Forum Energy Technologies, Inc. (FET) Q3 2026 Earnings Call Transcript

Operator: Good morning, ladies and gentlemen, and welcome to the Forum Energy Technologies Third Quarter 2026 Earnings Conference Call. My name is Dulam, 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 the session, you will need to press star 1 on your telephone. Will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1 again. A link with instructions can be found on the company's Investor Relations website under the events section. 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: Thank you, Dulam. Good morning, everyone. And welcome to FET's Third 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. We are relying on federal safe harbor protection 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 ks and other SEC filings. Finally, management's statements may include non GAAP financial measures. For reconciliation of these measures, please refer to our earnings release and our website. During today's call, all statements related to EBITDA refer to adjusted EBITDA, and net income refers to adjusted net income. And unless otherwise noted, all comparisons are third quarter 2026 to second quarter 2026. I will now turn the call over to Neal.

Neal Lux: Thank you, Rob, and good morning, everyone. Our third quarter results demonstrate another period of strong execution. Expectations entering the quarter were high, given our substantial increase in guidance and our team delivered. We generated sequential and year over year growth in revenue EBITDA, net income and free cash flow. That performance, improved our balance sheet, and allowed us to complete a highly accretive acquisition. Our momentum through the first 9 months together with strong execution, and healthy backlog levels, gives us confidence to raise our full-full-year 2026 outlook. We now expect revenue between $900 million and $920 million EBITDA between $123 million and $129 million and net income between $52 million and $58 million At the midpoint, revenue would be up 15%, EBITDA up 46%, and net income up 639%. All compared with 2025. Also, up from prior guidance, we expect full year free cash flow between $66 million and $71 million Our outlook is not only the result of an improving market, We believe it is disciplined execution, of our beat to market strategy. Our strategy is straightforward. Compete in targeted markets. Use competitive advantages, innovate continuously, and leverage our global footprint. Each pillar reinforces the others and creates a repeatable framework for profitable growth. This strategy is critical to our investment thesis, so let me spend a few moments on each. As a starting point, we focus on mission critical applications where customers value differentiated performance, reliability, and technical expertise. We choose to compete in targeted markets where we have limited competition and competitive advantages. These advantages include advanced manufacturing capabilities, intellectual property, and brands that have served customers for decades. Just as important our industry experts work closely with customers to understand how our products are used in the field and how they can be improved The combination of product expertise and customer relationships turn specific operating needs into durable commercial opportunities. Continuous innovation is the next pillar, It fuels our growth engine. We develop differentiated technology that separates FET from the competition improves customer outcomes, and expands our addressable markets. Our innovation machine is making significant progress on a wide range of applications including hydraulic fracturing, the Canadian oil sands, and power generation. Hydraulic fracturing, we introduced a new high tensile strength tube used in perforating gun housings and received our first order this month. This consumable product utilizes our pipe milling expertise to efficiently manufacture a cost effective solution. The introduction of this product expands our addressable market by approximately $200 million. The Canadian oil sands is a resource play with significant long term growth potential. We are penetrating this market with our innovative flow control technology. Our products reduce steam and sand penetration in thermal oil wells, and most importantly, increase oil production. This is a winning value proposition. In power generation for data centers, we continue to build momentum for our stationary cooling products. Our teams are utilizing patented technology to provide customized solutions that increase uptime, and lower the total cost of ownership. Ongoing collaboration with key customers is resulting in several advanced stage RFQs. This addressable market has significant growth potential. These are a few examples of how we translate engineering capability into market share gains, new revenue streams, and profitable growth. Finally, our global footprint allows us to take technologies developed for US unconventional basins and bring them to customers around the world. International revenue year to date is up 31% year over year compared to last year, reflecting both healthy customer demand and strong execution by regional teams. In the Middle East, we navigated ongoing volatility and increased revenue 32% year over year. Importantly, while we have experienced some disruptions, we have not had meaningful order cancellations related to the conflict. Customer priorities remain centered on uptime efficiency and production performance, which align closely with FET's capabilities. The opening of Venezuela for US companies is another developing opportunity. Historically, this country has been a good market for our products. It is encouraging to see our customers making capital commitments and entering into contracts. The opportunity remains in its early stages but the level of activity is moving in a constructive direction. FET has already delivered coil tubing, pressure control equipment, and coiled line pipe into the country. Staying in Latin America, Argentina is emerging as an attractive international growth market. Operators are applying technologies proven in the North America shale. Major oilfield service companies have established significant positions in the basin to support multi year unconventional development programs. FET's differentiated products, like quench and temper coiled tubing and greaseless wireline cables, enable efficient drilling and completion operations. As activity scales, this should drive additional demand for our portfolio of consumable products. Now that we have reviewed the pillars of our strategy, let me touch on how we measure its effectiveness. The success of our beat-to-market strategy is measured by revenue per global rig This metric evaluates whether FET is truly outperforming the broader market. And on this measure, we are winning. Since the beginning of 2022, our revenue per global rig has increased 35% year over year. And we have accelerated our outperformance through the first 9 months of 2026. Not only have we beat the market, but we believe FET remains a compelling investment. We have a proven track record and attractive valuation meaningful capital returns, and a clear growth path we call FET 2030. Our results demonstrate a consistent record of outperformance compared to the Russell 2000. Year to date, we have grown revenue 75% faster year over year. And our operating leverage translates top line growth into significantly greater earnings with EBITDA increasing by over 4x the index. Finally, that performance is even more pronounced on the bottom line. With adjusted net income increasing by more than 400x the Russell. That strong financial performance is translating into significant equity appreciation. Through yesterday's close, FET shares are up 140% year to year to date. Compared to a 15% increase for the Russell 2000. Even after this appreciation, we believe FET continues to offer attractive relative value especially compared to other small cap industrial companies. Across several valuation and balance sheet metrics, including free cash flow yield, price to sales, enterprise value to EBITDA, and net leverage we believe FET comes out ahead. Our cash generation gives us flexibility to deploy capital for the benefit of shareholders. We generated $41 million of free cash flow, through the first 9 months of 2026, We are returning $9 million through share repurchases and reducing net debt by almost 10% to date. During the quarter, we completed the acquisition of Premier TorqueRings, a highly accretive deal within our Downhole product line. The acquisition met our investment criteria, with strong industrial logic, differentiated products, attractive EBITDA margins, and strong free cash flow conversion. As wells become longer and more complex, torque rings become an increasingly important solution. Further supporting our FET 2030 growth plan. We are excited to add this established brand to the portfolio and I would like to welcome the employees of Premier Torque Rings to the FET family. Looking ahead to 2027 and beyond, our FET 2030 plan targets doubling revenue, quadrupling EBITDA, and tripling free cash flow versus 2025. Those goals reflect a combination of addressable market growth targeted share gains, operating leverage, and our capital light business model. Thinking about next year, market indications favor a growth year. Elevated commodity prices are driving activity higher large service companies are expecting broad based growth. For FET specifically, annualizing the midpoints of our fourth quarter guidance would result in revenue and EBITDA growth of 5% to 14% in 2027. I believe we will continue to perform at this level or higher. Putting it all together, we are on the path towards FET 2030. Now to provide more detail on our third quarter results, and near term financial outlook, I will turn the call over to Lyle.

David Lyle Williams Jr.: Thank you, Neal. In the third quarter, our teams built on momentum from market share gains, customer technology adoption, and increasing contribution from international markets. To deliver meaningful growth and profit enhancement. Sequentially, consolidated revenue increased 5% to $237 million right at the midpoint of guidance. EBITDA increased 14% to $36 million and EBITDA margin improved 120 basis points to just over 15%. With strong incremental margins of 40% year over year. Net income increased 33% to $18 million. Both EBITDA and net income met the top end of our guidance. Impressively, on a year over year basis, EBITDA increased 56% and net income was up. Nearly 5 times. Our book to bill was 103% as orders increased to $244 million. Exceeding revenue for 6 of the last 7 quarters. 4 primary drivers propelled our year over year third quarter performance. We continue to see good results in our drilling product line. Where revenue increased 22% The changes made last year to streamline the business and lower its cost base are showing up in improved margins and operating leverage. Internationally, we are delivering differentiated drilling capital equipment particularly in The Middle East and Latin America, providing additional opportunities to build on this success. Subsea continues to deliver its backlog, driving improved financial performance. We are executing orders booked last year, including ROV systems, and the rescue submarine. With the offshore market strengthening, we are also seeing a pickup in aftermarket activity. The Canadian oil sands market continues to be a strong contributor to our results. In addition to activity levels remaining durable, we have also seen the increased adoption of our flow control technology that Neal referenced earlier. Finally, revenue increased across each of our international regions as we gain market share through differentiated product delivery. International revenue per rig is up 26% compared with the prior year. These results reinforce the strength of our competitive position utilization of our global footprint, and the opportunities we are seeing across international markets. Before I review segment results, I would like to touch on the adjusting items from our GAAP net income in the third quarter. We recorded a $3 million charge associated with resolving a previously disclosed litigation matter. plus $500 thousand of related legal fees. We also recorded approximately $1 million in conjunction with the sublease of 1 of 1 of the manufacturing facilities we closed earlier this year. There was also roughly $1 million of transaction fees for the Premier acquisition. Now turning to our segment results. Drilling and completion revenue increased 6% to $147 million attributable to increases in all 4 product lines. EBITDA increased 28% to approximately $21 million and margins expanded 240 basis points to 14% year over year. Strong operating leverage and cost management enabled a robust incremental EBITDA margin of 56% year over year. Artificial lift and downhole revenue increased 3% to $90 million due to the addition of Premier TorqueRings and higher demand for sand and flow control solutions and our valve products. EBITDA of $21 million was relatively flat Contributions from revenue growth were offset by higher freight and tariff costs. Orders remain strong resulting in a book to bill ratio of 113% year over year, primarily from large gas processing equipment and technology orders. With that segment context, I will turn to our outlook for the fourth quarter. We expect fourth quarter results to be stronger than we had implied on our second quarter call. Higher oil prices have supported increases in drilling and completion activity around the world. Specifically, global drilling rig count is up 6% year over year. This activity tailwind combined with our recent acquisition, supports the to increase our outlook. We expect fourth quarter revenue between $230 million and $250 million and EBITDA between $33 million and $39 million At the midpoint, these represent approximately 19% year-over-year revenue growth and 59% year-over-year EBITDA growth compared to the fourth quarter of last year. In line with this profitability guidance, we expect net income between $15 million and $21 million and free cash flow between $25 million and $30 million for the fourth quarter. I would like to call out 1 thing for fourth quarter modeling purposes that will impact GAAP net income and earnings per share. Earlier this month, to comply with our long term incentive plan, we modified approximately 128 thousand shares of outstanding equity awards to allow for cash settlement. and/or electing to settle another 15 thousand shares of equity awards in cash. Therefore, we expect to recognize a onetime incremental stock based compensation charge of approximately $5 million in the fourth quarter. While our third quarter income statement demonstrates the success of our beat the market strategy, Our capital light operating model continues to deliver even more value. Over the past 2 years, improved free cash flow generation has allowed us to favorably deploy capital for the benefit of FET and its shareholders. During the third quarter, we continued that trend taking advantage of our strong free cash flow and balance sheet to reduce net debt repurchase shares and complete an accretive acquisition. In the third quarter, effective working capital management pulled forward $10 million of cash flow from the fourth quarter. Accounts receivable increased with revenue, while inventory remained well controlled as we actively managed inbound materials to align the business with our outlook. With this focus, free cash flow of $30 million was well above the high end of our guidance range. We reduced net debt by $13 million to $97 million improved our net leverage ratio dramatically, from 1.1x to 0.9x and return capital to shareholders. We repurchased approximately $1.4 million of shares during the quarter at an average price of $51, over 40% below our recent trading values. Since initiating our current program in 2025, we have repurchased a total of 1.6 million shares or approximately 13% of the then outstanding share count. In addition to debt reduction, and share repurchases, we also completed the acquisition of Premier TorqueRings. Total guaranteed consideration of $33 million, or about 4x EBITDA consisted of $16 million of common stock, $12 million of cash, and $5 million of deferred cash consideration. Management will remain with the business and is motivated to continue profitable growth through a self funding earn out. Acquisitions have been and continue to be an important part of our capital allocation framework. And can enhance our FET 2030 vision. We have a solid balance sheet, believe our stock is an attractive currency today. Using a combination of cash and equity allowed us to complete the Premier acquisition while preserving balance sheet capacity to pursue additional strategic investments. With that, I will turn the call back to Neal for closing remarks.

Neal Lux: Thank you, Lyle. Our third quarter results reinforce FET's track record of delivering on our commitments and a clear example of executing at a high level. We delivered strong growth, generated substantial free cash flow, and used that cash to strengthen the balance sheet return capital to shareholders, and complete an accretive acquisition. These results reflect the progress we are making across the business. Looking ahead, we remain confident in our increased 2026 outlook and the path towards FET 2030. With continued execution of our beat the market strategy, we expect to gain share improve profitability, and build a stronger company. We believe FET is well positioned to deliver continued outperformance and long term shareholder value. Thank you for joining us today. Dulam, please take the first question.

Operator: Thank you, sir. And I show our first question in the queue. James from the line of Jeffrey Woolf Robertson from Water Tower Research. Please go ahead.

Jeff Robertson: Neal, let me talk a little bit about you talked a little bit about 2027. Can you share any color on the type of conversations that you were having with customers that support your. Their. Or that underpin your view that people might be leaning into 2027 a little bit just based on where the market is right now?

Neal Lux: Yeah. You know, I think it is it is definitely early in the seed budget season. Right? So I do not wanna you know, get too far ahead, you know, but I think if you take what you hear from you know, large service companies, you know, publicly saying, know, broad based, let's call it mid to high single digit activity. You know, we do have a higher commodity strip as well. You know, I. Our customers are gonna be disciplined, but I do think for us, it will continue to be the intensity. Right? It will be longer laterals, more stages. And that is just going to consume more of our products. So think the other the other way to think about it is know, what we if I think we are at a good operating level where we are today. So if you think about our third and fourth. Third quarter results and fourth quarter guidance, We feel like that is a good level that we are operating at. And then if we see further activity and further share gains, we feel good about good about next year.

Jeff Robertson: On the Premier TorqueRing acquisition, can you can you share anything about the contribution to fourth quarter 26? And is that a technology that falls into some of your others that you can extend the market opportunity to other markets under the FET umbrella?

Neal Lux: Yeah. I will I will I will start with the second part of your Jeffrey. Because I think that is really the key the key part. Premier TorqueRings, you know, has a lot of synergy with our downhole product line. You know, we have shared customers very similar target accounts, know? So a lot of cross selling you know, opportunities. So that part to me is really exciting again. International expansion is 1 part of that. You know, also, when we started looking at this acquisition, what got us really excited is how useful the product is, but how field friendly it is. You know, just to give a quick anecdote, when we were. Started looking at the company, you know, Lyle and I actually able to install these rings on the casing and quite honestly, we would make terrible field hands. Like, we would be fired day 1. But we were able to install these torque rings. So I think you know, it is field friendly. But as you know, wells continue to get more complex, the torque rings are gonna be a great solution for our customers. It gives them a lot of flexibility in their threat design. And then, you know, importantly, we were able to man. Retain the management team. Right? They are they are talented. They are passion. Passionate, and they are, you know, customer focused. So think you know, all that is just really exciting about the acquisition.

David Lyle Williams Jr.: And Jeff, I will add in. On the on the fourth quarter results, really excited about that. We talked about on the call the guaranteed consideration for the acquisition is about $33 million and we acquired that for roughly 4x EBITDA. Think about an $8 million, or $2 million a quarter. Kind of a run rate. We did close that acquisition in the middle of Q3. So sequentially, probably think another million dollars or so of contribution from torque rings. As Neil mentioned, long term, we are excited about the ability to leverage our footprint to help that business grow. So we look for more contribution in the coming quarters and years.

Jeff Robertson: Lyle, is there is there a current business more of a North American focus, or are they. Do they already have a global relationships?

David Lyle Williams Jr.: They are they are they are very US focused, but before our acquisition, they were also international. They were, doing business in Latin America and The Middle East. So already a great starting point around the world and something that we can we can help them grow.

Jeff Robertson: Last question or last I guess. So like a lot of your other businesses, that basically dovetails into increased demand for unconventional resource development around the world. That right?

Neal Lux: that is right. I think I think also these tools can be used in even conventional casing designs. So ones that know, it just. it is really the good use of this. Of our Premier torque rings is if the casing needs to be rotated while entering the hole. So if it is, you know, more complex, or the hole is not you know, drilled perfectly, premier torque ring is a great tool to increase that capability and allow that casing to be installed. So unconventional, yes. I think well complexity is really what is. What drives it. Thank you. Thanks, Jeffrey.

Operator: Thank you. And I show our next question in the queue comes from the line of Stephen Ferazani from Sidoti. Please go ahead.

Analyst: Hi. Yeah. Actually, I have the second team here. it is Peter Sidoti. Quick question. Can you just talk about where you are comfortable with debt levels as well as your priorities on the cash flow between buying back stock, debt repayment, and acquisitions at this point?

Neal Lux: Yeah. Maybe I will start and then let Lyle jump in, Stephen. But or excuse me, Peter. You know, as we think about our priorities, you know, we feel like we are we are comfortable with our debt levels now. We kinda mentioned that as we entered the year. So we want to look at different opportunities and, you know, acquisitions would be 1 of them as well as, you know, share buybacks would be strategic as well. And know, we think there is a lot of acquisition opportunities out there. We are we are continuing to look, and I think there is a good pipeline that we have built. But we will also, you know, be very disciplined in you know, whether we make an acquisition or we or we buy back our own shares. And, you know, 1 way to look at that is, you know, our free cash flow yield and, you know, and then what is the price of the acquisition we are we are buying.

David Lyle Williams Jr.: Yeah. Peter, the. Really, thanks for the question. We have done a great job over the last several years of lowering our net debt. Thing I want to correct, comment on the call, I actually said we reduced our net debt by $13 million. The right number is $18 million. So sorry for that mis. misspeak. But I think Neal's right as we continue to drive that down, we really think of debt reduction levels or where our debt is now as very comfortable level of leverage. As we continue to drive that down, it really looks like more dry powder for strategic investments.

Analyst: Do you have a target return when you look at acquisitions?

Neal Lux: You know, I. It we have a criteria. Maybe the. Maybe stepping back big picture, the you know, our criteria is we wanna acquire companies that, you know, have differentiated products, that have limited competition, that have similar growth outlook over the next 5 years that we do. Right? So they can augment our organic growth strategy. I think that is that is the key is we love our internal plans. You know, we love what we have in front of us. We think our FET 2030 plan, you know, so far, we are we are executing on that brilliantly. I think that will continue. But if we can augment that with acquisitions that follow that same path, we are excited. You know, Premier, we completed here in the in the third quarter, that was that was 1 as well. And if we can find others that have similar you know, similar framework, we will do that as well. Alright. Thank you very much.

Operator: Thank you. Thank you. And I show our next question comes from the line of Gautam Suri from Singular Research. Please go ahead.

Gautam Suri: Good morning, gentlemen. Hey. Thanks for taking my call. Good morning. My first question is, as growth kind of picks up, how should we think about free cash flow conversion? So how much kind of working capital requirements does the extra. The next $100 million of revenue need Yeah.

David Lyle Williams Jr.: Got you. That. that is a that is a really good question. Our 1 of our biggest assets, is our working capital. it is a capital light business, we do not need a lot of CapEx to grow our business. The last few years, we have been able to monetize a lot of working capital. it is been a good change. I think going forward with growth, you are right, we will need to reinvest. Think the right framework that we would say to use is think about our long term FET 2030 strategy. The outline we have given there, which is incremental EBITDA margins on revenue should be between 25% to 35%. Kind of roughly in line with our gross margins. And that 65 to 75 or 60 to 70% of every incremental dollar of EBITDA would be free cash flow. So still quite a light capital model, but that gives an idea of what we have thinking about as far as incremental working capital to grow top line.

Gautam Suri: I see. And on the backlog, I know you started the year around $300 million kind of the highest in 11 years. Where does that backlog sit right now, as opposed to with the years at the start of the year, and how much of that can we kind of model that converts over the next 2 or 3 quarters?

Neal Lux: Yeah. I think, you know, our book to bill has continued to be above a 100 for the last few quarters. I think that is that is the good. So I think generally, our backlog, we convert in less than in less than a year. So I think that is that is a good rule. We do have a few exceptions, you know, in subsea. In that product line. Occasionally, we can have orders that will extend out. A good example is our rescue submarine that will deliver or will recognize, excuse me, progress over the next 2 years or so. So that would be 1 exception. But I think in general, as we as we book, we will. We convert that to revenue. Maybe another thing to think about is, you know, roughly 80% of our sales are activity based consumables. So those are typically booked and shipped within the quarter even. So I think that is to us more important. So as we think about 2027 and we look out beyond, it is what is activity gonna be, what is. How much share are we going to take, and then how quickly can we turn that into revenue?

Gautam Suri: Okay. And I know you kind of. You alluded to that. Does the aftermarket and the defense, become a bigger share of subsea next year? Is the subsea pipeline looking for refilling the backlogs as those ROV deliveries kind of roll off?

Neal Lux: Yeah. We have continued to have good progress. But, yeah, I think as we shift ship ROVs, we will we will be adding more and more aftermarket. Again, we think we have 1 of the, you know, the highest market positions in world class ROVs. So as those ROVs to have higher utilization, they are gonna need more and more aftermarket. We have made defense a focus of our growth market, so we have continued to add And then finally, you know, with our innovation you know, we have added our Unity operating system. And with Unity, we have the opportunity to put that operating system on new ROVs But more excitingly, it can be an upgrade to existing. So I think as we continue to see adoption of Unity, we will we will continue to have opportunities to upgrade existing ROVs.

Gautam Suri: Okay. I will just make this my last question. I know you mentioned the global rig count up 8% quarter on quarter. Where are these rigs being added? How much of that. How much of the FET content do you typically have on them? And how long does a rig addition usually take to show up in your consumables revenue?

Neal Lux: Mhmm. Yep. Good question. So you know, year to date, you know, if you think about the big geographies, so US is roughly flat. But sequentially over the quarter, it is up 6%. But year over year, up 9. I think Canada is up a bit. But I think more importantly, if you think about our revenue, per rig. So if you split it out in The US, you know, we have about $700 thousand of annual revenue per US rig. Internationally, that number's $350 thousand so about half. So I think as we continue to execute on our strategy of taking the technologies that have been really successful in The US and exporting those internationally, The big goal for us is to bring up that international revenue per international rig. And so I think it is a it is a rig count story. But more importantly, it is how do we increase our revenue per rig. And so I think international is a great opportunity there for us. Awesome. Thank you again. Good luck. Congratulations. Thank you.

Operator: Thank you. And I show next question comes from the line of James Rollyson from Raymond James. Please go ahead.

Jim Rollyson: Good morning, guys. Morning, Jim. Neal, you have you have covered a lot of things. I was going to ask, and you kind of just alluded to it. But international revenue's up 31% year to date. I think your full year revenue guide is up 15% corporate wide. Which obviously puts international on track to outperform. As you think through your outlook through 2030, you know, the targets on growth, is international and offshore going to be the bigger relative share of that growth to get to those targets, do you think?

Neal Lux: I think it will be, and I again, just maybe to add on that prior comment of revenue per rig, As we think about the technologies that have been really successful, and again, example I have given because I just. I love it is our multi lift solution that we provide downhole tools that extend the life of downhole pumps. In The US, we have strong share. Internationally, the applications are. That market is about 4x larger, and our share is really low. So you know, the opportunity for us to take that solution that is really successful, that has proven itself, and sell that internationally is huge. And so, yeah, I think we will continue to see an acceleration of revenue outside the US. Perfect. Appreciate that. Thanks, guys. Thanks, James. Thanks, James.

Operator: Thank you. And I show our next question comes from the line of Daniel Pickering from Pickering Energy Partners. Please go ahead.

Dan Pickering: Good morning, guys. Morning, Dan. First, I guess I would make a comment, which is it was not that long ago when the Q&A queue was pretty lonely. So congratulations on identifying incremental investors and finding folks that appreciate the story. Well done there.

Neal Lux: Let's talk a little bit, if you do not mind, Neal, you spent some time on the call talking about the Middle East. You show us your revenue numbers by geographic region. That was a kind of $40 million revenue number year to date. Tell us what you are. I mean, kinda give us an idea of what you are doing over there. Are you shipping things in? Are you performing any kind of services? You said you have been somewhat uninterrupted. Do you think the next 6 months looks similar to that? Is there a risk that things get dicier just as this conflict plays out?

Dan Pickering: I think there is always that risk, Dan.

Neal Lux: it is it is somewhere we are concerned about. You know, we have local manufacturing as well as distribution and sales offices, you know, in Saudi as well as in the UAE. So we are always concerned that things can change. You know? But for us, it is it is know, sell. it is. We ship our product. Right? So most of our sales will be. Let's call it, product sales. So whether it is new products or aftermarket, that is what is that is what is driving it. And it is a lot of times, though, it is taking the applications that, you know, whether it is it is it is radiators for frac equipment or pumps or quench and tempered coil tubing or wire. Or greaseless wireline cable. Things that have been the workhorse of US unconventional. And exporting those to, you know, the Middle East that is been successful, or exporting them to Argentina, for example. So anywhere that you know, service companies and operators are looking to become more efficient, You know, we found a good market opportunity for our products and solutions.

Dan Pickering: Yeah. You mentioned Venezuela. And Argentina. Those are countries that have, in the past, for upstream companies been tough to get paid or they have seen assets expropriated, etcetera. How if you think about Venezuela specifically, is that is that a ship to a US customer, get paid in US dollars in the US or does it happen locally? How are you handling the kind of the currency and the country risk?

Neal Lux: Yeah. No. We are being very, very cautious. Right? We are not going to you know, try to grow but take on a lot of credit risk there. So absolutely, we are being. We are gonna. We are generally shipping to a US company and receiving US dollars. It another way we could do it on, let's say, larger projects, I think coiled line pipe would be a good example. example, we may have an LC in place but, again, that would be on delivery of that product x work. So our focus is products. We are not gonna have assets in country. We are gonna ship our products from, you know, The US and have them delivered into Venezuela. And Argentina, and we are highly focused on getting paid.

Dan Pickering: Mhmm. And you mentioned it, but I was not writing quickly enough. What are kind of your key opportunities there in Venezuela just from a product line perspective?

Neal Lux: Yeah. it is it is really starting off with equipment or products that service companies would utilize. So coil tubing, pressure control, We are also seeing some infrastructure rebuild would be, you know, like, coil line pipe. So you know, I can remember a time when I was there probably over 20 years ago, and looking at, you know, Lake Maracaibo and the opportunities to install you know, coil line pipe there. So you know, we. We have seen some of that. So I think as the country continues to you know, grow and stabilize, know, I think, you know, more infrastructure type products will be there. But initially, you know, we are selling consumables. Gotcha. Thank you.

Dan Pickering: And the last question for me, you have you did an acquisition this quarter. Your balance sheet clearly lets you do more if you find the right ones. Can you just talk a little bit about your BD process? You mentioned in your discussion you and Lyle out kicking the tires at Premier. Is there Are you guys the BD guys for Forum? Is. Do you have an organization that is focused on that? Just kinda curious what the velocity of acquisitions might be now that the balance sheet's really ready to go.

Neal Lux: Yeah. I will hand that to Lyle to see his team his team leads that kinda talk through the process.

David Lyle Williams Jr.: Yeah. Thanks, Dan. We do have a we do have a team that works on identifying opportunities. I think 1 of the ways that we do that, though, is we have talked before, we have a really broad product reach. Way to think about M&A is we have lots of shots on goal, lots of technologies that could be adjacent or additive to our story. So our BD teams do work with our, with our individual product lines and businesses to identify technologies are out in the space, what could be interesting, tangential to us, something where 1+1 is more than 2. So it is a company wide effort, I would say, to identify those targets and then a specific team that helps bet that those are the right targets for us. Got it. Thanks very much.

Operator: Thanks, Daniel. Thank you. And I show our next question comes from the line of Joshua Jayne from Daniel Energy Partners. Please go ahead.

Joshua Jayne: First 1 is on Lower 48. We have heard a number of increasing anecdotes around underinvestment across a number of product lines. Signaling that sort of if we have an activity move up further into 2027, the industry could be short equipment across a number of product lines. You agree with this take, first? And for those who maybe under invested these see this as sort of a coiled spring coming in the lower 48 equipment market? Or do you think view it as sort of just steady as she goes for now?

Neal Lux: Yeah. Hey, Joshua. Good to hear from you. Know, we get out and see, you know, visit our customers a lot and see our equipment and I know at the operating level, know, in the field, a lot of them would love to have new equipment. They would love to have that investment. I think our customers especially in the US lower 48, have been extremely resourceful in extending life and utilizing their equipment to the fullest. So I. As I think about you know, next year, you know, I. I would hate to say it is a coiled spring. Because I think they are gonna continue to be resourceful. For us, though, it is it is the higher utilization of that equipment that, you know, is it you know, there is less downtime. there is there is more wells, more stages, and so that is where we are seeing the benefit is really on the consumables. That said, if we, you know, get examples for upgrades, you know, where we are seeing it, is with, like, key tools. So our f r 21 iron roughneck. that is a capital item. Right? That will be a CapEx item. But what we are seeing is our customers, you know, wanting to upgrade their rigs to handle larger drill pipe and be more efficient, well, they are making that investment. Another good example is our is our radiators from GHT. Again, having a. The latest and the and the best radiator can increase the uptime of your engine and your and transmission. So they do make that upgrade. So I think we may see an upgrade cycle of key components, and I feel like that is that is really good for us. If there is a underinvestment in coiled spring, I would I would I would love to be a part of it, and we are well positioned to take advantage of that too.

Joshua Jayne: K. Thanks for that. And then I did wanna talk about. You highlighted the potential for data center revenue and just there is been a lot of opportunity, but also a lot of regulatory noise with respect to project start times. Has this pushed your expectations out a little? Or maybe you could just go into some more detail about the opportunity set for Forum and the size scale as it relates to the opportunity for your for your business today.

Neal Lux: Yeah. So we are and if you think about the place where we play, you know, we are on we are on the shorter cycle. Right? So if you go back to the regulatory challenges that you mentioned, those will happen on the front end and, you know, once the EPCs or the data center customers, they get over that, that is when they come to us. So when we have RFQs, that are in the you know, in the hopper, Those are, you know, quotes and deliveries that have kind of passed that hurdle. If we are. If they are talking to us, it means that it is right in front of us. So what is what is exciting that we are seeing is we are seeing increased activity, increased RFQs that are out there. You know, we think we have a great solution. We have some IP around it. You know, our coolers are. Let's call them a little bit more modular. So when they are operating. And, again, as I envision these data centers, the engine should be running a lot. Right? Even more than frac. You know, they should be running 24/7. If you need to have maintenance or you need to have an issue, you know, you cannot have a cooler down. So our modular technology would allow replacement of coolers very quickly. So when I mentioned we are. We have solutions that prioritize uptime, that is what we are talking about is going to lower the total cost of ownership. So we are we are excited about what we have. We have a good history there. We have progressed from really strenuous applications to now stationary ones. I think we are really well positioned. Thanks. I will turn it back. Thanks, Joshua.

Eric: And I show our next question comes from the line of Eric Hey, guys. Good morning. Morning, Eric. No. No. Another good quarter. Think. Maybe just thinking a little bit longer term here. I mean, I think you guys started presenting the 2030 plan 3 or 4 quarters ago, And kind of if you look at results the past few quarters and even if you hold those steady to modestly higher, I mean, within 5 or 6 months or 2 quarters here, we are looking at somewhere around $140 million of trailing EBITDA mean if I would have told you this is kind of where we would stand and the tailwinds that exist, you would have started thinking about the 2030 plan, I mean, what would be your score? Does it feel like you are ahead of schedule, behind schedule? And just some comments on when you think about where we have come from to where we are now and then kind of progress along the way here.

Neal Lux: Yeah. We have we do we do feel really good about the progress we have made. I think the you know, when we rolled out the FPT 30 plan, it was not a top down exercise, but 1 that we built for the bottoms up with our with our teams. And, you know, we have a shared commitment to delivering there. So the results we have had today I am I am proud of our teams and what they have done. You know, when we first started it as well, we kinda laid out a flat and a growth scenario. So I think where we have benefited is, you know, we have had more of that growth scenario. And I think about the inventory of oil over the next few years that I think that growth scenario is a more likely scenario than flat. I think that is a little bit different than maybe just 3 or 4 quarters ago. That said, you know, it still requires us to take share. It still requires, you know, discipline you know, working capital management in order to turn that share growth into free cash, and then the teams have done it. So, yeah, I would give ourselves an a, but know, the next quarter has already started and we need to need to be focused on our grades going forward. So we will give ourselves a pat on the back but we are we are already moving forward.

Eric: Great. And then Lyle, can you remind me. I think so the debt that you guys issued a few years ago, that comes due in 2029. it is callable next year. Obviously, there is some balance sheet or return to capital restrictions on there that probably are not as big of a an issue as they were in the past. But when you guys think about those notes due 2029, Maybe just walk through. Is that something that looks interesting to call once that here in the middle of 27 or refinance those into something less restrictive Maybe just thoughts on the debt side?

David Lyle Williams Jr.: Yeah. Great question, Eric, and thanks for letting me remind everybody where that stands. On our balance sheet, we do have the $100 million bond that traded in the Nordic market. We issued it a couple years ago, and as you mentioned, it matures in 2029. The first call date for us would be about May 2027. So definitely something that we have thought about. I think importantly from where we stand today, our net debt as of the end of Q3 was $97 million so below the value of that of that bond. And our expectation is to continue generating free cash flow. So we can get our net leverage down, net debt on an absolute basis down quite a bit and leverage is low. That bond would be callable in May, so it is definitely something we have thought about as an option. Got a very well-funded revolver, about a $250 million total facility. $180 million worth of borrowing base, and very little drawn on that here at the end of the quarter. So really in great shape from that perspective. So now I think it is a capital allocation question. In the past, our capital allocation has been aimed at debt reduction. And share repurchases, and I would say check mark, check mark. Achieve both of those. Now I think we can add in the flexibility of M&A, which we just completed here in the third quarter, and balance where do we wanna deploy our capital for where do we get the best return. That could be in some sort of refinancing of those bonds, but could also be we have plenty of time left on those bonds. So I think we have got flexibility to think about where are the best returns and what actions do we wanna take for the balance sheet.

Eric: Right. And then last 1 for me would be, when you think. So the recent acquisition, $8 million of EBITDA, is that kind of the wheelhouse of what you would like to see going forward? Maybe not something transformative like you did with Veraperm, But if you can bolt on 4, 5, or 6 of these, 8 to. Or $5 million to $15 million EBITDA businesses and that has a meaningful impact over the next 2, 3, 4 years?. Maybe just like the range of the targets in the pipeline. Like, what do they look like from a EBITDA perspective? It obviously become even more interesting as the public markets the multiples have kind of increased. Well, it seems like the private valuations from what I have heard are still pretty subdued just because there is not a lot of buyers. So maybe just talk through kinda target size and pipeline and you guys see you are competing, or who you are competing with for some of these acquisitions?

Neal Lux: Okay. Well, maybe we will do a little back and forth on that on that question, Eric. But I think what is what is really important is. And exciting for us is we have the opportunity to do a bigger acquisition if we wanted to. Right? I think we have. We have the balance sheet in the right spot. We have. We. You know, again, if we feel good about our access to capital markets. So if we wanted to do a larger 1, that is available. But, you know, as you mentioned Premier was a great add on. I think there are. There could be other ones like that. We spend a lot of time looking And, again, it is it is important to understand what is out there. And I think as Lyle mentioned, earlier on an earlier question, you know, we get a lot of the information from our teams and see where does it fit, you know, what technologies are out there. So we will continue to do that. But know, you know, as you mentioned, private. Public company multiples have moved up. Would imagine over time that, you know, you may see private as well. So I do not think there is just you know, deals out there. You cannot steal a company. I think there is a lot of other opportunities too. Great. that is helpful. Thank you. Thanks, Eric. Thanks, Eric.

Operator: Thank you. That concludes the Q&A session. At this time, I would like to turn the call back over to Neal Lux, President and CEO, for closing remarks.

Neal Lux: All right. Well, thank you for your support and participation on today's call. We look forward to our next 1 in February to discuss our fourth quarter and full year 2026 results. Thank you.

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