Forum Energy’s Earnings Call Highlights Growth and Challenges

Forum Energy ((FET)) has held its Q2 earnings call. Read on for the main highlights of the call.

Forum Energy Technologies (FET) recently held its earnings call, revealing a generally positive sentiment driven by strong sequential growth and record-high backlog levels. The company successfully executed its market strategy, which led to increased revenue per rig and raised free cash flow guidance. However, challenges in the valve business due to tariffs and declining rig counts pose ongoing concerns. Despite these issues, the overall sentiment remains optimistic, highlighting the company’s robust performance and strategic execution.

Strong Sequential Growth

FET reported impressive sequential growth in several key financial metrics, including bookings, revenue, EBITDA, and free cash flow. The company’s revenue and EBITDA were positioned in the top half of their guidance ranges, showcasing a solid financial performance.

Record High Backlog

The company achieved a record-high backlog, the highest in over a decade, driven by strong bookings across most product lines. This milestone underscores FET’s ability to secure future business and maintain a strong pipeline.

Significant Free Cash Flow

FET generated $23 million in free cash flow during the second quarter, marking the eighth consecutive quarter of positive free cash flow. This represents a 27% year-over-year increase, highlighting the company’s effective cash management strategies.

Increased Free Cash Flow Guidance

The company raised its full-year 2025 free cash flow guidance to between $60 million and $80 million, a $20 million increase. This adjustment reflects FET’s confidence in its financial outlook and ability to generate cash.

Market Strategy Success

FET’s “beat the market” strategy has resulted in a 20% increase in annualized revenue per global rig since 2022. This success demonstrates the effectiveness of the company’s strategic initiatives in capturing market share and driving revenue growth.

Leadership and Growth Markets Expansion

FET derives approximately two-thirds of its revenue from leadership markets, holding a 36% market share. The company sees growth markets as a $3 billion opportunity and plans to double its market share in these areas.

Share Repurchases

The company has repurchased approximately 5% of its outstanding shares and plans to repurchase an additional 10% based on full-year guidance. This move reflects FET’s commitment to returning value to shareholders.

Valve Business Challenges

The valve segment faced challenges due to a buyer strike related to tariff uncertainties, resulting in reduced volumes and continued depressed levels. This issue remains a concern for FET’s operations.

Declining Rig Count Impact

Despite overall growth, FET encountered challenges from declining global rig counts, particularly in the U.S. and international markets. This trend poses a risk to the company’s future performance.

Stimulation and Intervention Product Line Decline

A decline in U.S. completions activity negatively impacted the EBITDA margins of FET’s stimulation and intervention product line, highlighting a segment-specific challenge.

Forward-Looking Guidance

FET provided several forward-looking guidance updates during the earnings call. The company expects to generate between $60 million and $80 million in free cash flow for the full year 2025, with plans to reduce net leverage to 1.3x by year-end. Additionally, FET aims to repurchase an additional 10% of its outstanding shares. For the third quarter, the company forecasts revenue between $180 million and $200 million and EBITDA between $19 million and $23 million. The full-year 2025 revenue is expected to be between $760 million and $800 million, with EBITDA around $85 million.

In conclusion, Forum Energy Technologies’ earnings call reflected a positive sentiment, driven by strong financial performance and strategic execution. While challenges remain in certain segments, the company’s record-high backlog and increased free cash flow guidance underscore its robust outlook. Investors and stakeholders will be keenly watching FET’s continued efforts to navigate market challenges and capitalize on growth opportunities.