Good morning, ladies and gentlemen, and welcome to the Forum Energy Technologies Third Quarter 2025 Earnings Conference Call. My name is Daniel, and I will be your coordinator for today's call. 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.

Thank you, Daniel. Good morning, everyone, and welcome to FET's Third Quarter 2025 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, and it is available on our website. 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's statements may include non-GAAP financial measures. For a 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. And unless otherwise noted, all comparisons are third quarter 2025 to second quarter 2025. I will now turn the call over to Neal.

Thank you, Rob, and good morning, everyone. Our team executed another solid quarter, demonstrating why FET is a great company and an even better investment. We extended our track record of outperformance, delivered significant capital returns, and we believe FET remains an incredible value while poised for long-term growth. Over the past three years, we have outpaced the Russell 2000, our small-cap Index, in revenue and free cash flow growth. And with our third quarter results, we continued this trend. Our Beat the Market strategy, which centers on new product development and targeted commercial efforts, drove strong bookings and meaningful backlog growth. During the quarter, we captured several offshore and international awards. This success increased our backlog by 21%, its highest level since 2015. Our commercial teams are generating market share gains. They successfully pushed third quarter revenue to the top end of our guidance. In addition, our operating teams are driving increased efficiency, higher utilization, and structural cost reductions. This combination allowed us to exceed the top end of our EBITDA guidance. FET's free cash flow performance is another area of strength. Year-to-date, we are up 21% and have achieved our ninth consecutive quarter of positive free cash flow. Over that period, our operations have generated almost $200 million in cash. Looking ahead to the fourth quarter, we anticipate another good quarter of free cash flow. Therefore, we are once again raising our full-year guidance to between $70 million and $80 million. This free cash flow performance allows us to execute our capital returns framework through further net debt reductions and share repurchases. Last quarter, we discussed reducing net leverage to 1.3 times by year-end. I am pleased to report we are now at that level, one quarter ahead of schedule. Also, in the third quarter, we repurchased 5% of our shares outstanding, bringing the total for this year to 8% through September. We have seen a strong run in FET's stock performance. However, even after this remarkable gain, our free cash flow yield is around 20% and share buybacks remain a compelling use of capital. In addition, we believe that FET's share outlook remains incredibly attractive, given our long-term forecast. The key driver there is our Beat the Market strategy. By competing in targeted markets, utilizing our competitive advantages, developing differentiated technologies, and leveraging our global footprint, we continue to grow profitable market share. For the first nine months of 2025, our annualized revenue per rig is up 3% despite subdued market activity. Since the strategy's implementation in 2022, we have increased this metric by 20%. Last quarter, we outlined a refinement to the strategy by aggregating our addressable markets into two broad categories: leadership markets and growth markets. For our new investors, let me quickly summarize our discussion from last quarter's call. Our leadership markets are where FET solutions are fully adopted by the industry, where we have meaningful share, strong competitive positions, and broad geographic reach. We estimate the size of our leadership markets to be $1.5 billion, with FET maintaining a 36% share. A few examples from our portfolio include Global Tubing, Quality Wireline, Variperm, and Perry ROVs. FET derives about two-thirds of its revenue from the leadership markets, and we will continue to invest in product development to maintain and expand our position. The growth markets are about twice the size of our leadership markets, or roughly $3 billion. Here, our products and solutions are differentiated, proven, and have fewer competitors. However, they may be in the early stages of industry adoption. They may have a narrower customer base, or they may be more geographically limited. As a result, our aggregate market share here is relatively low, around 8%. This creates an exciting opportunity to increase revenue rapidly through wider industry adoption, new customer acquisition, and expanded global utilization. Let me provide a couple of examples and share some insights. One example is coiled line pipe, a product that saves operators time and money. The market opportunity is immense and has very few direct competitors. However, broad customer adoption has been limited by our industry's conservative approach to new technology. Recently, our team's relentless commercial efforts have added several key accounts. Demand is expanding in the U.S., the Middle East, and offshore. Sequentially, coiled line pipe revenue grew 28%. We expect this product to be a meaningful contributor to our long-term growth. The second example I want to highlight is from our artificial lift product family, where demand is generally more stable because it is tied to existing production. Our technically differentiated products extend the life of downhole pumps, allowing more production at significantly lower costs. Execution of this value proposition has made us the market leader in the United States. The exciting part for FET is that the international market is over four times larger than our home market. We are making headway there as our revenue has grown 12% since last year. By leveraging our global footprint to address these markets efficiently, we have a significant opportunity to grow revenue. These are two of many products that compete in the growth markets. Our goal over time is to double our share from 8% to 16%, which would increase FET's revenue by $250 million in a flat market. However, our base case is not a flat market. We see the possibility of our addressable markets expanding by 50% or more over the next five years. Here's how we get there. The two main drivers of energy demand are economic activity and demographics. By 2030, world GDP is forecasted to increase by nearly $30 trillion, and the global population is expected to increase by 400 million. With this growth, it is reasonable to forecast an oil demand increase of at least 5 million barrels per day in that period. In addition, our industry will need to replace 30 million barrels of daily supply that will be lost to natural production declines. Finally, on top of that, demand for natural gas is projected to grow rapidly to power AI data centers and supply LNG exports. With this outlook, today's supply will not come close to meeting this level of demand. We believe that means significant investment is required. To meet these challenges, our customers need to be significantly more efficient while adding a modest amount of new capacity. Under this scenario, FET's addressable markets would expand by more than 50%. This expansion, combined with our targeted market share gains, would organically double revenue in five years. And with our strong operating leverage and capital-light business model, our free cash flow would grow significantly. By 2030, this would give us meaningful firepower to execute strategic investments, including accretive acquisitions and additional shareholder returns. We call this Plan FET 2030, and its execution is our North Star. Now, while we are excited about our long-term vision, we also remain focused on executing today. So to provide an update on our quarterly results and outlook, I am now going to turn the call over to Lyle.

Thank you, Neal. Good morning, everyone. FET delivered revenue of $196 million, approaching the top end of our guidance range as offshore and international revenue grew in the quarter. Revenue increases for our drilling and subsea product line drove offshore revenue to 22% of our total. As Middle East and Canadian revenue each increased by over 10%, international revenue surpassed U.S. sales. U.S. rig count declined by 5% in the quarter, and revenue from most of our product lines averaged a 5% decrease as well. One product line, however, was more impacted as their customers took a conservative position and pushed deliveries into the fourth quarter. Overall, this led U.S. revenue to decline 10%. As Neal highlighted, we had another great quarter of bookings. Our book-to-bill was 122%, showing the benefits of FET's diverse product offering. Both segments achieved greater than 100% book-to-bill at 129% and 112%, respectively. Booking strength for the Drilling and Completions segment was again led by subsea. The strong quoting activity we highlighted last quarter led to new orders for ROVs and pushed the book-to-bill ratio over 200%. In addition, drilling bookings increased by 45% as the team secured capital equipment orders for new-build land drilling rigs in the Middle East. Also, orders grew 24% in our stimulation and intervention product line with strong demand for many of our products. In the Artificial Lift and Downhole segment, a large Canadian customer ordered sand control products in support of an extended drilling program. Valves achieved their largest bookings in almost two years, and our process technologies product family reached its second highest bookings quarter over the same time frame. Our large backlog and higher revenue, combined with healthy incremental margins, helped us exceed our EBITDA expectations. Consolidated EBITDA was $23 million, up 13% and above the top end of our guidance. Margins improved by 150 basis points to nearly 12% due to favorable product mix, ongoing cost reductions, and tariff mitigation efforts. Now, let me provide a bit more color on our segment results. Drilling and Completions segment revenue was flat for the quarter. Momentum continued for coiled line pipe as sales increased 28% with market share gains and revenue recognition on a Middle East project. The subsea product line was up 5% with revenue recognized for ROV projects. Strong sales of wireline products and heat transfer units drove an increase in our stimulation and intervention product line. Offsetting these increases were lower sales for consumable items tied to softer market activity. Despite flat segment revenue, EBITDA was up 3%, driven by product mix and benefits from cost savings initiatives. Our Artificial Lift and Downhole segment revenue decreased 4%. Lower downhole casing hardware and processing equipment technology revenue was partially offset by increased sales volumes for valve and sand control products. Similar to the Drilling and Completions segment, EBITDA increased 2% despite lower revenue. Favorable product mix and cost savings drove the increase, with margins improving 130 basis points. In the third quarter, increased tariffs on steel imports and targeted tariffs on imports from India surprised the markets. Our teams evaluated pricing adjustments to counteract these policies. In addition to our strategy of passing along tariffs through pricing, we continue to leverage our global footprint to avoid tariffs altogether. For example, early in the fourth quarter, we leveraged our Saudi Arabia manufacturing facility to assemble and ship heat transfer units to a Latin American customer. This successful supply chain adjustment protects the competitiveness of these products in the global market. While our teams effectively mitigated negative tariff impacts this quarter, tariff rate volatility continues to be a challenge for our operations. To further counter tariff costs and in support of our solid operating results, we accelerated progress toward our $10 million structural cost reduction goal. As of the end of the third quarter, we are close to achieving that original goal. Additionally, in the third quarter, we made the strategic decision to consolidate four of our manufacturing plants into two. Combining facilities allows us to reduce overhead costs, improve direct labor and asset utilization, and enhance the efficiency of our operations. To achieve these consolidation benefits, we are discontinuing a few low-volume, low-margin products. Our results include $21 million of non-cash inventory and other asset impairments and $1 million of cash charges for severance and relocation costs. By the second quarter of 2026, we expect these facility consolidations to contribute over $5 million of additional annualized cost savings, taking our total structural savings to approximately $15 million, 50% more than our original goal. These efforts have supported our EBITDA this year and will provide additional tailwind going into 2026. Shifting to cash flow and shareholder returns. I am pleased to report that our $28 million of free cash flow, a 23% increase, enabled meaningful shareholder returns. Consolidated free cash flow benefited from increased EBITDA, reductions in net working capital, and the sale-leaseback transaction. Our success in these areas enables us to confidently raise our full-year 2025 guidance to between $70 million and $80 million. Also, with this continued free cash flow strength, we accelerated our share buyback program. In the third quarter, we repurchased 635,000 shares for $15 million, bringing the full-year total to 966,000 shares, or 8% of the shares outstanding. Our expected fourth quarter free cash flow supports continued execution of our capital returns framework, and we have already begun additional buybacks. While executing our third quarter repurchases, we reduced net debt by $12 million, or nearly 10%, to $114 million, resulting in a net leverage ratio of 1.3 times. Our liquidity position remains solid. We ended the quarter with $32 million of cash on hand and $86 million of availability under our revolving credit facility, with total liquidity of $118 million. Before turning to our financial guidance, let me provide a little more detail on our income tax expense and corporate items for modeling purposes. In the quarter, we increased the valuation allowance reserves we hold for the U.K. and recorded $5 million of additional income tax expense. Net of this charge, income tax in the quarter was roughly $5 million, slightly below the second quarter. As our sourcing strategies shift income across jurisdictions, we expect our effective tax rate to shift as well. For example, for the fourth quarter, we expect income tax expense of $2 million to $3 million. For the fourth quarter, we estimate corporate costs and depreciation and amortization expense of around $8 million each and interest expense of $5 million. Now, turning to the market and our financial guidance for the remainder of the year. We are forecasting a gradual decline in activity through the fourth quarter. However, at current commodity prices, our elevated backlog, continued market share gains, and further cost savings should help keep our results relatively steady with the third quarter. Therefore, for the fourth quarter, we forecast revenue of $180 million to $200 million and EBITDA of $19 million to $23 million; and for the full year, revenue of $770 million to $790 million and EBITDA of $83 million to $87 million. Let me turn the call back to Neal for closing remarks.

Thank you, Lyle. To conclude, I want to first reiterate how proud I am of the team's execution. They delivered strong safety results, bookings, revenue, EBITDA, and free cash flow. Their efforts and performance are also positioning FET to finish the year with momentum. Looking ahead to 2026, we've begun initial discussions with our customers about their plans for the year. It is too early to call a bottom in activity. However, with our strong backlog, planned market share gains, and structural cost-saving efforts, we are well positioned for 2026. More importantly, we must continue to focus on the long-term vision. With our Beat the Market strategy, we are striving to double revenue. The next five years have the potential to be truly special for FET and its investors. That is FET 2030. Thank you for joining us today. Daniel, please take the first question.

Can you hear me?

Yes. Thanks, Dan.

Great. Just checking to make sure the system is working here. A couple of questions. Bookings are obviously quite strong. Neal or Lyle, can you talk a little bit about whether you've changed your incentive system for your sales team? Are you approaching things differently? Bookings have clearly accelerated, and the environment seems a bit worse. So, you must be doing something right. I'm curious if there's been a redesign in your strategy or if it’s just that your efforts have finally resulted in a lot of orders.

Yes, Dan, we've analyzed our markets and sales process thoroughly. This has been something we've actively worked on for many years, and we're beginning to see positive results. It ties back to our Beat the Market strategy, where we focus on the markets we're in and ensure we have the right products while our teams pursue these opportunities. Additionally, the strong subsea bookings are part of the structural cycle we're experiencing, which is encouraging. Our teams are aligned with the Beat the Market strategy and are dedicated to driving sales.

Okay. And as we look at that backlog, you're showing strong margins because of the reasons you talked about, Lyle. But how do we think about margins in the backlog, better than what we print in 2025, the same? Are you seeing any improvement in margins on the new orders?

Great question, Dan. One of the key factors to consider moving forward is the mix in our bookings. As Neal mentioned, subsea has significantly contributed to our backlogs. Traditionally, the contribution margin from subsea is slightly lower than our average due to the volume of pass-through items in that area. While the technology is strong, there are more pass-through items, which could apply some downward pressure since subsea will represent a larger portion of our revenue next year. That said, the team has performed exceptionally well this year with cost-saving initiatives, and we expect further benefits heading into 2026.

Okay. Second question would be the discussion around the facility consolidation. Kind of a big picture question. You're obviously talking about targeting substantial revenue growth. If we're going to fewer facilities, I mean, how do you think about the revenue-generating potential of your manufacturing base? So if we're going to run $800 million in revenues this year, what can your manufacturing capacity do? Is it $1 billion? Is it $1.2 billion? Is it $900 million? How much utilization are we really looking at now versus the future?

I believe we still have significant capacity and space to add personnel and resources to increase revenue. Over the past few years, we've mentioned our potential to grow revenue by 50%, and that still holds true today. Even with the consolidation, we have ample room to expand and distribute our products. I'm not concerned about growth despite these consolidations; in fact, I think it will enhance our efficiency in the near term. There will be advantages in terms of costs, as well as improvements for our customers, such as better and timely deliveries, thanks to the right structure we are putting in place. We are optimistic about this decision and feel the timing is right as we prepare for 2026.

Final question. Lyle, given the constraints that you have on share repurchase and leverage levels, et cetera, what's our capacity to repurchase shares over the next couple of quarters, given where the balance sheet is today?

Great question, Dan. Just to provide some context, our ability to purchase shares is limited by two factors: our net leverage of 1.5 times, which we are currently below, and the amount of free cash flow generated in the last fiscal year, which caps our buyback potential. This gives us a total buyback capacity of about $36 million. To date, we have repurchased approximately $21 million worth of shares, leaving us with around $15 million available for repurchase in the fourth quarter. As mentioned earlier in the call, we have already begun to use some of this capacity in October, so we still have a significant amount of available funds to buy back shares.

And Lyle, how does that look in '26? Does it reset, or is it $15 million until the end of '26?

Great. Thanks, Dan. It does reset every year. So the 2026 number will be roughly, call it, half of our 2025 free cash flow number. As we just said, we've raised that volume again. So we'll have a lot of dry power going into 2026.

So call it kind of $40 million-ish or something like that?

Yes.

Okay. I don't know what happened. Sorry about that. So first question for me, just given the diversified nature of your business, could you speak to where you think we are in the cycle in each geography? And I'll sort of break them down into U.S. land, international, and offshore. And based on where you think we are in each of those geographies, sort of how does that factor into the spending moving forward in the next 12 to 24 months, allocating resources and capital? Maybe just as the first question.

Yes, we're always assessing our individual markets. I prefer not to categorize them strictly by geography. Referring to our Beat the Market strategy, we have both leadership and growth markets, with opportunities present in each, independent of their location. We highlighted several examples during the call where we see potential for rapid growth by taking successful U.S. products and expanding them globally. A specific example is our artificial lift products. Additionally, we have experienced success with our stimulation and intervention products, which we’ve supplied to shale developments in Argentina and the Middle East. We are well positioned across all regions. While I believe it's still premature to declare a bottom, we are in discussions with our customers. Looking ahead to next year, we feel optimistic about our backlog and our strategic plans, which position us well for a successful year and long-term growth. Our five-year vision is to double our revenue organically.

I recall you mentioning coiled line pipe during the call. This particular product, for instance, saw a 28% increase quarter-over-quarter. Given that level of growth, do you believe this business could potentially double by 2026?

I believe that over time, particularly by 2026, we could see significant growth. It hinges on our awards and timing. For our growth products and markets, our aim is to double our progress in five years. If we can achieve that sooner, that would be fantastic. The coiled line pipe segment has seen some impressive successes, and the team has performed well. However, I don't want to place the pressure of needing to double results within just one year on them. Nevertheless, I do see the potential for considerable growth ahead.

And then, last question, maybe just to give you the floor on. As you're constantly introducing new products to the market, I mean, is there anything else just when we think about on the new product side heading into '26 that you're especially excited about that ultimately help E&Ps become more efficient? What are the things that you're thinking about introducing in '26 that could really drive some of this growth you're seeing sort of even if the market doesn't improve much going forward? Maybe talk about some of those products.

We have a strong pipeline of new product development underway. One exciting area is our advancements in artificial lift, where we're building on our success in protecting downhole ESP pumps and expanding to other applications like rod lift, with noticeable progress made. Another highlight is our Unity operating system for ROVs, which we launched in 2025. We're increasing our delivery capacity, and many of our new ROV and subsea bookings include the Unity system, which is promising. Additionally, on the power side, we supply a key heat transfer unit for many mobile power units being deployed in the U.S. and potentially internationally soon.

Neal, if we think about the growth markets, you talked about coiled line pipe and some of the downhole pump products that FET supplies. Does a period of lower oil prices increase adoption of some of those technologies by customers? Or is it more just industry trends as companies or countries around the world move toward more unconventional resource development?

Yes. In a tighter market with more challenging oil prices, products that save operators time and money are seeing strong demand. This situation has opened a door for us to showcase our technical capabilities. With lower oil prices, service companies will need to become more efficient, doing more with less and increasing service intensity. We anticipate that while the number of rigs may not increase significantly, they will operate harder and longer, similar to frac crews. This should lead to greater usage of our consumable products.

Do you have the capacity at your Dayton pipe facility? And when you mention increasing share in coiled tubing and coiled line pipe, how much can you handle before needing to consider any capital investment?

We've never clearly defined that capacity. However, having been involved since the facility was built, I know we can move significantly more pipe through it. This involves adding extra shifts and using both mills more effectively. I believe the main constraint on growth is our commercial teams and securing bookings. Once we achieve those bookings, I think we have a solid opportunity to generate more revenue from that facility.

As you consider the 2030 goals, does the aim to double revenue in growth markets pertain solely to traditional oil and gas, or do you see potential for any of your product lines or the possibility of making acquisitions that could open FET to adjacent markets?

Yes. I think oil and gas will be a big part of that. The other adjacent market would be defense. We've talked about our rescue submarine booking. We see a good, let's call it, opportunity pipeline there to add on. We're also selling our remotely operated vehicles to defense contractors and really to the navies around the world. So I think that's another opportunity. So I think oil and gas, organic, as well as defense. And our teams are always looking for new markets that we can expand our addressable ones. So part of our goal, right, is to double our revenue in the markets we participate. If we can identify new ones that are adjacent, where we have a differentiated offering, where customers value the products and solutions that we deliver, that would be another way to expand our addressable markets, and we are constantly looking for that.

Appreciate all the detail on the call. You introduced sort of how you're thinking about 2026. I think it's fair to ask, given the sort of consensus developing around the potential for sub-$50 WTI in the first part of the year, how well you're positioned for that and how you can offset what that could do on pressure at least on U.S. consumables?

Yes, in the call, we mentioned that it might be a bit early to discuss 2026. If we experience low oil prices, we are examining whether U.S. production will decline. From what we've observed in the industry, most operators seem to be aiming to maintain production levels at least steady year-over-year. Therefore, we anticipate a higher production level than what we might be modeling for that period. Regardless, we plan to stay close to our customers. Even if prices drop to the 50s, there will need to be increased efficiency. We aim to be a key driver of that efficiency, positioning ourselves well for these changes as part of our strategy.

Okay. And when we think about this multiyear high on backlog, timing of conversion, I know a lot of this is percentage of completion. How much of that backlog is multiyear? And how much of that do you think you work through over the next five quarters?

Yes, Steve, that's a really good question. And typically, when we think about our backlog over time, that backlog is going to typically run out in two or three quarters. I think now, with a bigger backlog build that we have in subsea, that's where we're going to see that run all the way into 2027. So the rescue submarine we announced last quarter, for example, we will recognize a decent amount of revenue on that in 2026, but we won't deliver that until late 2027. So we'll have revenue running all the way through there. But the bulk of our backlog probably bleeds out in 2026 with some subsea lasting all the way into '27.

Perfect. That's helpful. The uptick on both valves and sand control products, the sequential improvement, I know there's two different dynamics going in there. Can you walk through what you're seeing on the valve side? I know there was some destocking going on related to tariffs. Are we seeing that easing now? Are we getting through the destocking? And then, on the sand control products, what you're seeing in Canada?

Steve, the valves, I think you hit the nail on the head. We talked for the last two quarters about what we call the buyers' strike as buyers, with the uncertainty in what tariffs were going to do, basically pulled the pin on ordering patterns. So we have seen some needed increases there for our distribution customers who needed to restock some shelves. My comments about tariff rate volatility continue to be there. And despite the recent news about maybe lowering tariffs on Chinese imports, where that would most affect valves, we definitely see that volatility continue. So we're keeping our eyes close on the valves business, but it was nice to see the increase there.

Yes. And Steve, I think in Canada, I believe it was maybe our first or second quarter call, we thought the back half would be stronger based on some of the customer discussions we've had. So I think that's really been part of the activity or the growth in Canada as we've had that. And our team has been really successful in maintaining and getting key bookings up there as well.

And if I could get one more in because I heard you mention maybe once or even twice the potential in serving the rod lift market. Have you served that market before? Would that be a new addressable market?

That's a really new market for us. We've made some sales in that area, so we're not starting entirely from scratch. We're committed to increasing our efforts and expanding our product offerings. We've previously discussed a unique product called Pump Saver Plus. It serves a purpose similar to what we offer for ESPs by preventing rod pumps from getting damaged due to issues with sand and gas management. We believe this product has significant potential. We've improved it and are collaborating closely with both operators and rod lift pump companies to ensure its successful launch in the market.

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

Thank you, Daniel, and thank you for your support and participation on today's call. We look forward to our next call in February to discuss FET's fourth quarter and full-year 2025 results.

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