Forum Energy Technologies, Inc.

Good morning, ladies and gentlemen, and welcome to the Forum Energy Technologies fourth quarter and full year 2024 earnings conference call. My name is Gigi, and I'll 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 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, everyone, and welcome to FET's fourth quarter and full year 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 websites. 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. Finally, 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 fourth quarter 2024 to third quarter 2024.

I will now turn the call over to Neil. Thank you, Rob, and good morning, everyone. I would like to begin by congratulating Chris Scott and Leslie Beyer, two of FET's board members. Leslie was recently nominated to serve as Assistant Secretary for Land and Minerals Management in the US Department of Interior. Leslie's leadership and experience makes her an excellent choice to help our country navigate critical energy challenges. I would also like to congratulate Chris on his announced retirement. Chris has been involved with FET for almost 20 years. both as a dedicated board member and previously as chief executive officer. I would like to personally thank Chris for his mentorship, guidance, and friendship. He has been invaluable throughout my time at FET and especially since my appointment as CEO in January 2022. With these announcements, I think it is appropriate to step back and reflect on the great progress we have made the last three years. Revenue is up 51% during this time. Market share, as measured by revenue per rig, is up 19%. EBITDA increased five times, and margins expanded 800 basis points. Net debt is down 30%, and we significantly improved our net leverage from 11 to just under 1.5 times. These results clearly illustrate the progress we have made. Now let's talk about key achievements from the year, specifically our financial results, the completion of a transformational acquisition, the fortification of our balance sheet, authorization of a significant share repurchase program, and solid execution of our beat the market strategy. Financially, We delivered meaningful growth with revenue and EBITDA up 10% and 49% respectively. This resulted in a 42% incremental margin and over 300 basis point margin improvement. Impressively, we generated $105 million in free cash flow from strong EBITDA growth and efficient working capital management. VeriPerm contributed meaningfully to our financial results, as promised when we announced this acquisition. Despite some market headwinds, VeriPerm delivered stronger than expected EBITDA margins and outperformed the full-year free cash flow plan. We also executed a $100 million senior secured bond offering, which refinanced our long-term debt and maintained a strong liquidity position. Importantly, the refinancing provided flexibility for deployment of cash. In December, we announced a $75 million share repurchase program, delivering on our promise to shareholders. The size of this program relative to our market capitalization is significant. It also reflects our confidence in generating consistent free cash flow in 2025 and beyond. This year, we made great progress on our Beat the Market strategy by capturing profitable market share, leveraging our global footprint, and developing differentiated technologies. For example, we gained market share as demonstrated by our 15% revenue per rig growth Also, outside the U.S., we utilized our strategically located manufacturing facilities to grow international revenue by almost 42%. And FET is an industry innovator, delivering new products to the market. Here are a few examples. FR120SC. The next generation iron roughneck that combines best-in-class torque capacity with a reduced rig floor footprint. Fast Connect, a safer and more efficient zipper manifold system for multi-well pad frac operations. Powertron, an industry-leading heat transfer unit for mobile power generation. Pump Saver Plus, an incredible solution that increases oil production and reduces downtime in rod lift production systems. MagnaGuard, a breakthrough product that enables widespread adoption of efficient permanent magnet motor ESPs. And my last example, Unity, a leading-edge technology that remotely controls ROVs to reduce personnel on vessels. Now, turning to our outlook. We strongly believe long-term demand for energy will grow and continued investment will be required to supply this growth. However, we expect 2025 to be a transitional year for market activity driven by geopolitical and macroeconomic uncertainties. Overall, we anticipate global drilling and completion activity in 2025 will decrease 2% to 5% from 2024 levels. In North America, both rig count and frack fleet count are forecasted to soften. Internationally, we anticipate activity to be generally flat. We expect that continued market share gains through our beat the market strategy will partially or fully offset the impact of declining market activity. Therefore, our full year 2025 adjusted EBITDA guidance range is 85 to 105 million. There are a couple of variables, however, not in our 2025 forecast that we are tracking closely. The first is natural gas. In our guidance, we do not assume a rebound in natural gas drilling and completions activity. If demand triggers a meaningful commodity price increase, there may be some upside to activity later in the year. The second variable is tariffs. For most product families, we believe we are in a position to mitigate and pass through tariff impacts with increased pricing and supply chain optimization. This result may not be achieved immediately, and we may see short-term impacts and variability in our businesses. We are continuing to monitor this fluid situation and will adapt accordingly. Before turning the call over to Lyle, I would like to summarize our capital deployment framework. First, we are forecasting 2025 free cash flow between $40 to $60 million. We expect to allocate 50% of this free cash flow to net debt reduction. The remaining 50% would go towards strategic investments, including share repurchases. We continually evaluate acquisition opportunities and compare relative value to FET. With our industry-leading free cash flow yield, we have yet to find a better investment than ourselves. Buying back FET shares provides the best current value to shareholders. All right, I am now going to turn the call over to Lyle for more details on FET's fourth quarter results and other financial highlights.