Forum Energy Technologies, Inc.

the session, you will need to press 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 be found on the company's investor relations website under the events section. At this time, all participants are in 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 second quarter 2025 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, please 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 second quarter 2025 to first quarter 2025. I will now turn the call over to Neil.

Thank you, Rob, and good morning, everyone. The FET team achieved strong results this quarter. We delivered sequential growth in bookings, revenue, EBITDA, and free cash flow. Also, revenue and EBITDA were in the top half of our guidance ranges. Bookings this quarter were strong across most of our product lines and drove backlog to the highest level in over 10 years. Our subsea product lines performance was impressive with significant bookings for ROVs and a large submersible rescue vehicle system. We continue to see strength in the offshore market across a wide array of industries, including oil and gas, wind, and defense. Importantly, we generated 23 million in free cash flow in the second quarter, putting us at 30 million for the first six months of this year. That is a 27% year-over-year increase and marks our eighth consecutive quarter of positive free cash flow. Over that time, we have generated $168 million of free cash flow. Also, we believe this momentum will continue for the rest of the year. We are raising full-year 2025 free cash flow guidance to between $60 and $80 million, a $20 million increase. Applying our capital returns framework, we will use this free cash flow to further reduce net debt and execute share repurchases. This year, we repurchased approximately 5% of our shares outstanding and Based on our full year guidance and current stock price levels, we are on track to repurchase an additional 10%. Concurrently, we plan to reduce net leverage to 1.3 times by year end. With a free cash flow yield around 30% and significant long-term growth potential, continued buybacks are extremely compelling. The strong results I just outlined demonstrate the benefits of our beat the market strategy. Since its implementation in 2022, our annualized revenue per global rig is up 20%. As a reminder, this strategy aims to grow profitable market share by competing in targeted markets, utilizing our competitive advantages, developing differentiated technologies, and leveraging our global footprint. Now we've refined our strategy by aggregating our addressable markets into two broad categories, leadership markets and growth markets. This approach concentrates the impact of our technical and commercial resources. Today, FET derives about two-thirds of our revenue from the leadership markets. These are markets where our solutions are fully adopted by the industry, where we have few competitors and broad geographic reach. We estimate that the leadership markets, in aggregate, total $1.5 billion, and we have a meaningful 36% share. A few examples from our portfolio are Global Tubing, Quality Wireline, VeriPerm, and PERI ROVs. In these markets, we will continue to invest in product development to maintain and expand our leadership position. These are great markets, and I love our dominant products. In addition, we have identified substantial growth opportunities. in markets that are about twice the size of our leadership markets, or roughly 3 billion. We call these growth markets. Our products and solutions here are differentiated, proven, and have few competitors. However, they may be in the early stage of industry adoption or may have a narrower customer base or may be geographically limited. As a result, Our aggregate market share here is relatively low, around 8%. However, this creates an exciting opportunity to increase revenue rapidly through wider industry adoption, new customer acquisition, and expanded global utilization. Since this opportunity is so meaningful to FET, let's spend a few moments diving deeper with a few examples. First, let's begin with coiled line pipe, a product that saves time and money. This fantastic solution eliminates 95% of a pipeline's welds and can be installed faster than traditional steel pipe. The last hurdle holding back wider customer adoption is inertia. As we move forward, I expect our customers to prioritize saving time and money over the status quo. The market opportunity for coiled line pipe is immense and has very few competitors. Also, we employ one of the most efficient production methods for this product. With these factors in our favor, coiled line pipe should be a strong contributor to FET's results. We saw a glimpse of this potential in the second quarter with growing demand in the U.S., the Middle East, and offshore. The second example I want to highlight is from our artificial lift product family. The value proposition to operators is very simple. Our patented products extend the life of downhole pumps, allowing more production at significantly lower cost. Execution of this value proposition has made us the market leader in the United States. The exciting part for us is that the international market is more than four times larger than our home market, and demand is tied to production operating expenses. By leveraging our global footprint to address these markets efficiently, we have a significant opportunity to grow revenue. Our goal over time is to double our share in growth markets. To put that in perspective, eight points of market share gain could be an additional 240 million in revenue. At a 30% incremental margin, That is $72 million of additional EBITDA. This example illustrates the enormous revenue and EBITDA potential in just a flat market. This is exciting and demonstrates the value of FET's beat-the-market strategy. Now, for more color on our quarterly results and outlook, I'm going to turn the call over to Lyle.