Forum Energy Technologies, Inc.

Star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. A link with instructions can also be found on the company's investor relations website under the events section. 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.

Thank you, Gigi. Good morning and welcome to FET's first quarter 2024 earnings conference call. With me today are Neil 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. Please note that we are relying on the safe harbor protections afforded by federal law. Listeners are cautioned that our remarks today may 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. Management statements may include non-GAAP financial measures. For a reconciliation of these measures, you may refer to our earnings release. During today's call, all statements related to EBITDA refer to adjusted EBITDA. And unless otherwise noted, all comparisons are first quarter 2024 to fourth quarter 2023. I will now turn the call over to Neil.

Thank you, Rob. And good morning, everyone. When we announced the VeriPerm acquisition late last year, we used words like transformative, accretive, and scale. This quarter, we realized the value of VeriPerm adds to the FET's financial results. Sequentially, we achieved 9% revenue growth, and importantly, EBITDA increased 69%, with EBITDA margins improving by 460 basis points. The teams delivered on our promises with both revenue and EBITDA within our guidance range. With favorable sales mix and continued cost management, our EBITDA came in at $26 million above the midpoint of the range. I am pleased with our 13% EBITDA margins. I am confident we will achieve our mid-teens margin goal with our differentiated products and operating leverage. As expected, bookings rebounded in the first quarter and our book to bill ratio was 101%. With approximately 80% of our product portfolio sales being consumable and activity based, a book to bill ratio around 100% is generally expected. However, we will occasionally exceed this level when we received large awards from our capital-intensive and project-based businesses. As expected during the quarter, with oil prices around $80 per barrel and depressed gas prices, U.S. rig count and frac counts were flat. However, we did see a pickup in demand in our stimulation and intervention product line. Our quality wireline business saw a nice uptick in demand for our premium greaseless cable systems. Although the global rate count was essentially flat, we did see some seasonal softness in the international markets as customers were slow to release budgets. Let me briefly discuss VeriPerm and its operational results this quarter. First off, the integration of VeriPerm is going very well. Our teams have done an excellent job of working together, and importantly, we have integrated their financial results into our operating systems, which is critical for a publicly traded company. This is never an easy task, and I would like to thank everyone involved for making this happen in such a short timeframe. This acquisition broadens and enhances FET's existing artificial lift and downhole offerings. The sales teams from FET's traditional downhole product line and VeriPerm are making substantial progress working together. This collaboration should expand FET's total addressable market in Canada through revenue synergies and the broadening of our customer base. Operationally, VeriPerm has great leaders that will continue to run the business as efficiently and successfully as they did prior the acquisition. Earlier this year, we outlined our market views for Canada and forecasted a softer first half of the year, driven by uncertainty of the Trans Mountain Express pipeline startup and seasonal breakup. VeriPerm's first quarter results were generally in line with our expectations but softer than historical revenue run rate due to these near-term headwinds. Despite lower revenue, VeriPUR managed costs very effectively and margins held steady. Looking ahead, we anticipate stronger oil sands activity in the back half of the year as operators in Canada realize higher prices for their oil. Based on the first quarter results, And with no material change to our original global rig count forecast, which was roughly flat, we are reaffirming our full year 2024 guidance with EBITDA of 100 to 120 million and free cash flow of 40 to 60 million. Before turning the call over to Lyle, let me discuss our growth and profitability strategy to beat the market. We will continue to capture opportunities for market activity. With VeriPerm now in our portfolio, between 75 and 80% of our revenue should be tied to activity. We will use our trusted brands and relentless commercial efforts to increase our share within existing markets. As we grow, we will focus on niche markets where FET has truly differentiated itself. We have developed strong intellectual property and proprietary know-how over many years of operation. This strength is combined with our people who are experts in their fields and who understand how to solve our customers' problems. This creates a strong barrier of entry and maintains a favorable competitive landscape for FET. Therefore, we can command higher margins and generate greater returns. Also, we will continue to develop and commercialize new products, as well as continuously innovate and improve our current product portfolio. This is accomplished by working closely with our customers to iterate newer and better solutions, further separating us from our competitors. This allows FET to capture more market share while expanding its total addressable market. During last quarter's call, I went into great detail on a number of examples, including our greaseless wireline cable system, our FR120 iron roughneck, our FastConnect manifold system, and the Pump Saver Plus. Our innovation is laying the foundation for sustainable and profitable growth in the years ahead. In addition, we have an optimized global footprint with strategically located manufacturing and distribution hubs. Our asset light model allows FET to supply products and solutions to our customers wherever they are. We can be nimble and pivot with changing market conditions to go where our customers lead us. We do not need to spend capital within a specific country or region where activity is growing. We just ship our products there. Lastly, we will take advantage of increasing service intensity. To keep up with growing operator demands for greater efficiency, reduction of well costs, and increased safety, our customers are doing a lot more with less equipment. Their drilling rigs and frac fleets are being pushed to run at full utilization with more pumping hours, more stages, more drilling feet, and reduced time between wells. To achieve this, they do not need to invest in new fleets or rigs, but must upgrade their capabilities to keep up and remain relevant. That's where FET's products are critical and allow our customers to drive these efficiencies. I'm now going to turn the call over to Lyle for more details on FET's first quarter financial results and second quarter 2024 outlook.