Forum Energy Technologies (FET) Sidoti Micro-Cap Virtual Conference summary

Company Overview and Market Positioning

• Manufactures critical equipment and consumables for global oil and gas production, serving blue-chip clients and deriving about half of sales internationally.

• Operates through two main segments: artificial lift & downhole, and drilling completions, with a focus on niche markets and high barriers to entry.

• Global manufacturing and distribution footprint includes 44 locations in nine countries, enabling efficient scaling and balanced geographic revenue split.

• Continuous innovation and product development, with over 150 granted patents and examples like Enviro-Lite cable and DuraCoil tubing.

• Emphasis on ESG initiatives, including workforce diversity, safety improvements, and environmental impact reduction.

Financial Performance and Strategy

• Revenue increased from $541M in 2021 to an estimated $815M in 2024, with EBITDA margin rising from under 4% to 13% over the same period.

• 2024 EBITDA margin guidance is 13%, the highest in nearly a decade, driven by portfolio optimization and the Variperm acquisition.

• Free cash flow conversion reached 64% in 2024, with guidance midpoint for free cash flow at $65M and a 30% yield.

• Net leverage reduced from 4.7x in 2019 to 1.4x by Q3 2024, aided by debt repayment, equity conversion, and EBITDA growth.

• Recent $100M bond issuance extended maturities to 2028–2029, lowered interest rates, and improved liquidity.

Capital Allocation and Shareholder Returns

• Board approved a $75M share repurchase program, about one-third of market cap, to be executed over multiple years.

• Free cash flow allocation: ~50% to debt reduction, 25% to share buybacks, 25% to strategic investments or further buybacks.

• Sale leaseback transactions generated $20M, further strengthening the balance sheet.

• Focus remains on maintaining conservative leverage and flexibility for M&A or internal investment.

• Leadership views current share buybacks as the best investment given a 30% free cash flow yield.