Forum Energy Technologies (NYSE:FET) executives outlined the company’s business mix, recent financial performance, and long-term growth ambitions during a company presentation and question-and-answer session led by President and CEO Neal Lux and Executive Vice President and CFO Lyle Williams.
Business overview and end markets
Lux said Forum Energy Technologies is a global manufacturer serving the energy industry through two primary segments: Artificial Lift and Downhole and Drilling and Completion. In Artificial Lift and Downhole, the company generally sells to exploration and production operators and provides products intended to extend well life, increase production, and remove byproducts from the production stream. In Drilling and Completion, FET sells to oilfield service companies and supplies a range of products, including drilling handling tools and capital equipment, coiled tubing, wireline, and subsea remotely operated vehicles (ROVs).
Recent performance and 2026 outlook
Lux said the company has grown revenue at about a 10% compound annual growth rate over the last five years and increased adjusted EBITDA roughly fourfold since 2020, alongside significant margin improvement.
For 2026, management cited guidance of about $840 million in revenue and $100 million at the midpoint of adjusted EBITDA guidance, which Lux said would represent an increase of about 16% versus 2025. The forecast assumes relatively flat market activity into 2026, but Lux said the company entered the year with its largest backlog in many years and has implemented structural cost reductions expected to benefit results in 2026.
Investment thesis: outperformance, value, and capital returns
Lux and Williams framed the company’s narrative around four “pillars”: outperformance, value, capital returns, and being “poised for growth.”
- Outperformance: Management compared FET’s results to the Russell 2000, citing revenue growth of 10% CAGR versus 7% for the index over the last four years, and cash flow growth of 46% CAGR versus 9% for the Russell 2000 over the same period. Lux also said the stock delivered a 25% CAGR in share appreciation over five years and 139% over the last year, attributing performance to financial growth, balance sheet improvements, and capital returns.
- Value: The company argued that its free cash flow yield is higher than the Russell 2000 average and said it trades at “2–3x less expensive” multiples than the index on traditional valuation metrics, while carrying about one-third the leverage of an average Russell 2000 stock, according to management.
- Capital returns and balance sheet: Williams said FET’s free cash flow allocation has centered on share repurchases and debt reduction. In 2025, the company reduced shares outstanding by 10%, repurchasing 1.4 million shares below $25 per share, which Williams said is less than half the current share price. He also said the company reduced debt by 69% over the past few years and lowered net leverage from 3.9x to 1.2x by the end of last year, with no maturities until 2029.
Williams added that the company plans to deploy free cash flow toward either additional repurchases or acquisitions, weighing opportunities against FET’s free cash flow yield.
Strategy and growth targets through 2030
Lux said FET’s “beat the market” strategy focuses on targeted markets with limited competition, differentiated offerings, continuous innovation, and leveraging the company’s global footprint. Since implementing the strategy in 2022, he said the company has grown annualized revenue per rig by 20%.
Management described two portfolio groupings:
- Leadership markets (about two-thirds of revenue): an aggregate addressable market of about $1.5 billion with FET holding 36% share. Lux cited examples including quenched and tempered coiled tubing (one of three global manufacturers), greaseless cables for cased-hole wireline applications (also one of three manufacturers), the “world’s largest installed base” of work-class ROVs, and sand and flow control products for thermal oil sands.
- Growth markets (aggregate about $3 billion): where FET’s share is about 8%. Examples included defense (a large order booked last year for a rescue submarine for an East Asia navy), coiled line pipe used to connect wells to pipeline infrastructure, and pump protection products designed to extend the life of downhole pumps. Lux said international markets represent an opportunity to export pump protection technology proven in the United States.
Lux said the company believes it can double share in growth markets from 8% to 16% over the next five years. He outlined two scenarios: a baseline case where share gains alone could increase revenue from the company’s $840 million guidance to $1 billion by 2030 without underlying market growth, and a market-growth case where revenue could reach $1.6 billion by 2030. Lux said the company believes its served markets could grow about 9% per year, supported by global GDP expansion, urbanization, and electricity demand driving oil and gas needs.
In the market-growth scenario, Lux said 25%–35% of incremental revenue could convert to EBITDA due to operating leverage, while 60%–70% of incremental EBITDA could convert to free cash flow under the company’s capital-light model.
Q&A: Middle East exposure and acquisition approach
Asked about the impact of conflict in the Middle East, Lux said near-term priorities include employee safety and that the region accounted for about 11% of revenue last year. He noted that shipments into the region generally pass through the Strait of Hormuz and said a ceasefire would reduce potential disruptions. Longer term, Lux said the conflict has “drained” significant amounts of oil inventory and gas production, which he characterized as a tailwind that could increase the need for more production and, in turn, more FET products.
On near-term confidence for 2026 growth, Lux pointed to the company’s “largest backlog in many years,” continued market share gains, and the full-year benefit of structural cost savings, reiterating management’s assumption of a flat market in its outlook.
Williams addressed acquisition valuation questions by highlighting the company’s acquisition history, including the purchase of Variperm Energy Services in early 2024. Williams called it a “terrific deal,” saying it doubled EBITDA and more than doubled free cash flow, and that the company subsequently generated enough cash to repay all acquisition-related debt while buying back most shares issued in the transaction.
For future deals, Williams said FET is looking for targeted-market businesses with differentiated technology and room to grow, while protecting its balance sheet. On valuation, he said the company will compare potential deals to buying back its own stock, using the company’s full-year free cash flow guidance of $65 million, which he said implies about a 10% free cash flow yield at today’s valuation, and would seek opportunities that are more compelling than that benchmark.