Q3 2024 Forum Energy Technologies Inc Earnings Call

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Operator: This conference call is being recorded for replay purposes and will be available on the company's website.

Speaker Change: This conference call is being recorded for replay purposes and will be available on the Companys website I will now turn the conference over to Rob to Claw director of Investor Relations. Please proceed sir.

Rob Kukla: I will now turn the conference over to Rob Kukla, Director of Investor Relations. Please proceed, sir.

Neal Lux: Thank you, Gigi. Good morning, everyone, and welcome to FET's third quarter 2024 earnings conference call. With me today are Neal Lux, our President and Chief Executive Officer, and Lyle Williams, our Chief Financial Officer.

Speaker Change: Thank you Gigi good morning, everyone and welcome to <unk> third quarter 2024 earnings Conference call with me today are Neil Lux, Our President and Chief Executive Officer, and Lyle Williams, our Chief Financial Officer.

Neal Lux: 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 files. Finally, management statements may include non-GAAP financial measures. For a reconciliation of these measures, you may refer to our earnings release.

Rob Claw: Yesterday, we issued our earnings release it is available on our website.

Rob Claw: 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 <unk> Form 10-K, and other SEC.

Rob Claw: SEC filings.

Rob Claw: Finally management's statements may include non-GAAP financial measures for a reconciliation of these measures you may refer to our earnings release.

Neal Lux: During today's call, all statements related to EBITDA refer to a just And unless otherwise noted, all comparisons are third quarter 2024 to second quarter 2024.

Speaker Change: During today's call all statements related to EBITDA refer to adjusted EBITDA and unless otherwise noted all comparisons are third quarter 2024 to second quarter 2024, I will now turn the call over to Neil.

Rob Kukla: I will now turn the call over to Neal.

Neal Lux: Thank you, Rob, and good morning, everyone. This quarter, our FET team delivered on multiple fronts. First, we dramatically strengthened our financial position on an accelerated time-off. Second, new products continue to reflect FET's reputation for innovation and allow us to execute our beat-the-market strategy. Finally, our financial performance was down the fairway despite softening market activity.

Neil Lux: Thank you, Rob and good morning, everyone.

This quarter our team delivered on multiple fronts.

Neil Lux: First we dramatically strengthened our financial position on an accelerated timeline.

Neil Lux: New products continue to reflect.

Neil Lux: <unk> reputation for innovation and allow us to execute our beat the market strategy.

Neil Lux: Our financial performance was down the fairway, despite softening market activity.

Neal Lux: Let me expand on these key points. Earlier this year, we outlined the plan to organically pay off our 2025 notes and seller term loan by the middle of next year. In parallel, we explored refinancing options to accelerate that plan and meet our goals sooner. Our evaluation of alternatives included key transaction criteria. We wanted a solution that would allow us to return cash to shareholders and invest in strategic acquisitions. In addition, it was important to maintain our $250 million ABL facility for flexible growth financing. Finally, these criteria had to be met at a reasonable cost and with manageable covenants.

Neil Lux: Let me expand on these key points.

Earlier this year, we outlined the plan to organically pay off our 2025 notes and seller turmoil by the middle of next year.

Neil Lux: In parallel we explored refinance refinancing options to accelerate that plan and meet our goals sooner.

Neil Lux: Our evaluation of alternatives, including key transaction criteria.

Neil Lux: We wanted a solution that would allow us to return cash to shareholders and invest in strategic acquisitions.

Neil Lux: In addition, it was important to maintain our $250 million ABL facility for flexible growth financing.

Neil Lux: Finally, these criteria had to be met at a reasonable cost and with manageable covenants.

Neal Lux: after a patient and methodical search. We finalized a $100 million senior secured bond offering, which will allow us to pay off the 2025 notes and seller term loan when we close next In addition, this offering checks a lot of strategic boxes. First, it immediately eliminates the current portion of long-term debt and extends the maturity out to 2028 and 2029 for both the credit facility and our new bonds. Second, it enhances our liquidity position and by year-end should give us an estimated $80 million of dry powder, an amount that we expect to grow with free cash flow.

Neil Lux: After a patient and methodical search.

Neil Lux: We finalized a 100 million senior secured bond offering which will allow us to pay off the 2025 notes and seller term loan when we close next week.

In addition, this offering checks a lot of strategic boxes.

Neil Lux: First it immediately eliminate the current portion of long term debt.

Neil Lux: And extends the maturity out to 2028 and 2029.

Neil Lux: For both the credit facility and our new bonds.

Neil Lux: Second it enhances our liquidity position and by year end should give us an estimated $80 million of dry powder and amount that we expect to grow with free cash flow.

Neal Lux: Third, it provides flexibility for deployment of cash. We are committed to maintaining conservative net leverage, and a meaningful portion of our free cash flow will be used for further debt reduction. In addition, we expect to have ample flexibility for strategic investment. This could be in the form of traditional M&A or investing in ourselves through share buyback. With a cash flow yield of over 30%, it will be hard to find a better investment than FEMI. These strategic investments will be possible because we continue to deliver a lot of free cash back. For example, we generated $48 million in the first nine months of 2023.

Neil Lux: Third it provides flexibility for deployment of cash.

We are committed to maintaining conservative net leverage and a meaningful portion of our free cash flow will be used for further debt reduction.

Neil Lux: In addition, we expect to have ample flexibility for strategic investments.

Neil Lux: This could be in the form of traditional M&A or investing in ourselves through share buybacks.

Neil Lux: With a cash flow yield over 30% it will be hard to find a better investment than S. E T.

Neil Lux: These strategic investments will be possible, because we continue to deliver a lot of free cash flow.

Neil Lux: For example, we generated $48 million in the first nine months of 2020 for.

Neal Lux: putting us nearly within the full year guidance. Therefore, for the second time this year We are raising our cash flow forecast to between $60 and $70 million.

Putting us nearly within the full year guidance range. Therefore.

Neil Lux: Therefore for the second time this year.

Neil Lux: We are raising our cash flow forecast to between 60 and $70 million.

Neal Lux: to put that into perspective. That's a range of $4.90 to $5.70 per share. compared to yesterday's closing price of just under $14.

Neil Lux: To put that into perspective.

Neil Lux: It's a range of $4 92.

Neil Lux: To $5 70 per share compared to yesterdays closing price of just under $14.

Neal Lux: And most importantly, as Lyle will detail shortly, we believe this performance is repeatable over the long term. The FET team continues to execute our beat the market strategy. As a quick reminder, this consists of growing profitable market share. Developing Differentiated Products and Technologies. utilizing our optimized global footprint and participating expanding our participation in energy all to achieve our objective of creating shareholder value by growing faster than the One way to measure the performance of our Beat the Market strategy. is to compare FET revenue with global rate cap. for the first nine months of this year.

Neil Lux: Importantly, as Lyle will detail. Shortly we believe this performance is repeatable over the long term.

Neil Lux: The <unk> team continues to execute our beat the market strategy.

Neil Lux: As a quick reminder, this consist of growing profitable market share developing differentiated products and technologies.

Neil Lux: Utilizing our optimized global footprint.

Neil Lux: And participating expanding our participation in energy transition all to achieve our objective of creating shareholder value by growing faster than the market.

Neil Lux: One way to measure the performance of our beat the market strategy.

Neil Lux: As a compare F&B revenue with global rig count.

For the first nine months of this year.

Neal Lux: Our revenue per rig has increased 16% on a year-over-year basis as we integrated Veriperm into S&P.

Neil Lux: Our revenue per rig has increased 16% on a year over year basis, as we integrated <unk> and S E T.

Neal Lux: Let me provide a few highlights, starting with some exciting new products and technology we are delivering today. Permanent magnet motor ESPs are the most efficient pumps in the artificial lift industry today. However, their usage has been limited due to safety. to help mitigate their risk. We recently added MagnaGard to our extensive artificial lift portfolio. This tool provides reliable protection from possible extrication. saves our customers money by eliminating third-party services. and removes a critical barrier for greater adoption of permanent magnet motors. Also, our tool can be used on all ESP brands, which expands our addressable market.

Let me provide a few highlights starting with some exciting new products and technology, we are delivering to the market.

Permanent magnet motor ESP.

Neil Lux: Are the most efficient pumps in the artificial lift industry today.

Neil Lux: However, their usage has been limited due to safety concerns.

Neil Lux: To help mitigate their risk we recently added magnet guard to our extensive artificial lift portfolio.

Neil Lux: This tool provides reliable protection from possible execution.

Neil Lux: Saves our customers money by eliminating third party services.

Neil Lux: And removes a critical barrier for greater adoption of permanent magnet motors.

Neil Lux: Also our tool can be used on all ESP brands, which expands our addressable market.

Neal Lux: This is a great advancement for our industry and MagnaGard could meaningfully enhance FET's profitability.

This is a great advancement for our industry and magnitude art can meaningfully enhance <unk> profitability.

Neal Lux: Another area of innovation is within the offshore robotics. The industry is driving towards fewer personnel and vessels to improve safety and reduce costs. To meet this demand, FET has designed Unity. and Operating System for Remotely Controlling ROVs. This system can be installed on new ROVs and as an upgrade for existing fleets. This leading-edge technology utilizes cloud-based monitoring and supports AI tools for predictive maintenance. Initially, this technology would reduce personnel on vessels. But the end goal is to have ROVs operated fully remote from a central control station. for example. and operator in Norway. could control an ROV in We will deliver our first system before year end and four additional systems in the first quarter of next year.

Neil Lux: Yeah.

Neil Lux: Another area of innovation is within the offshore it robotics market.

Neil Lux: The industry is driving towards fewer personnel and vessels to improve safety and reduce cost.

Neil Lux: To meet this demand.

Neil Lux: <unk> has designed unity and operating system for remotely controlling rovs.

Neil Lux: This system can be installed on new rovs and as an upgrade for existing fleets.

Neil Lux: This leading edge technology utilizes cloud based monitoring and supports AI tools for predictive maintenance.

Neil Lux: Initially this technology would reduce personnel on vessels.

Neil Lux: But the end goal is have rovs operated fully remote from a central control station.

Neil Lux: For example.

Neil Lux: And operator in Norway.

Neil Lux: It could control and <unk> in Brazil.

Neil Lux: We will deliver our first system before year end and four additional systems in the first quarter of next year. We are excited about this technology and for what it can do for our customers.

Neal Lux: We are excited about this technology and for what it can do for our customers.

Neal Lux: last quarter. I mentioned a growing global opportunity. outside the traditional oil and gas. Our industry-leading Jumbotron XL heat transfer units have found applications in the power generation We expect the power gen market to grow rapidly over the coming years with energy transformation. Recently, we received sizable orders for power generation applications that can be utilized in AI data.

Last quarter I <unk>.

Neil Lux: Mentioned, a growing global opportunity.

Outside the traditional oil and gas market.

Neil Lux: Our industry, leading jumbotron XL E transfer units have found applications in the power generation sector.

Neil Lux: We expect the power Gen market to grow rapidly over the coming years with energy transition.

Neil Lux: Recently, we received sizable orders for power generation applications that can be utilized in AI data centers.

Neal Lux: This is an exciting and fast-growing opportunity that expands FET's revenue potential.

Neil Lux: This is an exciting and fast growing opportunity that expands <unk> revenue potential.

Neal Lux: in addition to new product development.

Neil Lux: In addition to product and new product development.

Neal Lux: Leveraging our global footprint is another pillar to our beat the market strategy. We can ship our products around the world to countries where our customers are invested. A good example is the shift to more unconventional activity in international markets. particularly in the Middle East and Argentina. through our facility in Saudi Arabia. We distribute a wide range of products, including casing hardware, artificial lift, high pressure pumps, and coil tubing. all of which are critical to exploiting unconventional reservoirs. In addition, last week we showcased our leading unconventional products at a large oil show in Argentina. economic stability, slowing inflation, and loosening currency controls are spurring investment and growth in the energy industry there.

Neil Lux: Leveraging our global footprint is another pillar to our beat the market strategy.

We can ship our products around the world to countries, where our customers are investing.

Neil Lux: A good example is the shift to more unconventional activity in international markets, particularly in the middle East and Argentina.

Neil Lux: Through our facility in Saudi Arabia.

Neil Lux: We distribute a wide range of products, including casing hardware artificial lift high pressure pumps and coiled tubing.

Neil Lux: All of which are critical to exploiting unconventional reservoirs.

Neil Lux: In addition last week, we showcased our leading unconventional products at a large oil show in Argentina.

Neil Lux: Economic stability slowing inflation and loosening currency controls are spurring investment and growth in the energy industry there.

Neal Lux: during our interaction with customers. Some expected activity to increase 10 to 15% next year. similar to shale plays in the U.S. Service intensity is increasing, and this will require equipment upgrades.

Neil Lux: During our interaction with customers so expected activity to increase 10% to 15% next year.

Neil Lux: Similar to shale plays in the U S service intensity is increasing and this will require equipment upgrades.

Neal Lux: Now, let me provide a few comments on our market outlook. For the fourth quarter, we believe the markets are going to be more cautious through the end of the year. Commodity prices remain volatile, driven by Middle East unrest, lower demand in China, and uncertainty around OPEC plus supply. in the U.S. efficiencies in drilling and completions have brought activity forward. This will allow our customers to meet their production and spending plans prior to year end. Therefore, we expect U.S. demand to slow due to budget exhaustion and holiday disruption. However, international and offshore activities as well as our Beat the Market strategy should help mitigate U.S.

Speaker Change: Now, let me provide a few comments on our market outlook.

Neil Lux: For the fourth quarter, we believe the markets are going to be more cautious through the end of the year.

Neil Lux: Commodity prices remain volatile driven by middle East unrest lower demand in China and uncertainty around OPEC plus supply.

Neil Lux: In the U S efficiencies in drilling and completions have brought activity forward.

This will allow our customers to meet their production and spending plans prior to year end.

Neil Lux: Therefore, we expect U S demand to slow due to budget exhaustion and holiday disruptions.

Neil Lux: International and offshore activity.

As well as our beat the market strategy should help mitigate U S softness.

Neal Lux: for the fourth quarter. We expect revenue and adjusted EBITDA to be in the ranges of $190 to $210 million, and $22 and $26 million respectively. Our fourth quarter EBITDA forecast. puts us within our previous full year guidance range of 100 to 110 million.

Neil Lux: For the fourth quarter, we expect revenue and adjusted EBITDA to be in the range of $190 million to $210 million, and 26, 22% and $26 million respectively.

Neil Lux: Our fourth quarter EBITDA forecast puts us within our previous full year guidance range of $100 million to $110 million.

Neal Lux: turning to 2025. It is still too early to provide a specific financial outlook for FED. However, as we start the planning process, here are a few baseline. Customer Indications and Industry Commentary. suggest U.S. drilling and completions activity could be down as much as 5% from 2024. Also, based on the spending cadence observed in the last two years, Activity may be slightly weighted towards the first half of the year. not contemplated in our planning process is a rebound in natural gas drilling and completions activity. If LNG, or data center electricity demand, triggers a meaningful commodity price increase, there may be some upside to activity.

Neil Lux: Turning to 2025, it is still too early to provide specific financial outlook for <unk>.

However, as we start the planning process here are a few baseline point.

Neil Lux: Customer indications and industry commentary suggests the U S drilling and completions activity could be down as much as 5% from 2024.

Also based on the spending cadence observed in the last two years.

Neil Lux: Activity may be slightly weighted towards the first half of the year.

Neil Lux: Not contemplated in our planning process is a rebound in natural gas drilling and completions activity.

Neil Lux: If LNG for datacenter electricity demand triggers a meaningful commodity price increase there may be some upside to activity.

Neal Lux: for Canada and the rest of the world. We currently believe demand will remain relatively flat to slightly up compared to 2025. regardless of market conditions next Our focus will remain on free cash flow and returning capital to shareholders.

Neil Lux: For Canada, and the rest of the world.

Neil Lux: We currently believe demand will remain relatively flat to slightly up compared to 2024.

Neil Lux: Regardless of market conditions next year.

Neil Lux: Our focus will remain on free cash flow and returning capital to shareholders.

Lyle Williams: I'm going to turn the call over to Lyle for more details on FET's third quarter financial results and highlights.

Speaker Change: I'm going to turn the call over to Lyle for more details on <unk> third quarter financial results and highlights. Thank.

Lyle Williams: Thank you, Neal. Good morning, everyone. Let me start with additional details on our debt refinancing. After having explored opportunities in the U.S., including high-yield markets and private debt placement, we ultimately secured financing in the Nordic high-yield bond market. The Nordic market has been quite receptive to the oilfield services industry, both onshore and offshore. Also, the size of our offering fits well with typical Nordic issues.

Lyle Williams: Thank you Neil good morning, everyone.

Lyle Williams: Let me start with additional details on our debt refinancing.

Lyle Williams: After having explored opportunities in the U S, including high yield markets and private debt placement, we ultimately secured financing in the Nordic high yield bond market.

Lyle Williams: The Nordic market has been quite receptive to the oilfield services industry, both onshore onshore and offshore.

Also the size of our offering fits well with typical Nordic issuances.

Lyle Williams: and as a side benefit of this process. we were able to share the FET story with a broad audience of international investors. We issued $100 million of notes at par with a 10.5% coupon. The yield compares favorably with our existing long-term debt and market comps. With our new capital structure, FET's blended interest rate will reduce by 130 basis points for the first quarter next year. Also, the yield is favorable to recently announced private debt and Nordic market issues. This pricing reflects investor confidence in the strength of FET's low leverage, free cash flow generation, and asset light business model.

Lyle Williams: And as a side benefit of this process, we were able to share the <unk> story with a broad audience of international investors.

Lyle Williams: We issued $100 million of notes at par with a 10, 5% coupon.

Lyle Williams: The yield compares favorably with our existing long term debt and market comps.

Lyle Williams: With our new capital structure Apt's blended interest rate will reduce by 130 basis points for the first quarter next year.

Lyle Williams: Also the yield is favorable to recently announced private debt and Nordic market issuances.

Lyle Williams: This pricing reflects investor confidence in the strength of Apt's low leverage free cash flow generation and asset light business model.

Lyle Williams: In addition to pricing, we were pleased with the Nordic Bond term. The notes have a five-year tenor and a two-and-a-half-year no-call period. During the life of the bonds, we will be subject to financial covenants of a maximum net leverage ratio of four times and minimum liquidity of $25 million. Given our commitment to maintain a low leverage ratio, we do not believe these covenants to be overly restrictive. Importantly, as Neal highlighted, the bonds provide flexibility to execute our strategy. First, the bonds not only permit the company to use cash for acquisitions, but also include provisions for a follow-on offer.

Lyle Williams: Yes.

Lyle Williams: In addition to pricing we were pleased with the Nordic bond terms.

Lyle Williams: The notes have a five year tenor and a two and a half year no call period.

Lyle Williams: During the life of the bonds, we will be subject to financial covenants of our maximum net leverage ratio of four times and minimum liquidity of $25 million.

Lyle Williams: Given our commitment to maintain a low leverage ratio, we do not believe these covenants to be overly restrictive.

Speaker Change: Importantly, as Neil highlighted the bonds provide flexibility to execute our strategy.

Speaker Change: First the bonds not only permit the company to use cash for acquisitions, but also include provisions for our follow on offering.

Lyle Williams: This feature provides up to $150 million of incremental capital to execute strategic acquisitions provided our net leverage remains below two and a half times. Second, the bonds permit distribution of cash to shareholders. Specifically, the bonds allow shareholder distributions of up to 50 percent of prior year adjusted free cash flow when our net leverage ratio is below one and a half times pro forma for the distribution. We will calculate the amount available for 2025 after filing our 10K next quarter. However, assuming our free cash flow guidance of $60 million to $70 million for 2024, we would have $30 million to $35 million that could be distributed once our leverage is below the incurrence threshold.

Speaker Change: This feature provides up to $150 million of incremental capital to execute strategic acquisitions provided our net leverage remains below two five times.

Speaker Change: Second the bonds permit distribution of cash to shareholders.

Speaker Change: Specifically the bonds allow shareholder distributions of up to 50% of prior year adjusted free cash flow when our net leverage ratio is below one five times pro forma for the distribution.

Speaker Change: We will calculate the amount available for 2025 after filing our 10-K next quarter.

Speaker Change: However, assuming our free cash flow guidance of $60 million to $70 million for 2024, we would have $30 million to $35 million that could be distributed once our leverage is below the encourage threshold.

Lyle Williams: That is over 15% of FET's current market capitalization. Our 2024 free cash flow results are compelling and repeatable looking forward.

Speaker Change: That is over 15% of <unk> current market capitalization.

Speaker Change: Our 2020 for free cash flow result results are compelling and repeatable looking forward.

Lyle Williams: Let me explain. Next year, we expect interest payments of about $20 million or less. cash income taxes, around $15 million, and capital expenditures of around $10 million or $45 million in total for these items. Assuming flat EBITDA year-over-year and before changes in net working capital, that would yield free cash flow between $50 and $60 million. This provides ample dry powder to reduce our net leverage over time. while executing our growth strategy and returning cash to shareholders.

Speaker Change: Let me explain.

Speaker Change: Next year, we expect interest payments of about $20 million or less.

Speaker Change: Cash income taxes around $15 million and capital expenditures of around $10 million or $45 million in total for these items.

Speaker Change: Assuming flat EBITDA year over year and before changes in net working capital that would yield free cash flow between 50 and $60 million.

Speaker Change: This provides ample dry powder to reduce our net leverage over time.

Speaker Change: While executing our growth strategy and returning cash to shareholders.

Lyle Williams: We anticipate communicating a shareholder return framework on our February call. in addition to improving our balance. FET printed a clean tape operational. Revenue and EBITDA results landed within our guidance range and were consistent with our first half results. Despite a softer U.S. market. Our third quarter consolidated revenue was $208 million. up 16% year over year, and EBITDA was up 55% over the same period. EBITDA margins here today are 13%, the strongest in nearly a decade. FET orders were $206 million, up 14%, for a book-to-bill ratio of 99%.

We anticipate communicating a shareholder return framework on our February call.

Speaker Change: In addition to improving our balance sheet.

Speaker Change: Printed a clean take operationally red.

Speaker Change: Revenue and EBITDA results landed within our guidance range and were consistent with our first half results. Despite a softer U S market.

Our third quarter consolidated revenue was $208 million.

Speaker Change: <unk> up 16% year over year, and EBITDA was up 55% over the same period.

Speaker Change: EBITDA margins year to date or 13% the strongest in nearly a decade.

Speaker Change: <unk> orders were $206 million up 14% for a book to bill ratio of 99%.

Lyle Williams: Both segments achieved higher orders, as did six of our seven product allow me to highlight three product lines in particular. We secured drilling-related capital equipment awards in support of new land drilling rigs for the Middle East region. These awards included Iron Roughnecks and Catwalks and contributed to a 38% increase in drilling orders. Subsea orders were up 19%. As utilization of ROVs increases, demand for FET's subsea product offering continues to strengthen. Our customers that support the construction of oil and gas wells and offshore wind turbines indicate high utilization of their equipment with no sign of decline.

Speaker Change: Both segments achieved higher orders as did six of our seven product lines.

Speaker Change: Allow me to highlight three product lines in particular.

Speaker Change: We secured drilling related capital equipment awards in support of new land drilling rigs for the Middle East region.

Speaker Change: These awards included Iron Roughnecks, and Catwalks and contributed to a 38% increase in drilling orders.

Speaker Change: Subsea orders were up 19% as utilization of Rovs increases demand for Opt's subsea product offering continues to strengthen.

Speaker Change: Our customers that support the construction of oil and gas wells and offshore wind turbines indicate high utilization of their equipment with no sign of decline.

Lyle Williams: As a result, our pipeline of new subsea booking opportunities is as robust as we have seen in a number of years. Our production equipment product line doubled orders from the second quarter. Included in the order book was a large U.S. desalting project, which will utilize FET's forum mix technology. Despite a softer U.S. land market, the outlook for production equipment remains solid as the business maintains nearly a year of backlog. Turning to segment results, the drilling and completion segment revenue increased 6%, primarily due to higher project revenue recognized from ROVs and launch and recovery systems. In addition, our Quality Wireline product family grew revenue by 20%.

Speaker Change: As a result, our pipeline of new subsea booking opportunities is as robust as we have seen in a number of years.

Speaker Change: Our production equipment product line doubled orders from the second quarter.

Speaker Change: Included in the order book was a large USD salting project, which will utilize <unk> technology.

Despite the softer U S land market the outlook for production equipment remains solid as the business maintains nearly a year of backlog.

Speaker Change: Yes.

Speaker Change: Turning to segment results the drilling and completions segment revenue increased 6%, primarily due to higher project revenue recognized from Rovs and launch and recovery systems.

In addition, our quality wireline product family grew revenue by 20% setting another quarterly record.

Lyle Williams: setting another quarterly record. partially offsetting this segment's revenue. or Lower Power End and Hose Sale. EBITDA was $15 million, up 26% on higher revenue and favorable product mix. segment improved EBITDA margins by 190 basis points to almost 12%. The artificial lift and downhole segment revenue was $84 million. down 5% and EBITDA was $17 million down 12%. Lower casing hardware volume coming off a strong second quarter in the Middle East and lower valve product sales contributed to the decline. However, segment EBITDA margins were nearly 21%.

Speaker Change: Partially offsetting this segment's revenue.

Speaker Change: We're lower power and in wholesales.

Speaker Change: EBITDA was $15 million up 26% on higher revenue and favorable product mix.

The segment improved EBITDA margins by 190 basis points to almost 12%.

The artificial lift and downhole segment revenue was $84 million.

Speaker Change: Down, 5% and EBITDA was $17 million down 12%.

Speaker Change: Lower casing hardware volume coming off a strong second quarter in the middle East and lower valve product sales contributed to the decline however.

Speaker Change: Segment EBITDA margins were nearly 21%.

Lyle Williams: With over nine months since the closing of the Vera Firm acquisition, let me provide you with an update on the business. Project timing has a more pronounced impact on Verifirm's results than the traditional rig count measures. With the Canadian markets heating up, lead times for tubulars are delaying pipe deliveries from our customers. ultimately deferring VeroPerm revenue. Despite a soft start to the year, Verifirm's orders have trended up each quarter this year, and the outlook remains strong. In the second quarter, VeroPrim's revenue was up 2% with meaningful EBITDA and margin contribution. They are maintaining a strong market position while delivering free cash flow above our budgeted level.

With over nine months since the closing of the <unk> acquisition, Let me provide you with an update on the business.

Speaker Change: Project timing has a more pronounced impact on <unk> results than the traditional rig count measure.

Speaker Change: With the Canadian market is heating up lead times for tubular are delaying pipe deliveries from our customers ultimately deferring Vera Perm revenue.

Despite a soft start to the year of <unk> orders have trended up each quarter this year and the outlook remains strong.

Speaker Change: In the second quarter of <unk> revenue was up 2% with meaningful EBITDA and margin contribution.

Speaker Change: They are maintaining a strong market position, while delivering free cash flow above our budgeted levels.

Lyle Williams: And speaking of cash, we generated $25 million of free cash flow in the quarter, up $3 million sequentially. We ended with $33 million of cash on hand and $59 million of availability under our revolving credit facility. with total liquidity of $92 million. Our net debt was $199 million, down $26 million from last quarter. Using Annual Live's first nine-month EBITDA, net leverage ratio was 1.9%. This is a good start and we remain committed to further reducing net leverage.

Speaker Change: And speaking of cash we generated $25 million of free cash flow in the quarter up $3 million sequentially.

We ended with $33 million of cash on hand, and $59 million of availability under our revolving credit facility with total liquidity of $92 million.

Speaker Change: Our net debt was $199 million down $26 million from last quarter.

Speaker Change: Using annualized first nine months EBITDA net leverage ratio was one nine times. This is a good start and we remain committed to further reducing net leverage.

Lyle Williams: Finally, let me provide a few details for modeling purposes for the fourth quarter. We anticipate corporate costs to be approximately $7 million, down slightly from the third quarter. The depreciation and amortization expense should be roughly in line with the third quarter. We expect interest expense to be approximately $5 million and income tax expense to be approximately $3 million.

Speaker Change: Finally, let me provide a few details for modeling purposes for the fourth quarter.

Speaker Change: We anticipate corporate costs to be approximately $7 million down slightly from the third quarter.

Speaker Change: Depreciation and amortization expense should be roughly in line with the third quarter.

Speaker Change: We expect interest expense to be approximately $5 million and income tax expense to be approximately $3 million.

Neal Lux: Let me turn the call back to Neal for closing remarks.

Speaker Change: Let me turn the call back to Neil for closing remarks Neil.

Neal Lux: Neal? Thank you, Lyle. We delivered solid financial results this quarter, despite uncertainty around commodity prices and equity. And we continue to fortify our balance sheet, generate free cash flow, and execute our strategy. As we close out the year.

Neil Lux: Thank you Lyle.

Neil Lux: We delivered solid financial results this quarter, despite uncertainty around commodity prices and activity.

Neil Lux: And we continue to fortify our balance sheet generate free cash flow and execute our strategy.

As we close out the year.

Neal Lux: I want to express my gratitude to the entire FET team for their hard work and dedication.

Neil Lux: I want to express my gratitude to the entire <unk>.

For their hard work and dedication.

Operator: Gigi, please take the first question. Thank you.

Speaker Change: Gigi please take the first question.

Operator: 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. Please stand by while we compile the Q&A roster.

Thank you.

Speaker Change: As a reminder to ask a question. Please press star one one on your telephone.

Speaker Change: Wait for your name to be announced towards the draw. Your question. Please press star one one again.

Speaker Change: Please stand by while we compile the Q&A roster.

Dave Storms: Our first question comes from the line of Dave Storms from Stonegate. Good morning. Morning, Dave.

Speaker Change: Our first question comes from the line of Dave storms from Stonegate.

Speaker Change: Good morning.

Speaker Change: Good morning, Dave.

Neal Lux: I was hoping we could start with maybe some of the puts and takes on the guidance range for free cash flow. Is that mostly just driven by enhanced profitability or is there more to that story? I think, Dave, if you're thinking about the kind of look forward on what cash flow might be, really there, all we've done is look at what are our fixed cash obligations on a go-forward basis. So interest, about $20 million or less next year. cash income taxes of 15 and capex, kind of in that 10 million range where we've been before, so about 45 million.

Dave Storms: Just hoping we could start with maybe.

Dave Storms: Some of the puts and takes on the guidance range for free cash flow is that mostly just driven by.

Dave Storms: Enhanced profitability or is there more to that story that we should be aware of.

Speaker Change: I think David if youre thinking about the kind of look forward on what cash flow might be really theyre. All we've done is look at what are our fixed cash obligations on a go forward basis, so interest about $20 million or less next year.

Speaker Change: Cash income taxes of 15, and Capex kind of in that $10 million range, where we've been before so about $45 million and then assuming everything else remains constant so EBITDA constant that werent capital constant that gets us debt $56 $50 million to $60 million range. I think there are obviously levers that we could pull.

Neal Lux: And then assuming everything else remains constant, so EBITDA constant, net worth capital constant, that gets us that 50 to $60 million range. I think there are obviously levers that we could pull that would enhance that. One of those would be growth, our beat the market strategy that Neal talked about, helping us to grow faster than the market, and obviously any ability to continue working down our networking capital would be a plus.

Speaker Change: That would enhance that one of those would be growth or beat the market strategy that Neil talked about helping us to grow faster than the market and obviously any ability to continue working down our networking capital would be a plus to that number.

Okay.

Dave Storms: Thank you.

Speaker Change: Understood. Thank you.

Dave Storms: I know in both the release and on today's call, you mentioned that the be strategically What's the kind of profile that would pique your interest? Would it look a lot like Feroperm or would you go in a different direction?

Speaker Change: And I know and both the release and on today's call you mentioned that the.

Speaker Change: New debt situation still gives you the ability to.

To be strategically acquisitive.

Speaker Change: What's the kind of profile that would feature interest would it look a lot like fair Perm or.

Speaker Change: Would you go in a different direction.

Neal Lux: Yeah, Dave, this is Neal. I think, you know, Veriperm obviously was a home-run acquisition, you know, fantastic margins, differentiated product. you know, a niche market, one that fit well with our portfolio.

Neil Lux: Yes, David This is Neil I think their Perm, obviously was a homerun acquisition fantastic margins differentiated product.

Niche market, one that fit well with our portfolio. So another acquisition like bear from absolutely.

Neal Lux: So another acquisition like Burr from, absolutely. You know, as we look out, you know, we see a lot of. Acquisition Opportunities, kind of in the pipeline that are... that have been sitting there, you know, we're going to be, you know, very methodical and choosy as we look through what acquisitions make sense, but It's been part of our history of FET, of how we've grown, and it'll be a lever we'll continue to push for growth as well.

Neil Lux: As we look out we see a lot of.

Neil Lux: Acquisition opportunities kind of in the pipeline that are.

Neil Lux: It had been sitting there we're going to be in a very.

Neil Lux: Methodical and choosy as we look through.

Neil Lux: Acquisitions makes sense, but.

Neil Lux: It's been part of our history of <unk>.

Neil Lux: And how we have grown and it'll be a lever we will continue to push for for growth as well.

Dave Storms: Thank you and then just one more for me, more of a macro question, that the upcoming US election A lot of the, some of the rhetoric has been around potential terror. How are you thinking about... and the potential impact to the international demand outlook should the U.S.

Speaker Change: Understood. Thank you and then just one more from me more of a macro question.

Upcoming U S election.

Speaker Change: Some of the rhetoric has been around potential tariff increases.

Speaker Change: Are you thinking about.

Speaker Change: Potential.

Speaker Change: Impacts to the international demand outlook sure.

Neal Lux: tariff rate You know, I guess I would characterize it more as a, rather than demand issue, I look at it more as a supply of our raw materials that, you know, we'd be most concerned about. And it's something we've actually, you know, been living with for a while now. Even going back to the first Trump administration, there were, you know, tariffs on raw materials that we regularly import. So we've diversified our supply chain, have multiple suppliers that provide key raw materials. That's really been our focus there on the tariffs.

Speaker Change: The U S tariff rate increase.

Speaker Change: I guess I would characterize it more as a.

Rather than demand issue I look at it more as a supply of our of our raw materials that we would be most concerned about and it's something we've actually.

Speaker Change: <unk> been living with for a while now even going back to the first Trump administration. There were tariffs on raw materials that we regularly imports. So we've we've diversified our supply chain have multiple.

Speaker Change: Suppliers that provide key raw materials.

That's really been our focus there on the on.

Speaker Change: On the tariff side.

Dave Storms: It's all very helpful.

Dave Storms: Thank you for taking my questions and good luck in the fourth quarter. Thank you, Dave.

Speaker Change: That's all very helpful. Thank you for taking my questions and good luck on the fourth quarter. Thank.

Thank you Dave.

Operator: Thank you. One moment for our next question.

Speaker Change: Thank you one moment for our next question.

John Daniel: Our next question comes from the line of John Daniel from Daniel Energy Partners. Andy on team. I just want to follow up on the one of the prior questions on M&A.

Speaker Change: Our next question comes from the line of John Daniel from Daniel Energy Partners.

John Daniel: And young team.

John Daniel: I just wanted to follow up on that.

John Daniel: One of the prior questions on M&A I guess, if you look at the.

Neal Lux: I guess if you look at the you know call it frack capital equipment market which is hitting a little bit of an air pocket right now. Do you look at that as an opportunity for where you might focus on acquisitions or would you rather stay more towards production related or drilling related stuff? Yeah, I think what we'd like to do is keep expanding our activity-based consumable sales.

John Daniel: Call It Frac capital equipment market, which is hitting a little bit of an air pocket right. Now do you look at that as an opportunity for <unk>.

John Daniel: You might focus on acquisitions or would you rather stay more towards production related or drilling related.

John Daniel: Staff.

Speaker Change: Yes, I think our.

What we'd like to do is keep expanding our activity based consumable.

Neal Lux: I think the capital is a little harder, whether it's, as you said, frack or similar in drilling too. So, again, what we really like, the Veriperm acquisition and other acquisitions we've done, whether it's Global Tubing or Quality Wireline or Multi-Lift Solutions, those are businesses that sell on a per-well basis. And those are exciting, and those are ones that we want to continue to participate in. But we'll be looking for opportunities, obviously, that the frack capital equipment – we've introduced some new technology there, and we've had good success, and we'll continue to do that. But yeah, the frack capital space is a little tough right now.

Speaker Change: Sales I think the capital.

Speaker Change: A little harder, whether it's as you said frac or similar in drilling too.

Speaker Change: So again, what we really like their Perm acquisition and other acquisitions, we've done whether it's global tubing, our quality wireline our multi lift solutions. Those are those are businesses that sell on a per well basis and those are those are exciting and those are ones that we want to continue to participate in.

Speaker Change: But.

We'll be looking for opportunities obviously.

Speaker Change: The Frac capital equipment, we've introduced some new technology, there and we've had good success.

Speaker Change: And we will continue to do that but yes. There is the frac Frac capital space is a little tough right now.

Neal Lux: Okay. And then you cited global tubing. It seems like every time you look at LinkedIn, another one of the coil guys is doing some drill out on like 27,000, 28,000 plus feet. I'm curious, how is all of that impacting the demand? I'm assuming it's positive, but if you could just elaborate a bit more on what you're seeing there.

Speaker Change: Okay and then.

You cited global tubing it.

It seems like every time you look at linked in another one of the coil guys is.

Doing some drill out on like <unk>.

Speaker Change: 728000 plus feet.

Speaker Change: I'm curious how is all of that impacting the demand.

Speaker Change: Im assuming its positive, but if you could just elaborate a bit more on what youre seeing there.

Neal Lux: Yeah, I think it's really two aspects to it. The first is the wells are going longer. You obviously need longer strings of coil tubing, so it's a higher selling price or more dollars per string. You also need heavier wall thickness that can allow you to get to, thicker wall thickness, excuse me, that allow you to push it out to the end. But I think most importantly, we have a team of engineers that specifically designs our strings and with our proprietary taper designs to actually reach out to the farthest. as far as laterals that we can find.

Speaker Change: Yes, I think it's really too two aspects to it the first of the wells are going longer.

Speaker Change: Obviously, you need need longer strings of coil tubing is higher higher selling price or more dollars per string.

Speaker Change: You also need heavier wall thickness that can allow you to get to thicker wall thing excuse me that allow you to push it push it out to the to the AD, but I think most importantly, we have a team of engineers that specifically designs are strings and with our proprietary.

Speaker Change: <unk> designs to actually reach out to the farthest.

Speaker Change: As far as far this laterals that we can find and when we do that we're maximizing the weight on bit so I think thats.

Neal Lux: And when we do that, we're maximizing the weight on bids. I think that's what's exciting for us, is we have the people, the process, to really help our customers reach their goals.

Speaker Change: Exciting for US is we have the people the process to really help our customers reach their goals.

Neal Lux: Have you had to do any changes to the plant to accommodate the longer strings or was that? are you good there? No, we're good there. Well, you know, we are pushing limits and we'll, you know, but with the, I think being the, one of the newest. Manufacturers. I think we designed around, you know, heavy installations. And, you know, one other benefit we had is when we upgraded to quench and temper, we made our quench and temper line continuous. So it's all in one step. I think we're, we have a patent around that. So we believe we're the only manufacturer that, that manufactures coil tubing quench and temper continuously.

Speaker Change: Have you had to do any changes.

Speaker Change: Changes to the plant to accommodate the longer shrinks or was that.

Speaker Change: Or do you get there.

Speaker Change: We're good there.

Speaker Change: We are pushing limits and will but with I think being one of the newest.

Speaker Change: Manufacturers I think we design around the heavy installations in.

Speaker Change: One other benefit we had is when we upgraded the quench and temper, we made our quench and temper line continuous so it's all in one step.

Speaker Change: I think we're we have a patent around that so we believe we're the only manufacturer that that manufacturer coiled tubing quench and temper continuously.

Neal Lux: Got it. Okay.

John Daniel: Well, thanks for including us.

Speaker Change: Got it okay, well, thanks for including me guys.

John Daniel: Thanks, John. Bye.

Speaker Change: Thanks, John.

Operator: Thank you. One moment for our next question.

Speaker Change: Thank you one moment for our next question.

Daniel Pickering: Our next question comes from the line of Daniel Pickering from Pickering Energy Partners. Morning guys Well, I want to make sure that I understood.

Speaker Change: Our next question comes from the line of Daniel Pickering from Pickering Energy partners.

Good morning, guys.

Daniel Pickering: Well I want to make sure that I understood.

Daniel Pickering: What you said around Veraperm, did I hear you say that Q3 was a 2% increase from Q2 or was that a year-over-year number? That's correct, it was a sequential number.

Daniel Pickering: What you said around <unk>.

Did I hear you say that Q3 was a 2% increase from Q2 or was that a year over year number.

Speaker Change: That's correct it was a sequential number Dan.

Daniel Pickering: Okay, thanks. And so it sounds like, you know, we can look through your prior disclosure and the consolidation, etc.

Speaker Change: Thanks.

Speaker Change: And so it sounds like.

Speaker Change: Look through your prior disclosure and the consolidation et cetera.

Daniel Pickering: Are we Are we kind of creating this coiled spring effect with some of these project delays in in Canada? Do we think that we have a kind of a snapback Q4 there? Or do we think we're pushing some of those projects out into 25?

Speaker Change: Are we.

Speaker Change: Are we kind of creating this coiled spring effect with some of these project delays in Canada.

Speaker Change: Canada do we think that we have kind of a snapback Q4, there or do we think we're pushing some of those projects out into 'twenty five.

Neal Lux: Yeah, Dan, I think I think the short answer is I think we are pushing some of these projects out into 2025. If you remember, on our earlier call, we talked about delays that happen with the TMX pipeline. And the good news is the TMX pipeline opens up Canadian crude market to the world market on the West Coast, and put a pretty nice bump in the underlying crude oil price in Canada. in the last year, beginning of this year, there was uncertainty as to when that was that timing was going to occur. A lot of operators began to defer projects.

Speaker Change: Yes, Dan.

Daniel Pickering: I think the short answer is I think we are pushing some of these projects out into 2025.

Daniel Pickering: If you remember on our earlier call, we talked about delays that happened with the <unk> pipeline and the good news is that Tim next pipeline opens up Canadian crude market to the world market on the West Coast.

Daniel Pickering: And put a pretty nice bump in the underlying crude oil price in Canada.

Daniel Pickering: In the last year beginning of this year there was uncertainty as to when that was that timing is going to occur a lot of operators begin to defer projects and as a result suppliers, primarily tubular suppliers delayed manufacturing so when that <unk> did come online early this year everyone's okay, great were back to the right.

Neal Lux: And as a result, suppliers, primarily tubular suppliers, delayed manufacturing. So when that TMX did come online early this year, everyone's okay, great, we're back to the right races, there was a supply chain lag that has yet to catch up. And so that's really what we're seeing as far as a delay, really year on year for Veriperm. So we do think that the activity we'd see continue and pick up in 2020. Just to be clear, our customers procure and supply those tubulars for us, so we're really waiting on our customers to get their supplies.

Daniel Pickering: <unk> there was a supply chain lag that has yet to catch up.

Daniel Pickering: And so that's really what we're seeing as far as the delay really year on year for <unk>.

Daniel Pickering: I do think that the activity we would see continue.

Daniel Pickering: And pick up in 2025, yes, and just to be clear our customers procure and supply that those <unk> for us. So that we're waiting we're really waiting on our customers to get their supply chain.

Daniel Pickering: And does that, as you look to Q4 for Veriperm, is that kind of a flat-ish, sounds like you're kind of running at a flat rate, Q3 versus Q2, do we hold that level in Q4 then? That feels right.

Daniel Pickering: I'll hand.

And does that.

Speaker Change: As you look to Q4 Premier permit is that kind of a flattish it sounded like youre kind of running it at a flat rate Q Q3 versus Q2 do we hold that level in Q4 then.

Speaker Change: That feels right, yes, Okay got you.

Daniel Pickering: Yes. Okay, gotcha.

Daniel Pickering: Thank you. I appreciate that.

Speaker Change: Thank you I appreciate that and then.

Daniel Pickering: And then just want to make sure I understand kind of ebbs and flows here on the on the balance sheet. So While we're sitting at the end of Q3 with call it $232 million of debt, we've got confirm these numbers for me. Roughly $60 million of the convert outstanding and then the seller notes another $60 million. So we pay down $120 million of debt with our new debt and your cash flow in Q4. And so basically we end the year kind of at the same cash balance, maybe a little bit better than we said at the end of Q3.

Speaker Change: Just wanted to make sure I understand kind of ebbs and flows here on the on the balance sheet. So.

Speaker Change: While we're sitting at the end of Q3.

Speaker Change: $232 million of debt.

Speaker Change: We've got.

Speaker Change: Confirm these numbers for me roughly $60 million of the convert outstanding and then the seller notes. Another 60, so we paid down $120 million of debt with our new debt and.

Speaker Change: Sure.

Speaker Change: Cash flow in Q4, and so basically we end the year kind of at the same cash balance maybe a little bit better than than we said at the end of Q3, if my math kind of tying their.

Daniel Pickering: Is my math kind of tying there? It is.

Speaker Change: It is it is and I would look at maybe total liquidity there. So the cash balance <unk> balance on our revolver because that can be a little fungible between those two.

Daniel Pickering: And I would look at maybe total liquidity there, so the cash balance and or balance on a revolver, because that can be a little fungible between those two. And so, yes, I think we would expect to end the year maybe a little bit lower. So we ended with 92 of liquidity at Q3. I think we'll be a little bit lower than that, kind of when you do the math on paying down the rest of our debt, right? So you're right on the 120 of debt that we will pay off with 100 million of new debt.

Speaker Change: So yes, I think we I think we would expect to end the year, maybe a little bit lower so we ended with 92 of liquidity at Q3, I think will be a little bit lower than that kind of when you do the math on on paying down the.

Speaker Change: The rest of our debt right. So you are right on the 120 of that that we will pay off with $100 million of new debt. So we will use 20 of our cash plus revolver some fees to get that finished up.

Daniel Pickering: So we'll use 20 of our cash slash revolver, some fees to get that finished up. So it should put us right about just a little bit below the 92 per year ending liquidity.

Speaker Change: So should put us right about just a little bit below the 92 for year ending liquidity.

Daniel Pickering: Gotcha.

Daniel Pickering: And then I appreciated the outlook for 25 on the free cash side. It sounds like I want to make sure the way you were describing cash is essentially in a flat revenues, flat EBITDA environment.

Speaker Change: Got you.

Speaker Change: And then I appreciate the outlook for 25 on the free cash side. It sounds like I want to make sure. The way you were describing cash is essentially in a.

Speaker Change: A flat revenues flat EBITDA environment.

Neal Lux: Maybe, Neal, if you could take a couple of minutes and just talk about where, you know, kind of what what product lines are or you feel best about as you go into 25, given kind of your order, your momentum, the things you're seeing from the customers? Yeah, I think it's it's it's still really, really early. And the indications now that we're hearing from our customers, obviously, is Q4. You know, we think in the US we're going to see, you know, see a slowdown at the end of the year. Yeah, sloppy. Sure. Yeah. And typically in Q1, we've seen that pick up.

Maybe.

Neil if you could take a couple of minutes and just talk about where you kind of what.

Speaker Change: What product lines are.

Speaker Change: Best about as you go into 'twenty five given kind of your order your momentum the things youre seeing from the customers.

Neil Lux: I think it's.

Neil Lux: It's still really really early.

Neil Lux: The indications now.

Neil Lux: Hearing from our customers obviously in Q4, we think in the U S. We're going to see a slowdown at the end of the year sloppy sure yeah.

Typically in Q1, we've seen that pick ups I think the U S. What kind of rebound a little bit in Q1.

Neal Lux: So I think the US would would kind of rebound a little bit in Q1. So I think for for that that part of it, you know, I think we'll see our, you know, our consumer business, whether it's, you know, caseload wireline from quality wireline, coil tubing. I think that'll and as well as our drilling consumables, product lines picking up.

Neil Lux: So I think for that that part of it I think we will see our.

Neil Lux: Our consumables business, whether its cased hole wireline from quality wireline and coiled tubing.

Neil Lux: And as well as our drilling consumables product lines picking up.

Neal Lux: I think exciting, though, for us is we are seeing a good pipeline of inquiries for our subsea business. So, you know, I think we've talked about the The utilization being pretty high for the fleets out there. So we are seeing a lot of inquiries come through. So we're hopeful we could have a nice backlog coming into 2025 and going further out for deliveries of ROEs.

Neil Lux: I think exciting though for US is we are seeing a good pipeline of enquiries for our subsea business.

Neil Lux: I think we've talked about the.

Neil Lux: <unk>.

Neil Lux: The utilization being pretty high for the fleets out there. So we are we are seeing.

Neil Lux: Lot of inquiries come through so we're hopeful we could have a nice backlog coming into 2025 and going going further out for deliveries of <unk> and we talked a little bit about our unity system, which is exciting technology. So we'd want to expand on that that development and continue to.

Neal Lux: We talked a little bit about our Unity system, which is an exciting technology. So we'd want to expand on that development and continue to grow our subsidy.

Neil Lux: A grow our subsea business.

Neal Lux: Okay, and if we think about the puts and takes as we go into 25 feels now like like Veriperm should have this kind of catch up. It's obviously a higher margin business. Do we in a flat revenue environment? Do we? Yeah, how much margin expansion do you think you guys could potentially see just based on mix alone? Yeah, I think higher obviously having a higher contribution from from bear perm would would help would help with next, obviously, in a flat revenue market. Our goal, though, is to continue to grow revenue in a flattish market, again, that's our beat the market strategy.

Neil Lux: Okay.

Neil Lux: And if we think about the puts and takes as we go into 'twenty five.

Speaker Change: Feels now like like fair Perm should have this kind of catch up its obviously a higher margin business.

Speaker Change: Do we in a flat revenue environment do we.

Speaker Change: How much margin expansion do you think you guys could potentially see just based on mix alone.

Speaker Change: Yes, I think.

Speaker Change: Obviously being a higher contribution from from bear Perm would help would help the mix obviously in a flat revenue market.

Speaker Change: Our our goal, though is to continue to grow grow revenue in a flattish market again, that's our beat the market strategy. So we think there are number of product lines, whether it's in our downhole casing hardware, our multi lift solutions artificial lift we think we can we can grow market share just by.

Neal Lux: So we think there are a number of product lines, whether it's in our downhole casing hardware or multi-lift solutions, artificial lift, we think we can grow market share just by better bundling, better customer account management, just more boots on the ground to grow that market share. Because a lot of times, a good example are multi-lift solutions, it's an insurance policy and we have some customers, some operators out there who live without insurance and so our goal is to convince them that insurance is a good thing for their pocketbook, good thing for their well. And so I think that's just a continuous opportunity that we're going to remain focused on.

Better bundling better customer account management.

Speaker Change: More just more boots on the ground to grow that market share because a lot of times.

Speaker Change: Good example of our multi list solution its an insurance policy and we have some customers some operators out there who live without insurance and so our goal is to convince them that insurance is a good thing.

Speaker Change: For their for their pocketbook, good thing for their well and so I think that's just a continuous opportunity that we're going to remain focus on.

Neal Lux: Great. Last question. I think I asked it about every other quarter. I just want to check in again. If you look at the business mix, the things that you've rationalized your portfolio over the past couple of years, kind of the product lines that we see, right now you're comfortable that that's where you want to be. So no meaningful divestitures from here. We'll continue to look at, you know, all our business, we want to we want to expand our our margins, right? I think a lot we've met in last part of the script, we talked about having the highest margins in nearly a decade, we're roughly 13%.

Speaker Change: Great.

Speaker Change: Last question I think I asking about every other quarter I just want to check.

Speaker Change: Checking again, if you look at the business mix the things that.

Speaker Change: You've rationalized your portfolio over the past couple of years.

Speaker Change: Kind of the product lines.

Speaker Change: We see here.

Speaker Change: Right now youre comfortable that Thats, where you want to be so so no meaningful divestitures from here.

Speaker Change: We'll continue to look at all of our business, we want to we want to expand our margins right I think we had.

Speaker Change: It allows us part of the script, we talked about having the highest margins in nearly a decade with roughly 13%.

Neal Lux: You know, I think mid teens is where we want to go. And so, you know, if we had more of a tailwind and revenue growth, I think our operating leverage could get us there. In a flattish market, you know, we need to, you know, both , and John K. We are here to help you grow revenue with our Beat the Market strategy, but we also need to look at cost and portfolio rationalization. So that's a continuous process that we follow, and so I don't want to say we're always satisfied. We're never satisfied.

Speaker Change: I think mid to mid teens is where we want to go and so.

Speaker Change: If we had more of a tailwind in revenue growth I think our operating leverage could get us there.

Speaker Change: In a flattish market, we need to both.

Speaker Change: Grow revenue with our beat the market strategy, but we also need to look at at cost and portfolio rationalization. So that's a continuous process that we follow and so I don't want to say, we're always satisfied will we're never satisfied we'll keep keep on that.

Neal Lux: We'll keep on that.

Neal Lux: Thank you.

Operator: Thanks, guys. Appreciate it.

Speaker Change: Okay. Thanks.

Speaker Change: Thanks, guys I appreciate it.

Operator: Thank you. One moment for our next question.

Speaker Change: Thanks, Dan.

Speaker Change: Thank you one moment for our next question.

Jeff Robertson: Our next question comes from the line of Jeff Robertson from Water Tower Research. Thank you, good morning. Neal, I think you mentioned in your thought process around 2025 that US drilling could be down about 5%.

Speaker Change: Our next question comes from the line of Jeff Robertson from water Tower research.

Speaker Change: Thanks, and good morning, Jeff.

Jeff Robertson: Neil you mentioned in your thought process around 2025 that U S drilling could be down about 5% or did I hear that right.

Neal Lux: Did I hear that right? You did.

Neil Lux: You did.

Neal Lux: Does do you get any sense that there is an increased focus on optimizing production and spending for those types of products? And if that's the case, does that drive demand for FET to gain market share, because some of your products are more efficient than maybe what's out what else is out there in the market? Yeah, I think that's that's absolutely an opportunity. Again, I think our customers, whether it's the service companies or operators are looking for, you know, efficiencies and, and operating cost reductions. And that's where a lot of our technologies are focused. I think part of our view on what could be down next year is partly based on commodity price, partly based on the consolidations of the operators as they look at their acreage and decide what they want to complete.

Jeff Robertson: Does do you get any sense that there is.

Neil Lux: An increased focus on.

Neil Lux: Optimizing production and spending for those types of products.

Neil Lux: That's the case does that drive.

Neil Lux: Demand for <unk> to gain market share because some of your products are more efficient and maybe what's out what else is out there in the market.

Speaker Change: Yes, I think that's absolutely an opportunity again, I think our customers whether it's the service companies or operators are looking for efficiencies and operating cost reductions and that's where a lot of our technologies are focused.

Speaker Change: Yes, I think part of our view on.

Speaker Change: It could be down next year is partly based on commodity price, partly based on the consolidations of the operators as they as they look at their acreage and decide what they want to complete.

Neal Lux: So that plays a part in it. I also think, as I mentioned, we're really assuming no rebound in natural gas. And I think that's kind of a wild card, right? We could have a cooler winter. We could have more demand from electricity for AI. PowerGen Applications, LNG, so we'll keep an eye on that. We want to go in with kind of a realistic look at 25 and it's still a little early and things can change here.

Speaker Change: <unk>.

Speaker Change: So that plays a part and I also think as I mentioned, we were really assuming no rebound in natural gas and I think that has some that's kind of a wildcard right. We could have a cooler winter we could have more demand from.

Speaker Change: Electricity for AI.

Speaker Change: Powergen applications LNG, so, we'll keep an eye on that but.

We want to go in with a kind of a realistic look.

Speaker Change: Look at 25, and it's still a little early and things can change here, we have an election next week we have.

Neal Lux: We have an election next week. keep looking at demand indicators, but that's where we are today. Do, would an increase in natural gas related activity? of increased demand for some of your products and that could have effect on the margin that It does, and this is a really general comment, but Natural gas drilling and completions activities seem to usually be higher pressure. And higher pressure will wear out our consumables more quickly. And so that's what we've seen in the past as we go to gas, is just maybe a higher turn of consumables.

We will keep looking at the demand indicators, but that's where we are today.

Speaker Change: Do would an increase in natural gas related activity.

Speaker Change: Increased demand for some of your products and that could have an effect on the margin mix.

Speaker Change: It does.

Speaker Change: And then this is a really general comment but.

Speaker Change: Natural gas.

Speaker Change: Drilling and completions activity seems to usually be higher pressure.

Speaker Change: And higher pressure will wear out our consumables more quickly and so that's what we've seen in the past as we go to gas is just maybe a higher turn of.

Speaker Change: Of consumables.

Neal Lux: Then just a question on the unity system for the ROVs. Would that system increase? the type of work those ROVs can do. or just make it easier to operate them from, like you said, a remote location. I think it'll be a combination. Again, it's still still early. So it's a good system that we're giving to the operators and they'll have to I think there may be some opportunities with the programming and with the AI that they could go more quickly, let's say, and whether they're setting up a node and moving from spot to spot. Could they do that more quickly in an automated system or in a remote system?

Speaker Change: And then just a question on the unity system for the Rovs that system increase.

Speaker Change: The type of work those rovs can do.

Or is it just makes it easier to operate them.

Speaker Change: Like you said remote locations.

Speaker Change: I think it will be it.

A combination and again, it's still still early so it's a good system that we're giving to the operators and they will have to.

Speaker Change: Become proficient with it I think there may be some opportunities that they with a.

Speaker Change: With the programming and with the AI that they could.

Speaker Change: Go more quickly, let's say in whether it's they're setting up a node and moving from spot to spot.

Speaker Change: Could they do that more quickly in an automated system in a remote system quite possibly so I think that's a potential.

Neal Lux: Quite possibly. But I think that's a potential. We're still early, as I think we said in our notes. We're delivering our first system at the end of this year and four more next. We'll continue to get feedback. You know, those going to different operators. The first five, I think, are going to the same operator, so we'll get, I think, pretty good results. there.

Speaker Change: Still early as I think we said in our notes we are delivering our first system at the end of this year and for more next we'll continue to get feedback there.

Speaker Change: Are those going to different operators.

Speaker Change: The first the first order the first five I think we're going all are going to the same operators. So we will get we will get I think pretty good consistent feedback there.

Neal Lux: I believe that.

Speaker Change: I believe thats the case Jeff.

Neal Lux: And lastly, on the MagnaGard, does that Apart from increasing safety, does it also have any effect on the run times of ESPs? No, I think it's really more that the safety, you know, it's when they, you know, when they shut down and, you know, they have the sand fall back, what it'll actually do is the magnet motor actually send a current up the cable and that's where the electricity risk comes out. The magnet guard acts as a brake and doesn't allow that motor to turn and by, you know, preventing the motor to turn, you prevent the electricity from, the current from being generated.

Then lastly on the magnet guard.

Speaker Change: Does that apart from increasing safety does it also.

Speaker Change: Have any effect on the run times of.

Speaker Change: <unk>.

No I think it's really more of the safety.

Speaker Change: They when they shut down and they have the sand fall back.

Speaker Change: But I'll actually do is the magnet motor actually sent a current up up the up the cable and that's where the electricity risk comes out.

<unk> acts as a break and doesn't allow that motor to return above prevailing on attorney prevent the electricity from occurring from being generated so that's really the safety feature.

Neal Lux: So that's really the safety feature.

Neal Lux: So I think what we look at it as is, you know, I've talked to customers who really like permanent magnet motors, right? The efficiency that they have, the lower electricity usage that permanent magnet motors have, they all see that as positive. If we can help them overcome the safety risk, which is real and which is concerning, you know, obviously, electricity. execution, electrocution is a scary event in the field. We can prevent that that we can really help adoption of permanent magnet motors.

Speaker Change: Well, we look at it as is.

Speaker Change: I've talked to two to customers, who really like permanent magnet motors right the efficiency.

Speaker Change: They have the lower electricity usage that permanent magnet motors have they all see that as positive. If we can help them overcome the safety risk, which is real and which is concerning obviously.

Speaker Change: Execution of electrocution is a scary event in the field, we can prevent that that we can really help the.

Speaker Change: Adoption of permanent magnet motors.

Jeff Robertson: Thank you. Thanks, Jeff.

Speaker Change: Thank you.

Speaker Change: Thanks, Jeff Thanks, Jeff.

Operator: Thank you. One moment for our next question.

Speaker Change: Thank you.

Speaker Change: One moment for our next question.

Eric Carlson: Our next question comes from the line of Eric Carlson. Morning, Eric. Morning.

Speaker Change: Our next question comes from the line of Eric Carlson.

Speaker Change: Good morning, Eric.

Lyle Williams: How's it going? Great. Cash flow continues to be strong. I mean, when you produce 25% of your current market cap in cash over the first three quarters, it looks like it's starting to get to the point where it can open the door for opportunities. I guess when we just think about free cash flow durability, and you kind of guide me through this a little bit. Obviously, it helps that year over year interest expense from 25 to 24 kind of based on what you said is And you're probably down a third, maybe a little bit more.

How's it going.

Speaker Change: Right.

Eric Carlson: Cash flow.

Eric Carlson: <unk> continues to be strong.

Eric Carlson: I mean, when you produce 25% of your current market cap in cash over the first three quarters.

Eric Carlson: It looks like it's starting to get to the point, where it can open the door for opportunities I guess, when we just think about free cash flow durability, and you're kind of guiding to this a little bit.

Eric Carlson: Obviously it helps that.

Year over year interest expense from 'twenty to 'twenty four kind of based on what you said.

Eric Carlson: I mean, you're probably down a third maybe a little bit more.

Lyle Williams: And can you just rephrase, I think you mentioned a 1.9 times net leverage ratio. Is that as of the kind of the close of the high yield bonds? No, that's using, yeah, yeah, no, that's a great point. So 1.9 times Eric is using year to date EBITDA annualized. So we have the full impact of the spare firm being in there. I think that's a point and you're spot on about the cash. It's exciting for us. It was a, we felt like an ambitious goal early in the year to set out the range that we set out, something we needed to do.

And can you just.

Speaker Change: I think you mentioned of one nine times net leverage ratio is that as of.

Speaker Change: Kind of.

Speaker Change: Close of the high yield bonds.

Speaker Change: Yes, I mean, thats using yes, yes, no that's.

Speaker Change: Great point, so at one nine times, Eric is using year to date EBITDA annualized. So we have the full impact of <unk> being in there.

Speaker Change: And I think that's the point and Youre spot on about the cash it's exciting for US. It was we felt like an ambitious goal early in the year to set out the range that we set out something we needed to do the fact that we're already at the bottom end of our range, which we raised last quarter and therefore raised again this quarter, we feel like that.

Lyle Williams: The fact that we're already at the bottom end of our range, which we raised last quarter and therefore raised again this quarter. We feel like that's a good track record. And we did want to lay out guidance going ahead. So this isn't a one time wonder where we're monetizing a bunch of EBITDA or anything like that. I'm sorry, monetizing a bunch of working capital. It really is something that we think is durable. And then, as you mentioned, as we continue to generate cash, our new debt and debt structure will allow us to pay down more debt.

Speaker Change: A good track record and we did want to lay out guidance going ahead. So this isn't a one time wonder where we're monetizing a bunch of EBITDA or anything like that I am sorry, monetizing a bunch of working capital.

Speaker Change: It really is something that we think is durable.

Speaker Change: And then as you mentioned as we continue to generate cash our new struck debt in that structure will allow us to pay down more debt. So we're refinancing a $120 million of debt with a $100 million of new bonds for the five year tenor.

Lyle Williams: So we're refinancing 120 million dollars of debt with 100 million of new bonds for the five year tenor and leaving some on the revolver. So as we generate cash, we'll drop that revolver balance as well so we can further reduce interest expense and have a good virtuous cycle. So we're really excited about the look ahead on cash, something we're committed to. And we think we think we'll, as you mentioned, open up opportunities both for delivering importantly for M&A, which is still out there is a great way for us to grow. And finally, for the ability to return cash to shareholders.

Speaker Change: And leaving some on the revolver. So as we generate cash we will drop that revolver balance as well.

Speaker Change: So we can further reduce interest expense and have a good virtuous cycle. So.

Speaker Change: So we're really excited about the look ahead on cash something we're committed to.

And we think we think will as you mentioned open up opportunities both for.

Speaker Change: Delevering importantly for M&A, which is still out there is a great way for us to grow and finally for the ability to return cash to shareholders.

Lyle Williams: Yeah. So would the expectation be high yield that closes next week? I would assume you guys are going to try to issue a redemption notice for the existing long term notes. And then that's like a month long process. And then what is the process on the seller note, you can do pay that in cash whenever you'd like. Yeah, very similar. There's a redemption process and all that was kind of happening simultaneously. So, so we'll pay off all the, we'll pay off our existing debt when we when we close the bond issuance here next week. So that's all kind of in process.

Speaker Change: Yes.

Speaker Change: So would the expectation be high yield debt closes next week I would assume you guys are going to try to.

Speaker Change: Yes.

Speaker Change: This year, a redemption notice for the existing long term notes.

Speaker Change: That's like a month long process I mean, what is the profit on the seller note you can get.

Speaker Change: Pay that in cash whenever you Mike.

Speaker Change: Yeah, very similar there's a redemption process and all of that is kind of happening simultaneously. So so.

Speaker Change: So we'll pay off all the pay off our existing debt when we when we closed the bond issuance here next week so.

Speaker Change: So thats all kind of in process.

Lyle Williams: Okay, and then so one point time 1.9 times net leverage, the new high yield notes, you need to get to 1.5 to be able to kind of do that 50-50 return cash to shareholders. That's correct, right. That's right. So we need to be at 1.5 times leverage pro forma for a share buyback or for any kind of a distribution. And given our guidance, we should be somewhere in the 1.8 to 1.9 times range at the end of this year. And then think about that cash flow. Obviously, one reason we wanted to look ahead with cash is that continues to get better over time.

Speaker Change: Okay and then.

Speaker Change: So one point in time.

Speaker Change: One nine times net leverage the new high yield notes you need to get to one five to.

To be able to kind of do that 50, 50 return cash to shareholders.

Speaker Change: <unk>.

Speaker Change: That's correct right.

Speaker Change: That's right that's right. So we need to be at one five times leverage pro forma for the.

Speaker Change: Pro forma for a share buyback or for any kind of a distribution and given our guidance, we should be somewhere in the one eight to one nine times range at the end of this year.

Speaker Change: And then think about that cash flow. Obviously, one reason we wanted to look ahead with cash as that continues to get better over time.

Lyle Williams: And then the question for us and the challenge is, how do we get to do even better than that? How do we increase our EBITDA so that we can pull that net leverage ratio down? Or how do we generate more cash? So those can come through our beat the market strategy, gaining share, margin improvement that could come through mix. I think Dan's question alluded to that or cost management, all of which boosts our EBITDA number and then asset monetization. So that 50 to 60 million dollar number did not have any working capital drawdown there, which would obviously enhance cash and lower our leverage.

Speaker Change: And then the question for US and the challenge is how do we get to do even better than that how do we increase our EBITDA. So that we could pull that net leverage ratio down or how do we generate more cash. So those can come through our beat the market strategy gaining share.

Speaker Change: <unk> improvement that could come through mix I think dan's question alluded to that or cost management, all of which boosts. Our EBITDA number and then asset monetization, so that $50 million to $60 million number Doug did not have any working capital.

Speaker Change: Drawdown, there, which would obviously enhanced cash and lower our leverage so all of those levers that we've got our hands on and working to pull those is as hard as quickly as we can.

Lyle Williams: So all those leverage, we've got our hands on and working to pull those as hard and as quickly as we can. Great. Yeah, so that kind of puts you towards, I mean, the next year when you can.

Speaker Change: Great.

Speaker Change: So that kind of puts you towards mid next year.

Speaker Change: Ken.

Lyle Williams: kind of think about getting to, I don't know, call it set 3.0, kind of fix, fix the balance sheet, look good, then kind of take on the return to capital, whether that's buybacks, dividends, pay down debt, or even go out and buy something. But I guess my My last thought was, I mean, Veribirm, I mean, has helped a lot. And kind of a home run. I think you bought that at 3.7 times trailing 12 month EBITDA. At least that was when it was announced. That's right. And now, F.E.T. as a... entity, he kind of did the pro forma number looking at bear firm trades at probably 3.6 times at $14 a share and 35% free cash flow yield, plus it seems like it would be hard to come up with something better to do with cash than buy more of what you already own, which is obviously buying back your shares.

Speaker Change: Kind of thinking about getting to I don't know I'll call. It.

Speaker Change: <unk> three point, all kind of fixing.

Fixing the balance sheet look good then kind of take on the return of capital whether that's.

Speaker Change: Buybacks dividends pay down debt or even go out and buy something but I guess my.

Speaker Change: My last thought was I mean.

Speaker Change: <unk> has helped a lot in kind of a home run I think you bought that at three seven times trailing 12 month EBITDA at least that was when it was announced.

Speaker Change: Alright.

Speaker Change: Now.

Speaker Change: <unk> is a.

Anthony if you kind of did the pro forma number looking at their Perm trades at probably three six times at $14 a share.

Speaker Change: 35% free cash flow yield plus.

Speaker Change: It seems like it would be hard to come up with something better to do with cash then buy more of what you already own which is obviously buying back your shares.

Neal Lux: So I guess when you think about, obviously, there's a there's a difference between M&A, because you kind of have the flexibility with the new high yield notes, it seems like so if you could find something that could incrementally add to free cash flow without David Storms, John Daniel, David Williams, Josh Jayne, Daniel Pickering, David Storms, John Daniel, David Williams, Josh Jayne, David Storms, Rob Kukla, Neal Lux, Forum Energy Technologies Inc. David Storms, John Daniel, David Williams, Josh Jayne, David Storms, Neal Lux, Forum Energy Technologies Inc.

Speaker Change: So I guess when you think about obviously, there's a difference between M&A because you kind of have the flexibility with the new high yield notes. It seems like so if you could find something that could.

Speaker Change: Incrementally add to free cash flow.

Speaker Change: Without.

Speaker Change: Considerably over Levered, leveraging yourself, obviously like the hurdle rate is a little bit different there because you have more flexibility to do so but when you think about that like what does something.

You can buy your own stock through the value added now versus go in and buy somebody else.

Neal Lux: David Storms, John Daniel, David Williams, Josh Jayne, David Storms, Neal Lux, Forum I mean, I guess, are there things out in the market right now that you can find in the private markets or carve out from somebody else in the public that you can find that kind of hurdle rate that makes a M&A transaction makes sense versus just being patient, getting to the middle of next year, the first third of next year, and then just saying, I'm going to buy my own stock. And I'm going to take kind of my destiny into my own hands versus let the market do it for me.

Speaker Change: For what.

Speaker Change: I guess are there things out in the market right now that you can find in the.

Private markets are a carve out from somebody else.

Speaker Change: You can find that.

Speaker Change: That kind of hurdle rate that makes up.

Speaker Change: M&A transaction makes sense versus just being patient getting to the middle of next year. The first third of next year, and then just saying I'm going to buy my own stock.

Speaker Change: <unk>.

Speaker Change: I'm going to take kind of my destiny into my own hands versus what the market do it for me.

Neal Lux: Yeah, you know, Eric, I think, as you were talking there, I think you laid out really the evaluation that we do, right, is, you know, I think when we look at acquisition is that investment in the acquisition going to increase our free cash flow per share or are we better off using that capital to buy our shares? I think that will be the question. and the threshold that we analyze going forward. And again, it is hard to find something as attractive as our own stock. 30 to 35% free cash flow yield, it's hard to buy companies like that.

Eric Carlson: Yes, Eric I think.

Eric Carlson: As you were talking there I think you laid out really the evaluation that we do right.

Eric Carlson: I think when we look at acquisitions.

Eric Carlson: Is that investment in the acquisition going to increase our free cash flow per share or are we better off using that that capital to buy our shares and I think that'll be the.

Eric Carlson: The threshold that we analyze going forward and.

Eric Carlson: Again, it is hard to find something as attractive as our own stock.

Eric Carlson: 30, 30% to 35% free cash flow yield.

Eric Carlson: It's hard to hard to buy companies like that if we find one though.

Neal Lux: If we find one though, we may snap that up if it's better. But all signs I think right now point to, we're probably one of the best investments that you can make. That, that's helpful. Yeah, I don't think I have anything else.

It would be we may snap that up if it's better but.

All signs I think right now point to we're probably one of the best investments that you can make.

That.

Speaker Change: That's helpful.

Eric Carlson: Yeah.

Eric Carlson: Yes, I don't think of anything else. The only other thing I would say as I listen to the precision drilling.

Eric Carlson: The only other thing I would say is I listened to the Precision Grilling call. I mean, they seem pretty bullish on Canada going into next year. And then I didn't see it in the release. I'm sure it'll be in your quarterly filing, but I know that the Middle East was kind of a revenue growth outlier relative to kind of activity growth kind of year to date through Q2. Is that still kind of holding true? And if you could just talk maybe a little bit more on the opportunity set there, it would be interesting because it feels like one of the markets that kind of could be a pretty big driver.

Speaker Change: They seem pretty bullish on Canada going into next year.

Speaker Change: And then I didn't see it in the release I'm sure it'll be in kind of your quarterly filing but.

Speaker Change: Now that the middle east with kind of a revenue growth outlier relative to kind of activity growth.

Speaker Change: Year to date through Q2 is that if that's still kind of holding true and if you could just talk maybe a little.

Speaker Change: Little bit more on the opportunity set there it would be interesting because it feels like one of the markets that China could be a pretty big driver.

Neal Lux: Yeah, Eric, we're excited about opportunities internationally. You mentioned Canada, and the market does seem to be more bullish there as far as adding rigs. As we've gotten deeper into the oil sands journey, there are a lot of rigs outside of the oil sands and the Montaney and other places generating gas, and that seems to be a big piece of the uplift there, oil sands being more steady, which we like that. Also, you mentioned the Middle East, and we did have a really good Q2, and we're excited about what that looks like going forward. So the Q3 revenue for us was a little bit softer than the second quarter, and that's really just timing of deliveries of product.

Speaker Change: Eric we're excited about opportunities internationally, you mentioned you mentioned Canada.

Speaker Change: And the market does seem to be more bullish there as far as adding rigs.

As we've gotten deeper into the oil sands journey, there are a lot of rigs outside of the oil sands in the Montney and other places generating gas.

Speaker Change: Seems to be a big piece of the uplift there oil sands being more steady.

Speaker Change: We like that.

Speaker Change: Also you mentioned the middle East and we did have a really good Q2.

Speaker Change: And we're excited about what that looks like going forward. So the Q3 revenue for us was a little bit softer than the second quarter and Thats really just timing of deliveries of product.

Neal Lux: But the opportunities there in the Middle East seem to be really strong, and I know Neal can chip in on that as well. Yeah, in fact, I'll be there being in the region next week and spending time with customers, and as we're doing our pre-work with my teams, there definitely seems to be a lot of opportunities that we're chasing and hopeful to be closing in the Middle East. and beyond. Again, we're, we think the unconventional story is is expanding. We're getting a lot of Tailwind from that as we export our technology, you know, Argentina, the Middle East as well.

Speaker Change: But the opportunities there in the middle east seemed to be really strong.

Speaker Change: And I know Neil Neil can chip in on that as well yes.

Neil Lux: There being in the region next week and spending time with customers and as we're kind of doing a pre work with my team.

Neil Lux: There definitely seems to be a lot of opportunities that we're chasing and hopeful to be closing in the middle East and.

Neil Lux: And beyond again.

Neil Lux: The unconventional story is expanding.

Neil Lux: We're getting a lot of.

Neil Lux: Tailwind from that as we export our technology, Argentina, the middle East as well. So it's exciting I think we're fairly early there and again with our footprint for a company our size were able to play play very well.

Eric Carlson: So it's exciting. I think we're fairly early there. And again, with our footprint, you know, for a company our size, we're able to play very well. Great. That's all helpful. Another good quarter, keep the cash coming. Thanks, Eric.

Neil Lux: Great.

Speaker Change: All helpful.

Speaker Change: Another good quarter keep the cash Kevin.

Operator: Thank you, Eric. Thank you.

Speaker Change: Thanks, Eric Thank you Eric.

Neal Lux: At this time, I would now like to turn the conference back over to Neal Lux for closing remarks. Thank you, Gigi, and thank you all for your support and participation on today's call. We look forward to our next meeting in February to discuss FET's fourth quarter and full year 2024 results. Thank you.

Yes.

Speaker Change: Thank you.

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

Thank you Gigi and thank you all for your support and participation on today's call. We look forward to our next meeting in February to discuss <unk> fourth quarter and full year 2024 results. Thank you.

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

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

Speaker Change: Okay.

[music].

Okay.