Operator: Good morning, ladies and gentlemen, and welcome to the Forum Energy Technologies Third Quarter 2026 Earnings Conference Call. My name is Dilem, and I will be your coordinator for today's call. There is a process for entering the question-and-answer queue. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.
Operator: A link with instructions can be found on the company's investor relations website under the Events section. At this time, all participants are in a listen-only mode, and all lines have been placed on mute to prevent any background noise. This conference call is being recorded for replay purposes and will be available on the company's website. I will now turn the conference over to Rob Kukla, Director of Investor Relations. Please proceed, sir.
Rob Kukla: Thank you, Dilem. Good morning, everyone, and welcome to FET's Third Quarter 2026 Earnings Conference Call. With me today are Neal Lux, our President and Chief Executive Officer, and Lyle Williams, our Chief Financial Officer. Yesterday, we issued our earnings release, which is available on our website. We are relying on federal safe harbor protections for forward-looking statements. Listeners are cautioned that our remarks today will contain information other than historical information. These remarks should be considered in the context of all factors that affect our business, including those disclosed in FET's Form 10-K and other SEC filings.
Rob Kukla: Finally, management statements may include non-GAAP financial measures. For reconciliation of these measures, please refer to our earnings release and our website. During today's call, all statements related to EBITDA refer to adjusted EBITDA, and net income refers to adjusted net income. Unless otherwise noted, all comparisons are Q3 2026 to Q2 2026. I will now turn the call over to Neal.
Neal Lux: Thank you, Rob, and good morning, everyone. Our Q3 results demonstrate another period of strong execution. Expectations entering the quarter were high, given our substantial increase in guidance, and our team delivered. We generated sequential and year-over-year growth in revenue, EBITDA, net income, and free cash flow. That performance improved our balance sheet and allowed us to complete a highly accretive acquisition. Our momentum through the first 9 months, together with strong execution and healthy backlog levels, gives us confidence to raise our full year 2026 outlook. We now expect revenue between $900 million and $920 million, EBITDA between $123 million and $129 million, and net income between $52 million and $58 million. At the midpoints, revenue would be up 15%, EBITDA up 46%, and net income up 639%, all compared with 2025. Also, up from prior guidance, we expect full-year free cash flow between $66 million and $71 million.
Neal Lux: Our outlook is not only the result of an improving market. We believe it is disciplined execution of our Beat the Market strategy. Our strategy is straightforward: compete in targeted markets, use competitive advantages, innovate continuously, and leverage our global footprint. Each pillar reinforces the others and creates a repeatable framework for profitable growth. This strategy is critical to our investment thesis, so let me spend a few moments on each. As a starting point, we focus on mission-critical applications where customers value differentiated performance, reliability, and technical expertise. We choose to compete in targeted markets where we have limited competition and competitive advantages. These advantages include advanced manufacturing capabilities, intellectual property, and brands that have served customers for decades. Just as important, our industry experts work closely with customers to understand how our products are used in the field and how they can be improved.
Neal Lux: The combination of product expertise and customer relationships turns specific operating needs into durable commercial opportunities. Continuous innovation is the next pillar. It fuels our growth engine. We develop differentiated technology that separates FET from the competition, improves customer outcomes, and expands our addressable markets. Our innovation machine is making significant progress on a wide range of applications, including hydraulic fracturing, the Canadian oil sands, and power generation. For hydraulic fracturing, we introduced a new high-tensile strength tube used in perforating gun housings and received our first order this month. This consumable product utilizes our pipe milling expertise to efficiently manufacture a cost-effective solution. The introduction of this product expands our addressable market by approximately $200 million. The Canadian oil sands is a resource play with significant long-term growth potential. We are penetrating this market with our innovative flow control technology.
Neal Lux: Our products reduce steam and sand penetration in thermal oil wells, and most importantly, increase oil production. This is a winning value proposition. In power generation for data centers, we continue to build momentum for our stationary cooling products. Our teams are utilizing patented technology to provide customized solutions that increase uptime and lower the total cost of ownership. Ongoing collaboration with key customers is resulting in several advanced-stage RFQs. This addressable market has significant growth potential. These are a few examples of how we translate engineering capability into market share gains, new revenue streams, and profitable growth. Finally, our global footprint allows us to take technologies developed for US unconventional basins and bring them to customers around the world. International revenue year-to-date is up 31% compared to last year, reflecting both healthy customer demand and strong execution by regional teams.
Neal Lux: In the Middle East, we navigated ongoing volatility and increased revenue 32%. Importantly, while we have experienced some disruptions, we have not had meaningful order cancellations related to the conflict. Customer priorities remain centered on uptime, efficiency, and production performance, which align closely with FET's capabilities. The opening of Venezuela for US companies is another developing opportunity. Historically, this country has been a good market for our products. It is encouraging to see our customers making capital commitments and entering into contracts. The opportunity remains in its early stages, but the level of activity is moving in a constructive direction. FET has already delivered coiled tubing, pressure control equipment, and coiled line pipe into the country. Staying in Latin America, Argentina is emerging as an attractive international growth market, where operators are applying technologies proven in the North America shale.
Neal Lux: Major oil field service companies have established significant positions in the basin to support multi-year unconventional development programs. FET's differentiated products, like quench and temper coiled tubing and greaseless wireline cables, enable efficient drilling and completion operations. As activity scales, this should drive additional demand for our portfolio of consumable products. Now that we have reviewed the pillars of our strategy, let me touch on how we measure its effectiveness. The success of our Beat the Market strategy is measured by revenue per global rig. This metric evaluates whether FET is truly outperforming the broader market. On this measure, we are winning. Since the beginning of 2022, our revenue per global rig has increased 35%, and we have accelerated our outperformance through the first nine months of 2026. Not only have we Beat the Market, but we believe FET remains a compelling investment.
Neal Lux: We have a proven track record, an attractive valuation, meaningful capital returns, and a clear growth path we call FET 2030. Our results demonstrate a consistent record of outperformance compared to the Russell 2000. Year to date, we have grown revenue 75% faster, and our operating leverage translates top-line growth into significantly greater earnings, with EBITDA increasing by over four times the index. Finally, that performance is even more pronounced on the bottom line, with adjusted net income increasing by more than 400 times the Russell. That strong financial performance is translating into significant equity appreciation. Through yesterday's close, FET shares are up 140% year to date, compared to a 15% increase for the Russell 2000. Even after this appreciation, we believe FET continues to offer attractive relative value, especially compared to other small-cap industrial companies.
Neal Lux: Across several valuation and balance sheet metrics, including free cash flow yield, price to sales, enterprise value to EBITDA, and net leverage, we believe FET comes out ahead. Our cash generation gives us flexibility to deploy capital for the benefit of shareholders. We generated $41 million of free cash flow through the first 9 months of 2026, returning $9 million through share repurchases and reducing net debt by almost 10%. During the quarter, we completed the acquisition of Premiere Torque Rings, a highly accretive deal within our downhole product line. The acquisition met our investment criteria, with strong industrial logic, differentiated products, attractive EBITDA margins, and strong free cash flow conversion. As wells become longer and more complex, torque rings become an increasingly important solution, further supporting our FET 2030 growth plan.
Neal Lux: We are excited to add this established brand to the portfolio, and I would like to welcome the employees of Premiere Torque Rings to the FET family. Looking ahead to 2027 and beyond, our FET 2030 plan targets doubling revenue, quadrupling EBITDA, and tripling free cash flow versus 2025. Those goals reflect a combination of addressable market growth, targeted share gains, operating leverage, and our capital-light business model. In thinking about next year, market indications favor a growth year. Elevated commodity prices are driving activity higher.
Neal Lux: Large service companies are expecting broad-based growth. For FET specifically, annualizing the midpoints of our Q4 guidance would result in revenue and EBITDA growth of 5% and 14% in 2027. I believe we will continue to perform at this level or higher. Putting it all together, we are on the path towards FET 2030. Now, to provide more detail on our Q3 results and near-term financial outlook, I will turn the call over to Lyle.
Lyle Williams: Thank you, Neal. In the Q3, our teams built on momentum from market share gains, customer technology adoption, and increasing contribution from international markets to deliver meaningful growth and profit enhancement. Sequentially, consolidated revenue increased 5% to $237 million, right at the midpoint of guidance. EBITDA increased 14% to $36 million, and EBITDA margins improved by 120 basis points to just over 15%, with strong incremental margins of 40%. Net income increased 33% to $18 million. Both EBITDA and net income met the top end of our guidance. Impressively, on a year-over-year basis, EBITDA increased 56%, and net income was up nearly five times. Our book-to-bill was 103% as orders increased to $244 million, exceeding revenue for six of the last seven quarters. Four primary drivers propelled our year-over-year Q3 performance. We continue to see good results in our drilling product line, where revenue increased 22%.
Lyle Williams: The changes made last year to streamline the business and lower its cost base are showing up in improved margins and operating leverage. Internationally, we are delivering differentiated drilling capital equipment, particularly in the Middle East and Latin America, providing additional opportunities to build on this success. Subsea continues to deliver its backlog, driving improved financial performance. We are executing orders booked last year, including ROV systems and the rescue submarine. With the offshore market strengthening, we are also seeing a pickup in aftermarket activity. The Canadian oil sands market continues to be a strong contributor to our results. In addition to activity levels remaining durable, we have also seen the increased adoption of our flow control technology that Neal referenced earlier. Finally, revenue increased across each of our international regions as we gain market share through differentiated product delivery.
Lyle Williams: International revenue per rig is up 26% compared with the prior year. These results reinforce the strength of our competitive position, utilization of our global footprint, and the opportunities we are seeing across international markets. Before I review segment results, I would like to touch on the adjusting items from our GAAP net income in the Q3. We recorded a $3 million charge associated with resolving a previously disclosed litigation matter, plus $500,000 of related legal fees. We also recorded approximately $1 million in conjunction with the sublease of one of the manufacturing facilities we closed earlier this year. There was also roughly $1 million of transaction fees for the Premiere acquisition. Turning to our segment results, Drilling and Completion revenue increased 6% to $147 million, attributable to increases in all four product lines.
Lyle Williams: EBITDA increased 28% to approximately $21 million, and margins expanded 240 basis points to 14%. Strong operating leverage and cost management enabled a robust incremental EBITDA margin of 56%. Artificial Lift and Downhole revenue increased 3% to $90 million due to the addition of Premiere Torque Rings and higher demand for sand and flow control solutions and our valve products. EBITDA of $21 million was relatively flat. Contributions from revenue growth were offset by higher freight and tariff costs. Orders remained strong, resulting in a book-to-bill ratio of 113%, primarily from large gas processing equipment and technology orders. With that segment context, I will turn to our outlook for the Q4. We expect Q4 results to be stronger than we had implied on our Q2 call. Higher oil prices have supported increases in drilling and completion activity around the world.
Lyle Williams: Specifically, global drilling rig count is up 6% year over year. This activity tailwind, combined with our recent acquisition, supports the increase in our outlook. We expect Q4 revenue between $230 million and $250 million, and EBITDA between $33 million and $39 million. At the midpoint, these represent approximately 19% revenue growth and 59% EBITDA growth compared to the Q4 of last year. In line with this profitability guidance, we expect net income between $15 million and $21 million, and free cash flow between $25 million and $30 million for the Q4. I would like to call out one thing for Q4 modeling purposes that will impact GAAP net income and earnings per share. Earlier this month, to comply with our long-term incentive plan, we modified approximately 128,000 outstanding equity awards to allow for cash settlement and are electing to settle another 15,000 equity awards in cash.
Lyle Williams: Therefore, we expect to recognize a one-time incremental stock-based compensation charge of approximately $5 million in Q4. While our Q3 income statement demonstrates the success of our Beat the Market strategy, our capital-light operating model continues to deliver even more value. Over the past two years, improved free cash flow generation has allowed us to favorably deploy capital for the benefit of FET and its shareholders. During Q3, we continued that trend, taking advantage of our strong free cash flow and balance sheet to reduce net debt, repurchase shares, and complete an accretive acquisition. In Q3, effective working capital management pulled forward $10 million of cash flow from Q4. Accounts receivable increased with revenue, while inventory remained well-controlled as we actively managed inbound materials to align the business with our outlook.
Lyle Williams: With this focus, free cash flow of $30 million was well above the high end of our guidance range. We reduced net debt by $13 million to $97 million, improved our net leverage ratio dramatically from 1.1x to 0.9x, and returned capital to shareholders. We repurchased approximately $1.4 million of shares during the quarter at an average price of $51, over 40% below our recent trading values. Since initiating our current program in 2025, we have repurchased a total of 1.6 million shares, or approximately 13% of the then outstanding share count. In addition to debt reduction and share repurchases, we also completed the acquisition of Premiere Torque Rings. Total guaranteed consideration of $33 million, or about 4x EBITDA, consisted of $16 million of common stock, $12 million of cash, and $5 million of deferred cash consideration.
Lyle Williams: Management will remain with the business and is motivated to continue profitable growth through a self-funding earnout. Acquisitions have been and continue to be an important part of our capital allocation framework and can enhance our FET 2030 vision. We have a solid balance sheet and believe our stock is an attractive currency today. Using a combination of cash and equity allowed us to complete the Premiere acquisition while preserving balance sheet capacity to pursue additional strategic investments. With that, I'll turn the call back to Neal for closing remarks.
Neal Lux: Thank you, Lyle. Our Q3 results reinforce FET's track record of delivering on our commitments and a clear example of executing at a high level. We delivered strong growth, generated substantial free cash flow, and used that cash to strengthen the balance sheet, return capital to shareholders, and complete an accretive acquisition. These results reflect the progress we are making across the business. Looking ahead, we remain confident in our increased 2026 outlook and the path towards FET 2030. With continued execution of our Beat the Market strategy, we expect to gain share, improve profitability, and build a stronger company. We believe FET is well-positioned to deliver continued outperformance and long-term shareholder value. Thank you for joining us today. Dullem, please take the first question.
Operator: Thank you, sir. Our first question in the queue comes from the line of Jeff Robertson from Water Tower Research. Please go ahead.
Jeff Robertson: Excuse me. Good morning. Neal, you talked a little bit about 2027. Can you share any color on the type of conversations that you are having with customers that underpin your view that people might be leaning into 2027 a little bit, just based on where the market is right now?
Neal Lux: Yeah. I think it's definitely early in the budget season, right? I don't want to get too far ahead. But I think if you take what you hear from large service companies publicly saying, broad-based, let's call it mid to high single-digit activity, we do have a higher commodity strip as well. Our customers are going to be disciplined, but I do think for us, it'll continue to be the intensity, right?
Neal Lux: It'll be longer laterals, more stages, and that's just going to consume more of our product. I think the other way to think about it is, I think we're at a good operating level where we are today. If you think about our Q3 results and Q4 guidance, we feel like that's a good level that we're operating at, and then if we see further activity and further share gains, we feel good about next year.
Jeff Robertson: On the Premiere Torque Rings acquisitions, can you share anything about the contribution to Q4 2026? Is that a technology that falls into some of your others that you can extend the market opportunity to other markets under the FET umbrella?
Neal Lux: Yeah. I will start with the second part of your question, Jeff, because I think that is really the key part. Premiere Torque Rings has a lot of synergy with our downhole product line. We have shared customers, very similar target accounts, so a lot of cross-selling opportunities. That part, to me, is really exciting. Again, international expansion is one part of that. Also, when we started looking at this acquisition, what got us really excited is how useful the product is, but how field-friendly it is. Just to give a quick anecdote, when we started looking at the company, Lyle and I were actually able to install these rings on the casing, and quite honestly, we would make terrible field hands. We would be fired day one. But we were able to install these torque rings.
Neal Lux: So I think it is field-friendly, but as wells continue to get more complex, the torque rings are going to be a great solution for our customers. It gives them a lot of flexibility in their thread designs. Then, importantly, we were able to retain the management team. They are talented, they are passionate, and they are customer-focused. So I think all that is just really exciting about the acquisition.
Lyle Williams: Jeff, I will add in, on the Q4 results, really excited about that. We talked about on the call, the guaranteed consideration for the acquisition is about $33 million, and we acquired that for roughly 4x EBITDA. So, think about an $8 million or $2 million a quarter kind of a run rate. We did close that acquisition in the middle of Q3, so sequentially, probably think another $1 million or so of contribution from Torque Rings. As Neal mentioned, long term, we are excited about the ability to leverage our footprint to help that business grow, so we look for more contribution in the coming quarters and years.
Jeff Robertson: Lyle, is their current business more of a North American focus, or do they already have global relationships?
Lyle Williams: They are very US-focused, but before our acquisition, they were also international. They were doing business in Latin America and the Middle East. Already a great starting point around the world and something that we can help them grow.
Jeff Robertson: Last question or last comment, I guess. Like a lot of your other businesses, that basically dovetails into increased demand for unconventional resource development around the world. Is that right?
Neal Lux: That's right. I think also these tools can be used in even conventional casing designs, so ones that really, the good use of Premiere Torque Rings is if the casing needs to be rotated while lining the hole. If it's more complex or the hole isn't drilled perfectly, Premiere Torque Rings is a great tool to increase that capability and allow that casing to be installed. Unconventional, yes, but I think well complexity is really what drives it.
Jeff Robertson: Thank you.
Neal Lux: Thanks, Jeff.
Operator: Thank you. Our next question in the queue comes from the line of Steve Ferazani from Sidoti. Please go ahead.
Peter Sidoti: Hi. I actually have the second team here. It is Peter Sidoti. Quick question. Can you just talk about where you are comfortable with debt levels as well as your priorities on the cash flow between buying back stock, debt repayment, and acquisitions at this point?
Neal Lux: Yeah. Maybe I will start and then let Lyle jump in, Steve, but excuse me, Peter. As we think about our priorities, we feel like we are comfortable with our debt levels now, and we kind of mentioned that as we entered the year. We want to look at different opportunities, and acquisitions would be one of them, as well as share buybacks would be strategic as well. And we think there is a lot of acquisition opportunities out there. We are continuing to look, and I think there is a good pipeline that we have built. But we will also be very disciplined in whether we make an acquisition or we buy back our own shares. And one way to look at that is our free cash flow yield and then what is the price of the acquisition we are buying.
Lyle Williams: Yeah, Peter, really, thanks for the question. We have done a great job over the last several years of lowering our net debt. One thing I want to correct, comment on the call, I actually said we reduced our net debt by $13 million. The right number is $18 million. So, sorry for that misspeak. But I think Neal is right. As we continue to drive that down, we really think of debt reduction levels, or where our debt is now is a very comfortable level of leverage. As we continue to drive that down, it really looks like more dry powder for strategic investments.
Peter Sidoti: Do you have a target return when you look at acquisitions?
Neal Lux: We have a criteria. Maybe stepping back, big picture, our criteria is we want to acquire companies that have differentiated products, that have limited competition, that have similar growth outlook over the next 5 years that we do, right? So, they can augment our organic growth strategy. I think that is the key is, we love our internal plans. We love what we have in front of us. We think our FET 2030 plan, so far we are executing on that brilliantly. I think that will continue. But if we can augment that with acquisitions that follow that same path, we are excited. Premiere, which we completed here in Q3, that was one as well. And if we can find others that have similar framework, we will do that as well.
Peter Sidoti: All right. Thank you very much.
Neal Lux: Thank you.
Operator: Thank you. Our next question comes from the line of Gowshi Sriharan from Singular Research. Please go ahead.
Gowshi Sriharan: Good morning, gentlemen. Thanks for taking my call.
Lyle Williams: Hi, Gowshi.
Gowshi Sriharan: Hey, good morning. My first question is, as growth kind of picks up, how should we think about free cash flow conversion? How much kind of working capital requirements does the extra, the next $100 million of revenue need?
Lyle Williams: Yeah, Gowshi, that's a really good question. One of our biggest assets, obviously, is our working capital. As a capital-light business, we don't need a lot of CapEx to grow our business. The last few years, we've been able to monetize a lot of working capital. It's been a good change. I think going forward with growth, you're right, we will need to reinvest. I think the right framework that we would say to use is think about our long-term FET 2030 strategy and the outlines we've given there, which is incremental EBITDA margins on revenue should be between 25% and 35%, kind of roughly in line with our gross margins.
Lyle Williams: And 60% to 70% of every incremental dollar of EBITDA would be free cash flow. Still quite a light capital model, but that gives an idea of what we would be thinking about as far as incremental working capital to grow top line.
Gowshi Sriharan: Got you. On the backlog, I know you started the year around $300 million, kind of the highest in 11 years. Where does that backlog sit right now, as opposed to the start of the year, and how much of that can we model that converts over the next two or three quarters?
Neal Lux: Yeah. I think our book-to-bill has continued to be above 100 for the last few quarters. I think that has been good. I think generally our backlog, we convert in less than a year. I think that is a good rule. We do have a few exceptions. Subsea, in that product line, occasionally we can have orders that will extend out. A good example is our rescue submarine that we will deliver, or we will recognize, excuse me, progress over the next two years or so.
Neal Lux: That would be one exception. I think in general, as we book, we convert that to revenue. Maybe another thing to think about is, roughly 80% of our sales are activity-based consumables. Those are typically booked and shipped within the quarter even. I think that is, to us, more important. As we think about 2027 and we look out beyond, it is what activity is going to be, how much share are we going to take, and then how quickly can we turn that to revenue?
Gowshi Sriharan: Okay. I know you alluded to that. Does the aftermarket and the defense become a bigger share of Subsea next year, or is the Subsea pipeline looking for refilling backlogs as those ROV deliveries kind of roll off?
Neal Lux: Yeah. We have continued to have good progress, but yeah, I think as we ship ROVs, we will be adding more and more aftermarket. Again, we think we have one of the highest market positions in world-class ROVs. So, as those ROVs continue to have higher utilization, they are going to need more and more aftermarket. We have made defense a focus of our growth market, so we have continued to add. Then finally, with our innovation, we have added our Unity operating system, and with Unity, we have the opportunity to put that operating system on new ROVs. But more excitingly, it can be an upgrade to existing. So, I think as we continue to see adoption of Unity, we will continue to have opportunities to upgrade existing ROVs.
Gowshi Sriharan: Okay. I will just make this my last question. I know that you mentioned the global rig kind of up 8% quarter-on-quarter. Where are these rigs being added? How much of the FET content do you typically have on them? How long does a rig addition usually take to show up in your consumables revenue?
Neal Lux: Mm-hmm. Yep. Good question. So, year to date, if you think about the big geographies, so US is roughly flat. But sequentially over the quarter, it is up 6%. But year-over-year, up 9%. But I think Canada is up a bit. But I think more importantly, if you think about our revenue per rig, so if you split it out, in the US, we have about $700,000 of annual revenue per US rig, and internationally, that number is about $350,000, so about half.
Neal Lux: So, I think as we continue to execute on our strategy of taking the technologies that have been really successful in the US and exporting those internationally, the big goal for us is to bring up that international revenue per international rig. So, I think it is a rig count story, but more importantly, it is how do we increase our revenue per rig? I think international is a great opportunity there for us.
Gowshi Sriharan: Awesome. Thank you again. Good luck and congratulations.
Neal Lux: Thank you.
Operator: Thank you. Our next question comes from the line of Jim Rollyson from Raymond James. Please go ahead.
Jim Rollyson: Hey, good morning, guys.
Lyle Williams: Morning, Jim.
Jim Rollyson: Neal, you have covered a lot of things I was going to ask, and you kind of just alluded to it, but international revenue is up 31% year to date, and I think your full-year revenue guide is up 15% corporate-wide, which obviously puts international on track to outperform. As you think through your outlook through 2030, the targets on growth, is international and offshore going to be the bigger relative share of that growth to get to those targets, do you think?
Neal Lux: I think it will be. Again, just maybe to add on that prior comment of revenue per rig, as we think about the technologies that have been really successful, and again, the example I give, because I just love it, is our Multilift solution, that we provide downhole tools that extend the life of downhole pumps. In the US, we have strong share. Internationally, the applications are, that market is about four times larger, and our share is really low. So, the opportunity for us to take that solution that is really successful, that has proven itself, and sell that internationally is huge. So, yeah, I think we will continue to see an acceleration of revenue outside the US.
Jim Rollyson: Perfect. Appreciate that. Thanks, guys.
Neal Lux: Thanks, Jim.
Lyle Williams: Thanks, Jim.
Operator: Thank you. Our next question comes from the line of Dan Pickering from Pickering Energy Partners. Please go ahead.
Dan Pickering: Good morning, guys.
Lyle Williams: Morning, Dan.
Dan Pickering: First, I guess I'd make a comment, which is, it wasn't that long ago when the Q&A queue was pretty lonely, so congratulations on identifying incremental investors and finding folks that appreciate the story. Well done there. Let's talk a little bit, if you don't mind. Neal, you spent some time on the call talking about the Middle East. You show us your revenue numbers by geographic region. That was a kind of $40 million revenue number year to date. Tell us what you're doing over there. Give us an idea of what you're doing over there. Are you shipping things in? Are you performing any kind of services? You said you've been somewhat uninterrupted. Do you think the next 6 months looks similar to that? Is there a risk that things get dicier just as this conflict plays out?
Neal Lux: I think there's always that risk, Dan. It's something we're concerned about. We have local manufacturing as well as distribution and sales offices in Saudi as well as in the UAE, so we're always concerned that things can change. For us, we ship our product. Most of our sales will be what's called product sales, whether it's new products. Or aftermarket, that's what's driving it. A lot of times, though, it's taking the applications that, whether it's radiators for frac equipment or pumps or quench and temper coiled tubing or greaseless wireline cable, things that have been the workhorse of US unconventional, and exporting those to the Middle East. That's been successful. Or exporting them to Argentina, for example. Anywhere that service companies and operators are looking to become more efficient, we found a good market opportunity for our products and solutions.
Dan Pickering: Yeah. You mentioned Venezuela and Argentina. Those are countries that have, in the past, for upstream companies, been tough to get paid or they've seen assets expropriated, et cetera. If you think about Venezuela specifically, is that a ship to a US customer, get paid in US dollars in the US, or does it happen locally? How are you handling kind of the currency and country risk?
Neal Lux: Yeah. No, we're being very, very cautious, right? We're not going to try to grow, but take on a lot of credit risk there. Absolutely, we're generally shipping to a US company and receiving US dollars. Another way we could do it, let's say on larger projects, I think coiled line pipe would be a good example, we may have an LC in place, but again, that would be on delivery of that product ex-works. Our focus is products. We're not going to have assets in country. We're going to ship our products from the US and have them delivered into Venezuela and Argentina, and we're highly focused on getting paid.
Dan Pickering: Mm-hmm. You mentioned it, but I wasn't writing quickly enough. What are kind of your key opportunities there in Venezuela, just from a product line perspective?
Neal Lux: Yeah, it's really starting off with equipment or products that service companies would utilize, so coiled tubing, pressure control. We're also seeing some infrastructure rebuild, and that would be like coiled line pipe. I can remember a time when I was there probably over 20 years ago and looking at Lake Maracaibo and the opportunities to install coiled line pipe there. We've seen some of that. I think as the country continues to grow and stabilize, I think more infrastructure-type products will be there. But initially, we're selling consumables.
Dan Pickering: Got you. Thank you. The last question for me, you did an acquisition this quarter. Your balance sheet clearly lets you do more if you find the right ones. Can you just talk a little bit about your BD process? You mentioned in your discussion, you and Lyle out kicking the tires at Premiere. Are you guys the BD guys for Forum? Do you have an organization that is focused on that? Just curious what the velocity of acquisitions might be now that the balance sheet is really ready to go.
Neal Lux: Yeah. I will hand that to Lyle because his team leads that, kind of talk through the process.
Lyle Williams: Yeah. Thanks, Dan. We do have a team that works on identifying opportunities. I think one of the ways that we do that, though, as we have talked before, we have a really broad product reach. One way to think about M&A is we have lots of shots on goal, lots of technologies that could be adjacent or additive to our story. So, our BD teams do work with our individual product lines and businesses to identify what technologies are out in the space, what could be interesting, tangential to us, something where one plus one is more than two. So, it is a company-wide effort, I would say, to identify those targets, and then a specific team that helps vet that those are the right targets for us.
Dan Pickering: Got it. Thanks very much.
Neal Lux: Thanks, Dan.
Operator: Thank you. Our next question comes from the line of Joshua Jayne from Daniel Energy Partners. Please go ahead.
Joshua Jayne: Thanks. First one is on lower 48. We have heard a number of increasing anecdotes around underinvestment across a number of product lines, signaling that if we have an activity move up further into 2027, the industry could be short equipment across a number of product lines. Do you agree with this take, first? For those who maybe have underinvested, do you sense a coiled spring coming in the lower 48 equipment market, or do you view it as just steady as she goes for now?
Neal Lux: Yeah. Hey, Josh. Good to hear from you. We get out and visit our customers a lot and see our equipment, and I know at the operating level, in the field, a lot of them would love to have new equipment. They would love to have that investment. I think our customers, especially US lower 48, have been extremely resourceful in extending life and utilizing their equipment to the fullest. As I think about next year, I would hate to say it is a coiled spring, because I think they are going to continue to be resourceful. For us, though, it is the higher utilization of that equipment that there is less downtime, there is more wells, more stages. So that is where we are seeing the benefit, is really on the consumables. That said, if we get examples for upgrades, where we are seeing it is with key tools.
Neal Lux: Our FR120 iron roughneck, that is a capital item, that will be a CapEx item. What we are seeing is our customers wanting to upgrade their rigs to handle larger drill pipe and be more efficient. They are making that investment. Another good example is our radiators from GHT. Again, having the latest and the best radiator can increase the uptime of your engine and transmission, so they do make that upgrade. I think we may see an upgrade cycle of key components, and I feel like that is really good for us. If there is an underinvestment and coiled spring, I would love to be a part of it, and we are well-positioned to take advantage of that too.
Joshua Jayne: Thanks for that. I did want to talk about, you highlighted the potential for data center revenue, and there has been a lot of opportunity, but also a lot of regulatory noise with respect to project start times. Has this pushed your expectations out a little? Maybe you could just go into some more detail about the opportunity set for Forum, and the size scale as it relates to the opportunity for your business today.
Neal Lux: Yeah. We are excited, and if you think about the place where we play, we are on the shorter cycle. If you go back to the regulatory challenges that you mentioned, those will happen on the front end, and once the EPCs or the data center or the customers, they get over that is when they come to us. When we have RFQs that are in the hopper, those are quotes and deliveries that have kind of passed that hurdle. If they are talking to us, it means that it is right in front of us. What is exciting that we are seeing is we are seeing increased activity, increased RFQs that are out there. We think we have a great solution. We have some IP around it. Our coolers are, let us call them a little bit more modular.
Neal Lux: When they are operating, and again, as I envision these data centers, the engine should be running a lot, even more than frac. They should be roughly 365/24/7. If you need to have maintenance or you need to have an issue, you cannot have a cooler down. Our modular technology would allow replacement of coolers very quickly. When I mentioned we have solutions that prioritize uptime, that is what we are talking about. It is going to lower the total cost of ownership. We are excited about what we have. We have a good history there. We have progressed from really strenuous applications to now the stationary ones, so I think we are really well-positioned.
Joshua Jayne: Thanks. I will turn it back.
Neal Lux: Thanks, Josh.
Operator: Thank you. Our next question comes from the line of Eric Carlson. Please go ahead.
[Analyst]: Hey, guys. Good morning.
Neal Lux: Morning, Eric Carlson.
[Analyst]: Another good quarter. I think maybe just thinking a little bit longer term here. I mean, I think you guys started presenting the FET 2030 plan three or four quarters ago, and if you look at results the past few quarters, and even if you hold those steady to modestly higher, I mean, within five, six months or two quarters here, we are looking at somewhere around $140 million of trailing EBITDA. I mean, if I would have told you this is kind of where we stand and the tailwinds that exist when you started thinking about the FET 2030 plan, I mean, what would be your scorecard? Does it feel like you are ahead of schedule, behind schedule? Just some comments on when you think about where we have come from to where we are now, and then kind of progress along the way here.
Neal Lux: Yeah. We do feel really good about the progress we have made. I think when we rolled out the FET 2030 plan, it was not a top-down exercise, but one that we built from the bottoms up with our teams, and we have a shared commitment to delivering there. So the results we have had to date, I am proud of our teams and what they have done. When we first started it as well, we kind of laid out a flat and a growth scenario. So I think where we have benefited is, we have had more of that growth scenario. And I think about the inventory of oil over the next few years that I think that growth scenario is a more likely scenario than flat.
Neal Lux: And I think that is a little bit different than maybe just the three or four quarters ago. That said, it still requires us to take share. It still requires discipline, working capital management in order to turn that share growth into free cash, and then the teams have done it. So yeah, here, I would give ourselves an A, but the next quarter has already started, and we need to be focused on our grades going forward. So, we will give ourselves a pat on the back, but we are already moving forward.
[Analyst]: Great. Lyle, can you remind me, I think, the debt that you guys issued a few years ago, that comes due in 2029. It is callable next year. Obviously, there are some balance sheet or return to capital restrictions on that that probably are not as big of an issue as they were in the past. When you guys think about those notes due 2029, maybe just walk through, is that something that looks interesting to call once that gets here in the middle of 2027, or refinance those into something less restrictive? Maybe just thoughts on the debt side.
Lyle Williams: Yeah. Great question, Eric, and thanks for letting me remind everybody where that stands. On our balance sheet, we do have the $100 million bond that is traded on the Nordic market. We issued it a couple years ago, and as you mentioned, it matures in 2029. The first call date for us would be about May of 2027, so definitely something that we have thought about. I think importantly from where we stand today, our net debt as of the end of Q3 was $97 million, so below the value of that bond, and our expectation is to continue generating free cash flow. So, we can get our net debt on an absolute basis down quite a bit, and leverage is low. That bond would be callable in May, so it is definitely something we have thought about as an option.
Lyle Williams: We have got a very well-funded revolver, about a $250 million total facility, $180 million worth of borrowing base, and very little drawn on that here at the end of the quarter. So, really in great shape from that perspective. Now I think it is a capital allocation question. In the past, our capital allocation has been aimed at debt reduction and share repurchases, and I would say check mark, check mark.
Lyle Williams: We have been able to achieve both of those. Now I think we can add in the flexibility of M&A, which we just completed here in Q3, and balance where do we want to deploy our capital for where do we get the best return. That could be in some sort of refinancing of those bonds, but could also be, we have plenty of time left on those bonds. I think we have got flexibility to think about where are the best returns and what actions do we want to take for the balance sheet.
[Analyst]: Great. Last one for me would be, when you think, so the recent acquisition, $8 million EBITDA, is that kind of in the wheelhouse of what you would like to see going forward? Maybe not something transformative like you did with Variperm, but if you can bolt on four, five, six of these $8 to, or $5 to $15 million EBITDA businesses, that has a meaningful impact over the next two, three, four years.
[Analyst]: Maybe just range of targets in the pipeline, what do they look like from an EBITDA perspective? Because obviously, they become even more interesting as the public markets, the multiples have kind of increased, while it seems like the private valuations, from what I have heard, are still pretty subdued just because there is not a lot of buyers. Maybe just talk through kind of target size and pipeline and where you guys see you are competing or who you are competing with for some of these acquisitions.
Neal Lux: Okay. Maybe we will do a little back and forth on that question, Eric. I think what is really important and exciting for us is we have the opportunity to do a bigger acquisition if we wanted to, right? I think we have the balance sheet in the right spot. Again, we feel good about our access to capital markets. So, if we wanted to do a larger one, that is available. But, as you mentioned, Premiere was a great add-on. I think there could be other ones like that. We spend a lot of time looking, and again, it is important to understand what is out there. I think as Lyle mentioned earlier on an earlier question, we get a lot of the information from our teams and see where does it fit, what technologies are out there. So, we will continue to do that. But, as you mentioned, public company multiples have moved up. I would imagine over time that you may see private as well. So, I do not think there are just deals out there. You cannot steal a company, but I think there are a lot of other opportunities too.
[Analyst]: Great. That is helpful. Thank you.
Neal Lux: Thanks, Eric.
Lyle Williams: Thanks, Eric.
Operator: Thank you. That concludes the Q&A session. At this time, I would like to turn the call back over to Neal Lux, President and CEO, for closing remarks.
Neal Lux: Well, thank you for your support and participation on today's call. We look forward to our next one in February to discuss our Q4 and full year 2026 results.
Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
