVP and CFO at Forum Energy Technologies

Yeah, no, we like the buyback plan. We highlighted that about $5 million back this year.

Steve Ferazani
Steve Ferazani
Analyst at Sidoti & Company

Yep.

Lyle Williams
Lyle Williams
EVP and CFO at Forum Energy Technologies

Total capacity for the year would be about $30 million. Just like we talked on last quarter's call, we do expect that to be back-end weighted. You know, we wanna keep that-

Steve Ferazani
Steve Ferazani
Analyst at Sidoti & Company

Yep

Lyle Williams
Lyle Williams
EVP and CFO at Forum Energy Technologies

... somewhat in line with how our free cash flow flows in. We've got a little bit of time on how that plays out. Definitely feel like with our free cash flow yield as high as it is, over 10%, it definitely is an attractive investment for us to consider.

Steve Ferazani
Steve Ferazani
Analyst at Sidoti & Company

Great. Thanks, Neal. Thanks, Lyle.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

You're welcome.

Operator

Thank you. Our next question comes from Dan Pickering with Pickering Energy Partners. Your line is open.

Dan Pickering
Dan Pickering
CIO at Pickering Energy Partners

Morning, guys. I think Lyle, you mentioned, or maybe it was Neal, I can't remember. You talked about FET 2030. You threw out some numbers. I just wanna confirm what I heard. I think I heard doubling of revenues to $1.6 billion. EBITDA, I think, was quadrupling. That's call it $400 million. I just wanna confirm that. It kind of implies an EBITDA margin of about 25%. I was hoping you could just kinda give us some perspective. I realize that is aspirational, it's forward-looking, et cetera. How do you think in there around, you know, pricing improvements? Can you put that 25% margin level in context with prior sort of strong cycle periods?

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

Yeah. Yeah, Dan. I think, you know, those numbers are based compared to 2025, so we were just call it around $85 million of EBITDA in 2025. Yeah.

Dan Pickering
Dan Pickering
CIO at Pickering Energy Partners

Gotcha. Okay.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

... revenue to $1.6. We see that really as two drivers there. A market gains, market growth, excuse me, and share gains driving the revenue. With our, you know, operating leverage, we see, you know, let's call it 30% incremental margins on that revenue increase. I think that's where we get the increase in overall margin. I think if you play it out to that period, you know, let's call it around 20% EBITDA margins once we have that kind of revenue growth and on our fixed cost that we have here. I think we have a good platform.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

Also, as we look at it, you know, if you look at our revenue per rig in the U.S., we're around $700,000 per rig annually. Internationally, it's closer to $300,000. The ability for us to export the technology, whether it's, you know, DuraLine manifolds or our Multilift solution, ESP life extenders or protectors going into the Middle East, we see that as a great opportunity. If we could have international, you know, revenue per rig, international rig get closer to the U.S., you know, that 1.6 target is aspirational, but it feels like a great target for us to achieve.

Dan Pickering
Dan Pickering
CIO at Pickering Energy Partners

Okay. Thank you. Neal, you mentioned Venezuela. What are you seeing in Venezuela? Is it inquiries about what you could do if companies go in there? Are you seeing companies that are already there asking for more stuff? Is this a Q2 revenue impact? Is it a later in the year into 2027 revenue impact?

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

It's both. We are receiving orders, and delivering material for customers who are already in country looking for our products so they can get back to work. We're also early stages looking at maybe more infrastructure type sales. Again, we'll call it Coiled Line Pipe, things like that, potentially valves, going into Venezuela to help rebuild that infrastructure. I think that would be a longer term. You know, historically before, you know, let's call it maybe it's 2007. I gotta get my memory going. It's been a while. You know, Venezuela was a great market for a lot of our products.

Dan Pickering
Dan Pickering
CIO at Pickering Energy Partners

Mm-hmm.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

I think getting back in there, opening that market again creates a lot of opportunity for us.

Dan Pickering
Dan Pickering
CIO at Pickering Energy Partners

Yeah. Okay. Then you talked about Argentina and the DuraLine order that you'd been working on for a while. Is that going in with a pressure pumper that has equipment there already, or is it new capacity, new equipment moving in that you're going along with?

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

I'm not positive if the pumps are in country yet or not, but I believe that's an additional fleets that are being added.

Dan Pickering
Dan Pickering
CIO at Pickering Energy Partners

Yeah

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

to get the work done. Yeah.

Dan Pickering
Dan Pickering
CIO at Pickering Energy Partners

Yeah, that's a market we see a lot of opportunity. Last question from me as we bring it back to, you know, generally in the U.S. Can you talk a little bit about sort of pricing behavior? When we see your results in Q1 and you're talking about Q2, is that a flat pricing environment that you're discussing? Are we seeing any upward bias anywhere? Is it kind of a steady market right now?

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

I'd say it's steady right now, Dan. You know, we're getting interest. We're hearing, you know, the phone's ringing, the inquiries are coming. We've had a few customers ask to, you know, maybe receive material earlier than they had originally planned. It's not a, you know, let's call it a boom yet. I don't see a pricing impact here in Q2 necessarily, other than, you know, we have passed on, you know, any freight increases for if there's a diesel surcharge or any other sort of, you know, in the past, we've passed on tariffs, for example. If there's cost pressures like that, we'll push those through. Let's call it real pricing increase, we haven't approached that yet.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

I think we have some capacity. I think some of our competitors have some capacity, at least initially. As we go along in the cycle, you know, that's absolutely something we'll be looking for.

Dan Pickering
Dan Pickering
CIO at Pickering Energy Partners

Sure. Thank you, guys.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

Thanks, Dan.

Operator

Thank you. Our next question comes from John Daniel with Daniel Energy Partners. Your line is open.

John Daniel
Founder at Daniel Energy Partners

Hey, Neal. My first question is with the GHT product line. Can you speak to what you're seeing from the sort of the North American frac companies' replacement orders and inquiries?

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

Yeah. We have seen an uptick here in inquiries. I would say nothing, not a trend yet, John, but something that we're monitoring. I still think it's higher, we're still seeing more demand right now for our data center cooling opportunities than we are for frac. That said, you know, even going into the year, we were a little bit surprised with a few capital orders, you know, on the drilling side, even on the pressure pumping side, where customers are pulling the trigger even before this price increase.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

I'm kinda cautiously optimistic that as we get farther in the cycle and activity picks up, you know, I think you know just as, you know better than most how old some of that equipment is out in the field.

John Daniel
Founder at Daniel Energy Partners

Right

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

... that we could have an opportunity to add some new capital there for our customers.

John Daniel
Founder at Daniel Energy Partners

Okay. My follow-up, and not to get too technical, but on the DuraLine, it was characterized as more efficient. Can you elaborate on what makes it more efficient?

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

Yeah. It's our DuraLine connection. You know, we're able to rig up and rig down significantly faster. We also utilize high pressure hoses and cranes to move those hoses. If you need to pull out a pump, you can do that in much faster time than you could with a traditional manifold. It's something that, you know, we're seeing a lot of interest from the pressure pumpers there who, you know, large ones who wanna be, you know, best in class. We're seeing good.

John Daniel
Founder at Daniel Energy Partners

Right

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

good take up there.

John Daniel
Founder at Daniel Energy Partners

Once you sell those systems, what type of consumables are going along with it? What's the repeat revenue opportunity, if you will?

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

Yeah. You know, the whole system obviously is a pretty big order initially. We'll, you know, whether it's check valves, hose replacements, you know, different types of bearings, different types of iron that we would also add. I think that would be some of the pull through with that. I think, let's call it 80/20 on capital versus recurring there.

John Daniel
Founder at Daniel Energy Partners

Okay. A final question. I don't know how many, like, of the bearings and valves and fittings and all that is sourced from international markets, assuming some of it is, do you see any potential supply constraints as an eventual Middle East rebuild comes? Like, could supply that you might have thought you could get gets diverted to a higher priced market, if you will? Is that a risk?

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

Yeah, we haven't seen anything like that. We feel good about our supply chain, but, you know, it's obviously something we'll watch, John.

John Daniel
Founder at Daniel Energy Partners

Okay. That's all I got. Thanks for including me.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

Thank you.

Operator

Thank you. Our next question comes from Eric Carlson. Your line is open.

Eric Carlson
Analyst at Morgan Stanley Investment Management

Hey, guys. Good morning.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

Good morning.

Eric Carlson
Analyst at Morgan Stanley Investment Management

Good quarter again. Maybe just I think last time we talked, oil prices were probably in the mid-60s, and now you see obviously what's happened in the last few months, and obviously a lot of headline volatility there as well. When you think about kind of the 2030 plan you presented, I mean, from a physical perspective, an oil market that is likely to lose really over 1 billion barrels of supply. I mean, when you think about kind of the base case you've presented in that plan has been like a no-growth scenario and then the 2030 growth scenario.

Eric Carlson
Analyst at Morgan Stanley Investment Management

Can you just provide a little bit more context as to kinda your confidence in outcomes, kinda given we probably need to build a lot of supply back into the market at some point here?

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

Yes. Yes. I think with the, you know, as we look at it, and I think I agree with you, Eric, the idea that we're gonna take 1 billion barrels of oil out of inventory, that has to be replaced. I think, you know, countries around the world, I think they're gonna have to ask themselves how much inventory should they have. I would imagine it's gonna be more than what they had coming into the conflict. I think that is even more demand on oil production. That fits really well with our growth scenario. Again, we think that as the buildup comes both on oil and again, data centers is still out there, natural gas demand I think is still gonna grow.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

I think that biases up towards our growth outlook, where we could double revenue because we're gonna have our markets growing, and we're gonna be taking share. Again, we listed off a number of key innovations. That's really driving growth. You add on to it the need to rebuild and refill. Phew, I think that's a great opportunity for us.

Eric Carlson
Analyst at Morgan Stanley Investment Management

Agreed. Then maybe just in that context of kind of headline volatility, obviously the commodity volatility has been high. I mean, your own equity volatility is relatively high too. I mean, pretty good results today. Equity market reaction is what it is for whatever reason. In the context of your capital returns, when you look at volatility as an opportunity to buy more of what you already own and you know very well, and a potential to kind of accelerate the growth plan given what's happened in the broader market. Does that change how you think about buybacks versus acquisitions? What's more attractive? I mean, the organic opportunity is obviously massive if it even plays out close to the FET 2030 growth scenario.

Eric Carlson
Analyst at Morgan Stanley Investment Management

Maybe the last part of that would be is just from a M&A market perspective, obviously this volatility is quite high. I'm just curious what your thoughts are on potential targets. Maybe if you could cover kind of the size of target again. I would presume the bid-ask spread has kind of widened here. I'm just kind of curious as to kind of organic growth opportunity, how you allocate capital and then the M&A market. That'd be helpful. Thanks.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

Right. Maybe I'll start and then hand it to Lyle. You know, think about our free cash flow yield is still around 10%, right? I think there's, you know, it's higher than our peers and it's higher than the average small cap. I think we still are great, a great value there, especially with our growth outlook. As we think about acquisitions, you know, we have a criteria that's very, you know, that we hold to that, you know, they gotta be differentiated products, it's gotta have a few competitors, gotta have great financial metrics, and we'd want something that would be accretive, right? We wanna be able to grow free cash flow per share. I think that's really important. We kinda have all that together.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

You know, that said, you know, Lyle and his team have developed a really interesting pipeline and something we continue to look at. There's, you know, there's opportunities out there, but we're gonna be incredibly selective, especially with our free cash flow yield.

Lyle Williams
Lyle Williams
EVP and CFO at Forum Energy Technologies

Eric, thanks for the question. The one thing I would add to Neal's comments, 'cause they were spot on, is because of the breadth of our product portfolio, it gives us, we've said it before, a lot of shots on goal around what kinds of products we could add that would be strategically beneficial to our business. In every case, the criteria is the same. We want businesses that have differentiated technology, that compete in targeted markets, and that we could acquire as something that is going to be accretive to our per share metrics. We can be conservative and we can take our time because we do have a good alternative investment in our own shares that we could buy.

Lyle Williams
Lyle Williams
EVP and CFO at Forum Energy Technologies

Definitely an interesting market out there, a lot of opportunities to look at. But as you mentioned, we've got a compelling base case if we can't find something that is even more compelling.

Eric Carlson
Analyst at Morgan Stanley Investment Management

Right. Maybe just, valuations. Obviously, I think the Variperm deal was done, under 4x EBITDA and a really impressive free cash flow multiple. What does the market look like today? I think from a trailing perspective, if we would've maybe had this conversation in February, it'd go as well. The activity has continued to come down. Oil commodity prices are so-so. That feels like you're almost bottom-ticking the market. In the context where we sit today on a go-forward basis, it feels like you need more activity. It's kind of hard to judge how much ultimately, but it feels like the need is there. The extent can be debated, I suppose.

Eric Carlson
Analyst at Morgan Stanley Investment Management

Just like seller expectations in today versus maybe a quarter ago would be just interesting to hear.

Lyle Williams
Lyle Williams
EVP and CFO at Forum Energy Technologies

Yeah. No, I think you're right. If you look at public company valuations, multiples have increased year to date pretty meaningfully. Ours included. What you would expect, just as you mentioned, is sellers to try to take advantage of that with their own expectations. I think that being said, we've seen deals getting done still in the range of where we acquired Variperm. Our expectation is that, you know, those deals values haven't changed a lot meaningfully in the last 90 days. As you mentioned, volatility and valuations around public company equities can be pretty high. We'll be appropriately conservative in any moves that we make there, making sure that we're very accretive to our story.

Eric Carlson
Analyst at Morgan Stanley Investment Management

Great. Yeah. Basically all things equal, if something gets done it's significantly accretive, and then the last point would be like what is the target? I mean, Variperm was a very large acquisition that kind of transformed the business and really kind of set you up for where you are now. I mean, that was a pretty large transaction. I mean, what is the general range you guys have been thinking about if you can get something for the right price that kind of looks like another home run like Variperm was?

Lyle Williams
Lyle Williams
EVP and CFO at Forum Energy Technologies

Yeah. As, as I mentioned, we do have a lot of shots on goal, that means the dispersion of what those could look like is pretty broad as well. Key things that we're gonna do financially is keep our balance sheet very strong. We're not gonna risk the balance sheet by doing some bigger deal that stretches us out. That's not in our playbook. Obviously, you know, we've talked about our stock being a very good value. I think that puts kind of some brackets around the size of deal we might do. They are pretty broad as far as what we're seeing that are interesting. It's just a matter of we bring something across the line, what might that be?

Eric Carlson
Analyst at Morgan Stanley Investment Management

Okay. That's helpful. Last one, seller type, is that kind of like the Variperm deal where private, privately held companies or are there carve-outs from other publics or, I mean, what does that generally look like?

Lyle Williams
Lyle Williams
EVP and CFO at Forum Energy Technologies

We're kind of seeing it all. There are quite a few private equity held businesses that are long in the tooth in portfolios that are out there. That data's available. Also, we've seen some smaller deals that are owned by families.

Eric Carlson
Analyst at Morgan Stanley Investment Management

Okay

Lyle Williams
Lyle Williams
EVP and CFO at Forum Energy Technologies

you know, how do they plan for the next generation and estate planning kind of questions. We've seen a broad mix and over our history of FET, we've participated in a lot of different kinds of deals. Definitely an interesting time right now.

Eric Carlson
Analyst at Morgan Stanley Investment Management

Great. Well, that's all I got. Thanks.

Lyle Williams
Lyle Williams
EVP and CFO at Forum Energy Technologies

Thanks, Eric.

Operator

Thank you. I'm showing no further questions at this time. I would now like to turn it back to Neal Lux for closing remarks.

Neal Lux
Neal Lux
President and CEO at Forum Energy Technologies

All right. Thank you, for your support and participation on today's call, and we look forward to our next meeting in July to discuss, FET's second quarter 2026 results. Thank you.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.

Executives
    • Lyle Williams
      Lyle Williams
      EVP and CFO
    • Neal Lux
      Neal Lux
      President and CEO
    • Rob Kukla
      Rob Kukla
      Director of Investor Relations
Analysts
    • Dan Pickering
      CIO at Pickering Energy Partners
    • Eric Carlson
      Analyst at Morgan Stanley Investment Management
    • Jeff Robertson
      Managing Director of Natural Resources at Water Tower Research
    • John Daniel
      Founder at Daniel Energy Partners
    • Steve Ferazani
      Analyst at Sidoti & Company
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