Forum Energy Technologies, Inc.

Good morning, ladies and gentlemen, and welcome to the Forum Energy Technologies fourth quarter and full year 2025 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 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 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, which 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 statements may include non-GAAP financial measures. For reconciliations 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 fourth quarter 2025 to third quarter 2025. I will now turn the call over to Neil.

Thank you, Rob, and good morning, everyone. Our fourth quarter and full year results once again display why FET is a great business and a compelling long-term investment. Despite a challenging backdrop, including lower global drilling activity, tariffs, and geopolitical uncertainty, our teams executed with discipline and focus. I am extremely proud of what we achieved in 2025, and we are on the right track to realize our strategic vision, FET 2030. Let me discuss some of the highlights from last year, starting with market share gains. We continued to execute our beat the market strategy. through customer engagement, product innovation, and geographic expansion. Since the strategy's inception in 2022, revenue per global rig has grown 20%. In 2025, we increased it again, despite a sizable decline in global rig count. These gains reflect disciplined commercial execution a product portfolio that continues to resonate with customers and the benefits of our global footprint. Our commercial teams delivered a full-year book-to-bill of 113%, with orders well diversified across products and markets and geographies. The subsea product line performed exceptionally well, with a nearly 190% book-to-bill, supported by awards in the energy and defense markets. Also, capital equipment orders for drilling products increased internationally, while we saw continued strength in wireline, coil tubing, and sand and flow control products. As a result, we enter 2026 with our highest year-end backlog in 11 years, up 46% since the start of 2025, providing both visibility and resilience. A key driver of our market share gains and backlog growth is innovation. New product development remains central to our ability to beat the market and expand our addressable markets. During 2025, we commercialized 10 new products by collaborating with our customers to address specific operational challenges and improve their efficiencies. One innovative example is our Secura Series stage collars, which helped us rapidly grow share in the Middle East with one of the largest oil companies in the world. We are expanding on that line with Secura Slim, the smallest diameter stage collar in the industry designed for complex wells. With Secura Slim, our customers can eliminate a casing strength, significantly reducing costs and improving efficiency while maintaining well integrity. Another important product launch was Duracoil 95, a differentiated coil tubing solution for improved performance in corrosive environments. Developed with Middle East applications in mind, Duracoil 95 expands our portfolio and supports continued international share gains. The last example I will provide is our Duraline manifold system. which allows operators and service companies to rig up significantly faster and more safely with far fewer man-hours. This is made possible by our proprietary Duralock connectors, high-pressure hoses, and patent-pending crane systems. We recently commissioned a system for shale development in Argentina and have line of sight for additional sales. Collectively, these innovations strengthen our technology pipeline and support future growth. In addition to our focus on growth, we are maintaining our margin and cost discipline. During the year, our teams mitigated trade and tariff policy impacts through pricing actions, supply chain optimization, and leveraging our global manufacturing footprint. In parallel, we executed significant structural cost reductions and consolidated four manufacturing plants into two. These actions deliver approximately $15 million of ongoing annualized savings. The combination of market share gains, innovation, and cost discipline have translated directly into strong financial results. Free cash flow generation was a defining strength in 2025. Over the course of the year, we delivered 80 million of free cash flow, the top end of our increased guidance range. This performance enabled disciplined execution of our capital returns framework. We reduced net debt by 28% and repurchased approximately 11% of our shares outstanding. This is an incredible result for our investors. Looking to the future, we remain confident in our bullish long-term outlook. Over the next five years, oil demand is expected to increase along with global economic growth. and natural gas demand is forecast to grow rapidly through LNG exports and AI-driven electricity demand. The energy industry must supply these needs while also overcoming rapid declines in existing production. To meet this enormous challenge, our customers need to be significantly more efficient while also adding new capacity. Under this scenario, FET's addressable markets would expand by more than 50%. This expansion, combined with our targeted market share gains, could double revenue in five years. And with our strong operating leverage and capitalized business model, our EBITDA and free cash flow would grow significantly. The next step in this exciting journey starts now. While the general consensus for our industry is relatively flat activity, we expect to beat the market through share gains, strong backlog conversion, and benefits from structural cost reductions. We are forecasting revenue growth of 6% and EBITDA to increase by 16%. For full year 2026, we are guiding revenue between 800 and 880 million and EBITDA of 90 to 110 million. For adjusted net income, we are guiding between $18 and $38 million. In addition, we expect to convert 65% of EBITDA into free cash flow or between $55 and $75 million. This is a great start to executing FET 2030. To provide more detail on our fourth quarter results and near-term outlook, I will now turn the call over to Lyle.

Thank you, Neal. I will begin today with a review of our fourth quarter results and first quarter guidance, then shift to a discussion of cash flow and our capital allocation strategy. Fourth quarter revenue of $202 million exceeded the top end of our guidance range and increased 3% sequentially. This performance outpaced a flat global rig count and reflects continued strength in offshore and international markets where our revenue increased 7% and 8% respectively. This is the second consecutive quarter when international exceeded U.S. revenue, which declined 2% due to project timing and softer demand for valves and artificial lift products. Adjusted EBITDA for the quarter reached the top end of our guidance range at $23 million. Higher revenue and cost reduction overcame less favorable product mix and modest increases in healthcare costs and professional fees. Also, income tax expense in the quarter includes a $3 million of a foreign tax settlement related to tax years 2017 through 2020. The majority of the expense is from a non-cash reduction in deferred tax assets. Fourth quarter book to bill was 93%, primarily reflecting order timing in the drilling and completion segment, following two exceptionally strong quarters for subsea and international drilling related equipment. Let me continue with additional color on our segment results. Drilling and completion revenue was $127 million, up 8%. The subsea product line increased 25% as we recognized revenue on ROV projects and the sizable rescue submarine order announced in June. Coil tubing revenue was up 13% with strong tubing sales in North America, as well as continued momentum for coiled line pipe. Drilling product line revenue increased 11%, supported by international capital equipment demand. Segment EBITDA was essentially flat as cost savings offset unfavorable product mix. Artificial lift and downhole delivered a fourth quarter book-to-bill of 107%, driven by large orders for natural gas processing units. And segment revenue was $75 million, down 4% sequentially on lower shipments by the production equipment product line. Downhole and valve solutions revenues were relatively stable, and segment EBITDA was flat, with margin improvement of approximately 90 basis points supported by favorable mix and cost reductions. Free cash flow remained strong in the fourth quarter, totaling $22 million and resulting in full-year free cash flow of $80 million. Through the year, our teams generated cash of nearly $34 million from networking capital efficiencies. We also completed two real estate sale leaseback transactions that generated another $15 million in net cash proceeds. Excluding this $15 million, our 2025 free cash flow conversion would have been an impressive 76% and a yield of nearly 15% on our year-ending market capitalization. We ended the year with net debt of $107 million and a net leverage ratio of 1.2 times. Liquidity of $108 million remained strong, with $73 million available under our revolving credit facility. Subsequent to quarter end, we extended our credit facility maturity to February 2031 with improved pricing and increased letters of credit capacity. The credit facility tenor plus commitments totaling $250 million provide significant flexibility for FET to fund strategic initiatives, including long-term debt retirement, organic growth, and acquisitions. We appreciate the long and continued support of our bank group. With this flexible financing structure, and our fortified balance sheet, we are well positioned for the future. Looking ahead to the first quarter, we expect activity to remain relatively stable with the fourth quarter. Therefore, our guidance for revenue is 190 to 210 million, and EBITDA is 21 to 25 million. The midpoint of our EBITDA guidance is up about 15% on a year-over-year basis, despite a projected 5% decline in global rig count. We are also guiding adjusted net income of between $5 and $9 million. We expect to generate positive free cash flow this quarter. I would like to remind investors that our first quarter is seasonally lower due to annual incentive compensation and property tax payments. Now, let me turn to 2026 free cash flow. and capital allocation expectations. Our 2026 Free Cash Flow Guidance is consistent with our FET 2030 target and reflective of our capital light-up operating model. We forecast interest and cash taxes of $35 million, capital expenditures of $10 million, and a further net working capital reduction of $10 million. for full year free cash flow of $55 to $75 million. On a comparable basis to 2025, excluding networking capital and sale-leaseback proceeds, the midpoint of our 2026 cash flow guidance is about 75% higher. Let me provide a bit more color on uses of our free cash flow. The capital returns framework followed in 2025 was incredibly successful. During the year, we returned $35 million to shareholders by repurchasing nearly 1.4 million shares, 11% of shares outstanding at the beginning of the year. We repurchased these shares at an average price under $25, less than half of the current FET share price. and we reduced our net debt by 42 million or 28% through the year. Because our balance sheet is in such great shape, we believe any further net leverage reduction should be viewed as dry powder for incremental strategic investments. In fact, with our balance sheet flexibility and capacity, we have the ability to increase net leverage modestly to fund the right acquisition. FET has a long history of increasing our addressable market through acquisitions. Our criteria identifies company with differentiated products that compete in targeted markets, and it would be accretive to FET per share metrics. We evaluate these investments in comparison to repurchasing FET shares. This year, our bonds allow repurchases of around 30 million, as long as our net leverage remains below one and a half times. We believe FET with a forward free cash flow yield around 10% remains a compelling investment. In summary, 2026 builds upon the success we demonstrated in 2025. Market share gains supporting EBITDA and meaningful free cash flow enabling exciting opportunities for outsized returns. With that, I will now turn the call back to Neil for closing remarks.

Thank you, Lyle. To conclude, I want to reiterate how proud I am of the team's execution in 2025. They delivered strong operational performance, meaningful free cash flow, and disciplined capital allocation, positioning FET with momentum as we enter 2026. While near-term market conditions remain dynamic, our backlog, market share gains, and structural cost savings give us confidence in the year ahead. More importantly, our long-term vision remains unchanged. With our beat-the-market strategy and FET 2030 as our North Star, the next five years have the potential to be truly special. for FET and its investors. Thank you for joining us today. Gigi, please take the first question.

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our first question comes from the line of Jeff Robertson from Water Tower Research.

Thank you. Good morning. Neil, can you talk about the trajectory that you see in 2026 and 2027 in the subsea business? And then secondly, in terms of products, if you see more unconventional oil or gas development globally, where do you see the biggest benefit for FET?

Yeah, great, great question. So, you know, with subsea, you know, we've had a, you know, great bookings here the last year. So, you know, I think in 2025, we had 190% booked a bill and we're executing on our, you know, multi-year submarine program. You know, this is a strategic growth area for us and, you know, we expect strong demand, you know, energy and defense. So, you know, as we look ahead, 2026 will be a year where we're going to convert a lot of our backlog and look to add on for 2027 and beyond. Thinking about international unconventionals, we mentioned in our call the delivery of our Duraline system to Argentina. This is unconventional work where they're adopting really the latest technology that Quite frankly, even the U.S. guys haven't quite gotten yet. So we're delivering the newest and greatest to Argentina. I think another area will be Saudi Arabia for the unconventional gas projects there. Both areas where we have, you know, continued to export our technology. And as we think, you know, ultimately about the trajectory of 2030, where we're going to get the most gains is by attacking our growth markets. and getting the adoption of the solutions that we've had in the U.S. and have those adopted internationally. I've talked about this example a lot, but I think it just means so much that we think about our artificial lift product line. We have a high share in the U.S., and the value proposition is more oil at lower costs. Well, I think that value proposition resonates internationally as well. And, you know, it's going to be a time to get there, but I think that's probably a fantastic opportunity and one we'll continue to push.

With respect to acquisitions, are there any product lines or just maybe any other areas that have industrial logic to FET currently that make the most sense to target from an acquisition or maybe even an adjacent industry? Hmm.

You know, our, our last acquisition was, was Vera perm, you know, great, great buy, right? We, we, we were able to acquire it, you know, at under, under four times with high margins, incredibly creative. So I think, uh, another, another downhole type type business would, would be interesting. I think for us, the main criteria though, is, is it a great business? Are we adding something to us that, you know, has differentiated solutions? It's a targeted market. you know, be accretive to FET without, you know, stressing the balance sheet, right? So that's where our focus is. If we can find that adjacent where there's good industrial logic or if we can expand an existing product line, if it hits those criteria, we're really interested.

Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Steve Ferrazani from Sudoti.

Morning, everyone. Appreciate all the detail on the call this morning. Neil, I just wanted to ask, you came in at the very high end of the guidance range. What were the pluses and the minuses in the quarter? What came in better than you were expecting?

I think it was just – I'll start and let Lyle add in. I think the teams just really executed solidly. Coming into Q4, we're always concerned about just the holidays and a slowdown.

Yeah.

And we really didn't have that impact this year. So I don't know if it's kind of the plus or minuses of what came in. I think it was really we just didn't have that end of the year slowdown, you know, around Christmas. We call it frack holiday in years past, and we didn't see that.

Yeah, Steve, I agree with Neil on that comment. And, you know, really, Good revenue growth in the subsea product line that we saw, that 25% increase. So executing on backlog. And remember that most of our subsea revenue is percentage of completion accounting. So based on how much we can execute during the quarter, that can move that number around a bit. So a little bit of maybe ahead of the game on subsea projects, which was positive. And we had really good flow through in terms of profitability in artificial lift with artificial up and downhole segment with good favorable mix really benefited us. So I think, as Neil mentioned, we didn't see quite the activity drop off that we might have been afraid of, but also did see some good execution by all of our teams.

That's great. In terms of the Q1 guide, very strong given probably Q1 is probably going to be the worst year over year change in rig count, maybe 2Q is a little bit worse. Where's the 15% growth? We're so far into the quarter, you already know timing of deliveries. How are you outperforming by this much, the change in rig count in Q1 specifically?

I think it's the continuation of our beat the market strategy. We are gaining share and expanding on that. You know, thinking about the overall guide for 26, right, we have backlog coming into the year, so that gives us, you know, benefit. We also have the structural cost savings that we executed in the back half of last year, and so that's helpful as well.

Have you fully realized that at this point? Have we seen the full realization there's more there?

Not quite, not quite Steve, but I think the back, the back half of the year we'll have a hundred percent, but we're about two thirds of the way.

Got it. Um, on the strong for cashflow guidance, clearly part of the benefit you've had the last two years has been your really significant actions on working capital easier to do in a declining or flat market in a growth market. Maintain, you know, constraining working capital is a lot more challenging. I'm just trying to think about the pieces because that's pretty strong free cash flow guidance for next year. I'm assuming CapEx remains around this level. Can you just walk through a little bit of how you get to that really good number?

I appreciate the comments on the number, but also on the working capital challenge as we grow. So maybe key components that we talked about in the script, just as a reminder, walking from EBITDA down $35 million to of cash taxes and interest than 10 million of CapEx. So really in line with what we've done the last few years and a $10 million release or source of cash from working capital. So good job by our teams to continue to do that with revenue growth. I think a lot of that focus is around the area of inventory. If you look at last year, we released about 34 million of cash from working capital great moves in the area of DSOs and receivables, also good on inventory. So I think next year is a continuation of that. And really, as we think about that cash flow, one of the ways that we've done that is by looking at year-over-year comparison, excluding the sale-leasebacks that we had in 25, and also excluding network and capital benefit in both years. If you do that, then on a comparable basis, the 26 number is 75% more cash flow than the 2025 number. So as you mentioned, pretty strong growth there and confident in our team's ability to squeeze some more value out of working capital.

I can get one last quick one in. We looked at the average share count didn't really move much in 4Q. Can you talk about the timing of the buyback? in 4Q and then how we're thinking about timing in 2026. Typically, your cash flow is better in the second half. Reasonable to think that's the more likely period you might execute.

Steve, I think you're on there. We did repurchase about 400,000 shares, just over 400,000 shares in the fourth quarter. And we did that. I think as we think about our buyback strategy and how we have that in place. If you remember last year, we were trying to buy about, use about half of our cash for share purchases. We wanted to see that cash flow come in. So while we're really confident in this 26 number, I think a more back-end weighted, like we did in 2025, might be appropriate. One of the things that's different this year than last is the one and a half times net leverage ratio So at the beginning of 25, we were limited on your buybacks because we had leverage. We've effectively pulled that down to 1.2 at the end of 2025. So a little more of an open window there. But, yeah, I would think that buybacks may be a little more back-end loaded this year.

Got it.

Thanks, everyone.

Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Keith Beckman from Pickering Energy Partners.

Hey, thanks for taking my question. Hey, good morning, Keith. What do you expect kind of your largest growth avenues to be here over the next few years inside of your DNC business and kind of artificial lift and down in your downhole tools as well?

Yeah, you know, I think, you know, over, you know, I was, Several quarters, right? We've talked about subsea. I think that's part of our drilling completion segment. Again, we've had meaningful bookings. It has a little bit more diversity outside of oil and gas, too. We had our large defense booking last year, so I think there's some good runway there. Then you also mentioned the artificial lift. Again, what's exciting for us is these products extend the life of downhole pumps, reducing costs and increasing production. So our strong share In the U.S., where we have a solid value proposition, solid market share, I think that also resonates internationally. So we think we have a bigger opportunity international. So it's taking that value prop, taking our equipment, our products, and then utilizing our global footprint to really get national oil companies to adopt the technology that has proven itself in the U.S. So I think that's a big part of where we want to go. We also just kind of finish that thought too. In our last couple calls, we talked about our, you know, our kind of our, the aggregation of our market. So we have, we've looked at our growth markets and we've identified areas where, again, bigger than, you know, our, our leadership markets, but one where we have lower share. Again, this is maybe, you know, newer adoption or, or regional. we think over that time we can double our share in our growth markets, and that's going to be a big driver of future revenue growth and ultimately free cash flow and EBITDA.

That's awesome. Very helpful. And then my follow-up on that is just, you know, you guys have had some pretty significant orders here over the last year. Are you still seeing margin improvement on those new orders that are coming in? And then kind of in relation to orders as well, what's kind of the average lead time for different orders that you receive? Like what's the time from when you get an order to kind of whenever it shows up in the business and revenue?

Yeah, it really, really split it out. So I think in our, you know, about 75% of our revenue is activity-based consumables. So that when we receive that order, we're going to turn that We're going to turn that very quickly. So that could be a day to, let's call it three to four months. That's a quick turn. On the capital side, which is the other quarter of our revenue, that'll vary. In general, I would say it's a six-month from book to deliver on that. I think as we get more volume generally, we're going to get more incremental margins. So our goal is that 30% incremental EBITDA margins One, let's just say clarification there, on the subsea side, as we've been growing that, their mix isn't quite as strong on the margin side because of some of the pass-through items. However, by, I think, the amount of bookings that we have received in subsea, we are going to get some good economies of scale in our facilities and hopefully overcome that a little bit. So, again, manufacturing, you know, We have good operating leverage, so the more volume we get through our plants overall, the better. And again, our goal is to have a 30% incremental EBITDA margin on the revenue we add.

I will turn it back. That's very helpful. Thanks for taking my questions. Thanks, Keith.

Thank you. One moment for our next question. Our next question comes from the line of John Daniel from Daniel Energy Partners.

hey guys thanks for including me uh first just a congratulations on the tremendous improvement in the in the stock price uh impressive um was hoping you could elaborate a little bit on just the the opportunities that you guys are seeing for m a opportunities and maybe valuation expectations on the part of sellers today hey john uh lyle thanks for thanks for calling in and uh thanks for that question um

Really over the past few quarters, we've seen an increase in the number of companies being marketed for sale. So the opportunity set is getting larger. And several of those are really interesting and fit the acquisition criteria that we talked about and Neil elaborated on earlier. So we're looking at those and evaluating those. I think as we look for those great investments, we want to make sure that they fit with our strategy. And with our forward free cash flow yield that we talked about, that's a compelling alternative to M&A. Maybe think about expectations. As you mentioned, we have seen some lift in seller expectations. Primarily, they've seen public company stock multiples increase, so that's increased some expectation there as well. Wouldn't be surprised to see some deals get done at a little bit of a higher margin for us. I think discipline around our balance sheet is really key. So we'll keep looking at what is a pretty good opportunity set and be cautious and targeted in what we move on.

Okay. And preference offshore versus land, international, North America? That's all for me. Thank you. Okay.

Yeah, no, I think, again, earlier, just find the best business possible, John.

Okay.

And whether that's land, offshore, or, you know, it really fits our mix.

Okay. Well, thanks for including me, guys.

Thanks, John. Thanks, John.

Thank you. One moment for our next question. Our next question comes from the line of Eric Carlson.

Hey, guys, morning. Good morning. I guess maybe start, didn't spend a lot of time on U.S., but when you think about, I mean, you've basically proven to the market that you've diversified and kind of right-sized the business to be a very good performer kind of despite what we've seen in the rig count over the past few years. I think U.S. rig count down 30%, frack spreads down about 50% from kind of peaks late 2022, early 2023. Can you just maybe describe the... The torque in kind of available in just if the U.S. rebounds even marginally, I mean, what is the significance of that kind of the business?

Yeah. Yeah, I think in the U.S., our revenue per rig is significantly higher than international. So if there's a rebound in U.S. rig counts, it'll be a tremendous torque for us, you know, obviously high service intensity. And I think as you were, you know, laying out kind of the historical trend there, Eric, I think it's interesting to know that, you know, recount down, fractal leads down, but I think total footage drilled, you know, it's called the length of the wells is maybe up, you know, stages completed is up. So I think that's the service intensity. And as we think about that, we view that increased service intensity as more demand for our activity-based consumables. So I think that's a bonus there. I think maybe the other part that adds on to that for U.S. land is the equipment is getting older, right? You know, Lyle and I were talking the other day about when's the last time we've delivered a catwalk for U.S. land, and he's been here longer than me, and he had to scratch his head to try to remember. So it's been probably over 10 years. So what we are starting to see from our customers, though, is interest in upgrading their capital, whether it's drilling rigs or frac fleets. And I think for those who aren't as familiar with our story, we don't build entire drilling rigs or build entire frac fleets. We provide kind of the key components for them. So as the customer base in the US continues to increase the intensity of the assets they have, they're going to need to upgrade and add our equipment. A great example is our FR-120, the Iron Roughneck, which for those that follow the show Landman, they were able to see it on Season 2, Episode 6. The Roughnecks of Antex Oil called our product the Future, so that was good to see.

Yeah, I appreciate that. Yeah, I did catch that episode. Very interesting. And then maybe just when you think about kind of the core OFS equipment business versus kind of some of these newer opportunities, whether it's kind of subsea, not directly related to oil and gas, or maybe kind of one of the recent conversations I had was with kind of a large data center real estate investor, and they said, I mean, people are moving and just trying to find mobile power generation to kind of bridge the gap kind of as they wait for kind of firm base load to be delivered by the utility. And I know you guys offer like some, whether it's kind of the radiators or whatever it might be. Can you talk about some of maybe just the markets that are non...

non oil and gas related and kind of um are those early stages is there a really big opportunity there is it i mean marginally better just provide some feedback there would be interesting yeah you mentioned subsidy i'll just i'll start there but i think the data center one is obviously very interesting too but you know on subsea defense you know we think that is a long-term growth growth opportunity right we We provide key equipment. We're already in that business. I think as world economies rearm, as other countries around the world rearm and look to avoid satellite detection, working underwater is incredible. So it's a key part of their defense capabilities. So I think that's a long-term growth area, and I think it's a great opportunity. The data center side, you mentioned mobile power. So we do provide key heat exchangers, radiators, for that market. Again, you've taken the lead or the great product we had for heat exchangers and mobile frac, and those customers are now adopting that for mobile power generation. We also see the fixed radiator possibility as a huge market, and it's one that we're looking at developing products for. I think it's early on. We want to see if it fits our our engineering and supply chain manufacturing wheelhouse, but that would be a key area for us as well. And then, you know, maybe last area, you know, a good example is coal line pipe. You know, we've talked about that in prior calls, but we are providing that product into, you know, non-oil and gas applications, you know, what's called renewable natural gas, you know, opportunities like that. So that's That's been a good add to, let's call it, our non-traditional base. But overall, if you think about the data center opportunity, I kind of view it as more of a second derivative growth for us, that I think the increase in gas demand overall, whether it's LNG, data centers, that's going to drive U.S. drilling completion activity. And I think that's where we're going to really see the benefit as well.

Agreed. And then maybe shift to the kind of the capital returns framework, which you kind of laid out. I mean, when you guys look at acquisitions, I mean, are things still trading around that three to five times EBITDA multiple? Like if someone is holding something privately or you can carve something out of someone else who is public that wants to shed a legacy business or private equity firm that's been holding a business for the last dozen years that needs an exit. I mean, do you have any sense of like where, like what are multiples looking like that on either EBITDA or cashflow or both? I'm just curious if you're kind of looking at your pipeline.

No, Eric, good, great question. And like, like I mentioned earlier, we've seen deals getting done with a little bit more of an elevated enterprise value to EBITDA multiple. And we're seeing that. I think relative to public company comps, those are still lower. But we've seen some move up from where they are. I think it's very situational as to what that deal is. And you mentioned some of the kinds of sellers that are out there, whether it's family-owned businesses, whether it's some carve-outs, or it's private equity owners that have been long in the tooth making the sales. Definitely a good opportunity set out there as far as technology. It would fit well within our portfolio that we think we could leverage and would be incremental to our story. And that's what we're looking for. But we're also going to be careful and make sure we don't get out over our skis on any deal.

Right. And then maybe in that lens is, I mean, I've looked at and I've heard you present kind of the FET 2030 story and, I mean, the potential there. I mean, obviously, buying stock back today is not the same as buying it at $25. And we can argue if you should ever have that opportunity or not. But when you think about, I can buy my stock today, invest in my own organic growth, and just let the story play out through 2030. If I'm buying today, that looks like a pretty damn good investment longer term. I mean, like, is there a hurdle rate where you say like, I mean, buying our own stock, we know, we know our own business. We, that costs us nothing to integrate. We don't have the risk of getting over levered versus going out and trying to buy somebody. Like, how do you guys think about kind of the, the, the risk reward there? Like how much better does acquiring somebody have to be versus just saying, we'll just buy our own stock and we can return cash in a multitude of ways in the future as we kind of

build this this base towards kind of the 2030 growth plan yeah again we we we've started that that fet 2030 growth plan really from the from the bottoms up right looking at all of our businesses what could we do organically i think about uh an acquisition and adding on to that as a way to to really to to supercharge that as well though can we can we add somebody that We have, you know, revenue synergies. Can we have some cost synergies? And, you know, by having this, this type of product, could we then, you know, grow faster, our existing, you know, organic, you know, organic story. So I think there's definitely opportunities out there like that. And I mean, you gotta look at them on a, on a individual basis. You know, there's, we have our criteria that I think we've talked about a lot, you know, gotta be differentiated, you know, it's gotta be a targeted market. And we want to have it a creative to, to our, our financial, our financial metrics. So you're right though. We've the story, you know, buying our own stock has played out really well. Uh, it's been a good use of capital and, you know, our, our investors have taken notice. Um, but I think it's, it's one, one part of our, our capital allocation strategy. I think MNA is another, and I think overall, as long as the, the acquisition hits the criteria and adds to our FET 2030 story, we will take a serious look at it.

Great. That's helpful. I have two more questions and then I'll shut up. So when you think about, I mean, severe firm heavy oil sands in Canada primarily, there's obviously international implications to that. I mean, this is very early stages, but like is Verifirm a product that can be used in Venezuela eventually or something like that if a market like that would open up?

Yeah, that's a great question. They have, Verifirm has sold their products into Latin America for heavy oil applications in the past. So I think there is an application. I think as we As Venezuela develops, we'll learn more about whether they will go more towards a product development like we would have. I think maybe on a bigger picture, Venezuela, there's been a lot of public company commentary. Some of our biggest customers have been saying how enthusiastic they are. When they deploy equipment down there, they're going to need our consumables to run. Again, that's coil tubing. you know, wireline casing hardware, artificial lift products. I want to say even just this week, you know, we received legal approval to book a coil tubing order, you know, for Venezuela. So I think that opportunity is starting to move, and a great way for us to participate in it is with our customer base who's going to deploy their equipment down there.

Interesting. And then last question would be two parts. So just I mean, think about the tariff ruling today. What do you think is kind of net impact to that? And then also kind of on the financial side, I mean, projecting positive net income in a pretty meaningful way this year and obviously large deferred tax assets. I am no expert in that, but when you think about those on a go-forward basis, I mean, what's the incremental benefit of some of those if you can either write them up or maybe explain to me that a little bit as well.

I'll start with the tariffs and let Lyle take the tax part. So the ruling today, so we really kind of have, let's call it three categories of tariffs. We have the Section 232, Section 301, and what's referred to as the IEPA tariffs. the Supreme Court decision this morning just struck down the IEPA tariffs so that the 232 and 301s are going to remain in place. So for us, those are the more impactful ones. We've had those in place, though, since I think 2017, and they've impacted more of our steel supply. So we still have a good amount of tariffs still in place. Again, we've done what we can to mitigate those.

Yeah. Let me talk about taxes a little bit, Eric. It's definitely something that we're focused on as we've grown our profitability, especially outside the U.S. That's where we pay taxes. And so our tax bill is getting bigger as we do that and have that success. A lot of our tax assets, deferred tax assets, sit in the U.S. And so we have a lot of tax shield here. Kind of put all that together, it makes a really wonky tax rate. And you think about our tax. We're paying tax outside the US and we're not here in the US. So as we look to the future and look at increasing our taxable income in different countries, then it's about how could we optimize where that comes from, whether that's in the US, which would be more of an advantage for us, or in other countries as we grow. So something that's on our radar screen and definitely focused on as we look ahead and make sure we're doing appropriate execution but also now that we are paying taxes in countries, making sure that we're maintaining good compliance and keeping up with all the rules as they change around the world. That's helpful. All right. Great.

Thanks.

Thank you. At this time, I would now like to turn the conference back over to Neil Lux for closing remarks.

All right. Well, thank you for your support and participation on today's call. We look forward to our next meeting in May to discuss FET's first quarter 2026 results.

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