FORUM ENERGY TECHNOLOGIES, INC.

Previous wording

We are a global manufacturing company serving the oil, natural gas, industrial and renewable energy industries. With headquarters in Houston, Texas, FET provides value added solutions aimed at improving the safety, efficiency, and environmental impact of our customers’ operations. Our highly engineered products include capital equipment and consumable products. FET’s customers include oil and natural gas operators, land and offshore drilling contractors, oilfield service companies, pipeline and refinery operators, and renewable and new energy companies. Consumable products are used by our customers in drilling, well construction and completion activities and at processing centers and refineries. Our capital products are directed at drilling rig equipment for constructing new or upgrading existing rigs, subsea construction and development projects, pressure pumping equipment, the placement of production equipment on new producing wells, downstream capital projects and capital equipment for renewable energy projects. For the nine months ended September 30, 2024, approximately 80% of our revenue was derived from consumable products and activity-based equipment, while the balance was primarily derived from capital products with a small amount from rental and other services.

Current wording

We are a global manufacturing company serving the oil, natural gas, industrial and renewable energy industries. With headquarters in Houston, Texas, FET provides value added solutions aimed at improving the safety, efficiency, and environmental impact of our customers’ operations. Our highly engineered products include capital equipment and consumable products. FET’s customers include oil and natural gas operators, land and offshore drilling contractors, oilfield service companies, pipeline and refinery operators, and renewable energy and new energy companies. Consumable products are used by our customers in drilling, well construction and completion activities and at processing centers and refineries. Our capital products are directed at drilling rig equipment for constructing new or upgrading existing rigs, subsea construction and development projects, pressure pumping equipment, the placement of production equipment on new producing wells, downstream capital projects and capital equipment for renewable energy projects. For the three months ended March 31, 2025, approximately 80% of our revenue was derived from consumable products and activity-based equipment, while the balance was primarily derived from capital products with a small amount from rental and other services.

Previous wording

In the first quarter 2024, following the Variperm Acquisition, we aligned our reportable segments with business activity drivers, our customer base, and the manner in which management reviews and evaluates operating performance. FET now operates in the following two reportable segments: (1) Drilling and Completions and (2) Artificial Lift and Downhole. Refer to Note 10 Business Segmentsfor the product lines making up each segment. Our historical results of operations were recast retrospectively to reflect these changes in accordance with U.S. GAAP.

Current wording

The Company operates in the following two reportable segments: (1) Drilling and Completions and (2) Artificial Lift and Downhole. Refer to Note 9 Business Segmentsfor the product lines making up each segment.

Previous wording

Our revenues, over the long-term, are highly correlated to the global drilling rig count, which decreased 3.1% during the third quarter 2024 compared to average global rig count during third quarter 2023. The decrease was mainly driven by a decline in U.S. rig count of 9.7%. In the U.S., publicly owned exploration and production companies are expected to continue to exercise disciplined capital spending while privately owned exploration and production companies fluctuate their activity in response to changes in oil and natural gas prices. Activity levels in the U.S. are forecasted to remain depressed in the fourth quarter of 2024 and into 2025 while international growth is expected to decline.

Current wording

Our revenues, over the long-term, are highly correlated to the global drilling rig count, which decreased 5.0% during the first quarter 2025 compared to average global rig count during first quarter 2024. The decrease was mainly driven by a decline in U.S. rig count of 5.6%. In the U.S., publicly owned exploration and production companies are expected to continue to exercise disciplined capital spending while privately owned exploration and production companies fluctuate their activity in response to changes in oil and natural gas prices.

Previous wording

The table below shows average crude oil and natural gas prices for WTI, Brent, and Henry Hub:

Current wording

The table below shows average crude oil and natural gas prices for Average West Texas Intermediate (“WTI”), Brent, and Henry Hub:

Previous wording

Our revenue for the nine months ended September 30, 2024 was $615.4 million, an increase of $61.7 million, or 11.2%, compared to the nine months ended September 30, 2023. For the nine months ended September 30, 2024, our Drilling and Completions and our Artificial Lift and Downhole segments comprised 58.4% and 41.6% of our total revenue, respectively, compared to 67.9% and 32.1% of our total revenue, respectively, for the nine months ended September 30, 2023. The overall increase in revenue is primarily related to the revenue contributed from the acquired Variperm business and increased revenues in the Subsea product line, partially offset by the decline in U.S. drilling and completions activity in 2024 compared to 2023. The changes in revenue by operating segment consisted of the following:

Current wording

Our revenue for the three months ended March 31, 2025 was $193.3 million, a decrease of $9.1 million, or 4.5%, compared to the three months ended March 31, 2024. For the three months ended March 31, 2025, our Drilling and Completions and our Artificial Lift and Downhole segments comprised 59.8% and 40.2% of our total revenue, respectively, compared to 58.8% and 41.2% of our total revenue, respectively, for the three months ended March 31, 2024. The overall decrease in revenue is primarily related to the decline in global drilling and completions activity in 2025 compared to 2024. The changes in revenue by operating segment consisted of the following:

Previous wording

Drilling and Completions segment— Revenue was $359.7 million for the nine months ended September 30, 2024, a decrease of $16.3 million, or 4.3%, compared to the nine months ended September 30, 2023. The decrease in segment revenue included a $19.2 million, or 15.1%, decrease from the Drilling product line, a $12.4 million, or 9.8%, decrease from the Stimulation and Intervention product line, and a $3.4 million, or 4.1%, decrease from the Coiled Tubing product line, primarily the result of declining U.S. drilling and completions activity. These decreases were partially offset by an increase of $18.6 million, or 45.6%, in our Subsea product line due to higher project revenue recognized from ROVs and LARS, and an increase in parts sales.

Current wording

Drilling and Completions segment— Revenue was $115.6 million for the three months ended March 31, 2025, a decrease of $3.5 million, or 2.9%, compared to the three months ended March 31, 2024. The decrease in segment revenue included a $4.4 million, or 12.0%, decrease from the Drilling product line and a $1.1 million, or 2.9%, decrease from the Stimulation and Intervention product line, primarily the result of declining global drilling and completions activity. These decreases were partially offset by an increase of $1.7 million, or 7.6%, in our Coiled Tubing product line due to the completion of coiled line pipe projects in the U.S. and Latin America.

Previous wording

Artificial Lift and Downhole segment— Revenue was $255.7 million for the nine months ended September 30, 2024, an increase of $78.1 million, or 43.9%, compared to the nine months ended September 30, 2023. Revenue for our Downhole product line increased by $87.1 million, or 126.7%, primarily due to revenue contributed from the acquired Variperm business and an increase in downhole equipment sales from increased international activity. This increase was partially offset by a $4.8 million, or 8.0%, decrease in surface production equipment and a $4.3 million, or 8.7%, decrease in sales of our valve products.

Current wording

Artificial Lift and Downhole segment— Revenue was $77.8 million for the three months ended March 31, 2025, a decrease of $5.5 million, or 6.7%, compared to the three months ended March 31, 2024. Revenue for our Downhole product line decreased by $4.6 million, or 8.8%, primarily due to decreased U.S. activity, partially offset by an increase in sales of international casing equipment hardware. Also, there was a $1.5 million, or 12.3%, decrease in sales volumes of our valve products, particularly sales into the North America downstream oil and natural gas market.

Previous wording

Segment operating income for the three months ended September 30, 2024 was $9.4 million, a $3.9 million increase compared to an income of $5.5 million for the three months ended September 30, 2023. For the three months ended September 30, 2024, segment operating margin percentage was 4.5% compared to 3.1% for the three months ended September 30, 2023. Segment operating margin percentage is calculated by dividing segment operating income (loss) by revenue for the period. The change in operating income (loss) for each segment is explained as follows:

Current wording

Segment operating income for the three months ended March 31, 2025 was $9.0 million, a $0.1 million decrease, compared to $9.1 million for the three months ended March 31, 2024. For the three months ended March 31, 2025, segment operating margin percentage was 4.6%, compared to 4.5%, for the three months ended March 31, 2024. Segment operating margin percentage is calculated by dividing segment operating income by revenue for the period. The change in operating income for each segment is explained as follows:

Previous wording

Artificial Lift and Downhole segment— Segment operating income was $10.8 million, or 12.8%, for the three months ended September 30, 2024 compared to an income of $8.5 million, or 14.1%, for the three months ended September 30, 2023. The $2.3 million increase was primarily driven by the acquisition of Variperm, partially offset by the decline in operating leverage on lower sales volumes of our surface production equipment.

Current wording

Artificial Lift and Downhole segment— Segment operating income was $7.3 million, or 9.4%, for the three months ended March 31, 2025 compared to $11.8 million, or 14.1%, for the three months ended March 31, 2024. The $4.5 million decrease in segment operating results was due to unfavorable product mix.

Previous wording

Corporate— Selling, general and administrative expenses for Corporate were $8.4 million for the three months ended September 30, 2024 compared to $6.9 million for the three months ended September 30, 2023. This increase was primarily related to higher variable compensation costs and professional fees. Corporate costs include, among other items, payroll related costs for management, administration, finance, legal, and human resources personnel; professional fees for legal, accounting and related services; and marketing costs.

Current wording

Corporate— Selling, general and administrative expenses for Corporate were $7.7 million for the three months ended March 31, 2025 compared to $7.3 million for the three months ended March 31, 2024. This increase was primarily related to higher compensation costs and professional fees.

Previous wording

Transaction expenses, gain (loss) on the disposal of assets and other are not included in segment operating income, but are included in total operating income.

Current wording

Transaction expenses, gain (loss) on the disposal of assets and other are not included in segment operating income (loss), but are included in total operating income.

Previous wording

Other income and expense includes interest expense, foreign exchange gains (losses) and other, and loss on extinguishment of debt. We incurred $7.7 million of interest expense during the three months ended September 30, 2024, an increase of $3.1 million compared to the three months ended September 30, 2023, due to the increased borrowings under our revolving Credit Facility and borrowings under the Seller Term Loan entered into in connection with the Variperm Acquisition. See Note 7 Debt for further details related to the Credit Facility and Seller Term Loan.

Current wording

Other income and expense includes interest expense and foreign exchange gains (losses) and other. We incurred$5.0 million of interest expense during the three months ended March 31, 2025, a decrease of$3.8 million compared to the three months ended March 31, 2024, due to decreased borrowings. See Note 6 Debt for further details related to debt.

Previous wording

The foreign exchange gains (losses) are primarily the result of movements in the British pound, Euro and Canadian dollar relative to the U.S. dollar. These movements in exchange rates create foreign exchange gains or losses when applied to monetary assets or liabilities denominated in currencies other than the location’s functional currency, primarily U.S. dollar denominated cash, trade account receivables and net intercompany receivable balances for our entities using a functional currency other than the U.S. dollar.

Current wording

The foreign exchange gains and losses are primarily the result of movements in the British pound, Canadian dollar and Euro relative to the U.S. dollar. These movements in exchange rates create foreign exchange gains or losses when applied to monetary assets or liabilities denominated in currencies other than the location’s functional currency, primarily U.S. dollar denominated cash, trade account receivables and net intercompany receivable balances for our entities using a functional currency other than the U.S. dollar.

Previous wording

We recorded tax expense of $10.6 million and $6.2 million for thenine months ended September 30, 2024 and 2023, respectively. The estimated annual effective tax rates for thenine months ended September 30, 2024 and 2023 were impacted by losses in jurisdictions where the recording of a tax benefit is not available. Furthermore, the tax expense or benefit recorded can vary from period to period depending on the Company’s relative mix of earnings and losses by jurisdiction.

Current wording

We recorded tax expense of $3.8 million and $3.5 million for thethree months ended March 31, 2025 and 2024, respectively. The estimated annual effective tax rates for thethree months ended March 31, 2025 and 2024 were impacted by losses in jurisdictions where the recording of a tax benefit is not available. Furthermore, the tax expense or benefit recorded can vary from period to period depending on the Company’s relative mix of earnings and losses by jurisdiction.

Previous wording

Our internal sources of liquidity are cash on hand and cash flows from operations, while our primary external sources include trade credit, the Credit Facility, the 2025 Notes and the Seller Term Loan. Our primary uses of capital have been for inventory, sales on credit to our customers, maintenance and growth capital expenditures, debt repayments and the acquisition of Variperm. We continually monitor other potential capital sources, including equity and debt financing, to meet our investment and target liquidity requirements. Our future success and growth will be highly dependent on our ability to generate positive operating cash flow and access outside sources of capital.

Current wording

Our internal sources of liquidity are cash on hand and cash flows from operations, while our primary external sources include trade credit, the Credit Facility, and 2029 Bonds. Our primary uses of capital have been for inventory, sales on credit to our customers, maintenance and growth capital expenditures and debt repayments. We continually monitor other potential capital sources, including equity and debt financing, to meet our investment and target liquidity requirements. Our future success and growth will be highly dependent on our ability to generate positive operating cash flow and access outside sources of capital.

Previous wording

As of September 30, 2024, we had $61.2 million principal amount of 2025 Notes outstanding, $109.0 million of borrowings under our revolving Credit Facility and $58.4 million principal amount of the Seller Term Loan outstanding. During the nine months ended September 30, 2024, we retired an aggregate $73.0 million of principal amount of our 2025 Notes, including the $60.0 million in aggregate principal amount of our 2025 Notes that we redeemed in August 2024. The remaining 2025 Notes mature in August 2025. The Credit Facility matures on the earliest of (a) September 8, 2028, (b) the date that is 91 days prior to the maturity of 2025 Notes (which will not apply if the 2025 Notes are repaid prior to such 91st day) and (c) the date that is 91 days prior to the maturity of the Seller Term Loan if the outstanding aggregate principal amount thereunder is equal to or greater than $30 million. The Seller Term Loan matures in December 2026. See Note 7 Debt for further details related to the terms for our debt arrangements.

Current wording

As of March 31, 2025, we had $73.8 million of borrowings under our revolving Credit Facility and $100.0 million principal amount of the 2029 Bonds outstanding. See Note 6 Debt for further details related to the terms for our debt arrangements.

Previous wording

As of September 30, 2024, we had cash and cash equivalents of $33.3 million and $58.8 million of availability under the Credit Facility. We intend to use approximately $20 million of cash on hand and borrowings from our credit facility, together with the net proceeds from the issuance of the 2029 Bonds, to repay in full the 2025 Notes and the Seller Term Loan. We anticipate that our future working capital requirements for our operations will fluctuate directionally with revenues. Furthermore, availability under the Credit Facility will fluctuate directionally based on the level of our eligible accounts receivable and inventory subject to applicable sublimits. In addition, we expect total 2024 capital expenditures to be approximately $10.0 million, primarily for replacement of end of life machinery and equipment.

Current wording

As of March 31, 2025, we had cash and cash equivalents of $31.1 million and $77.4 million of availability under the Credit Facility. We anticipate that our future working capital requirements for our operations will fluctuate directionally with revenues. Furthermore, availability under the Credit Facility will fluctuate directionally based on the level of our eligible accounts receivable and inventory subject to applicable sublimits. In addition, we expect total 2025 capital expenditures to be approximately $10.0 million, primarily for replacement of end of life machinery and equipment.

Previous wording

In November 2021, our board of directors approved a program for the repurchase of outstanding shares of our common stock with an aggregate purchase amount of up to $10.0 million. Shares may be repurchased under the program from time to time, in amounts and at prices that the company deems appropriate, subject to market and business conditions, applicable legal requirements and other considerations. During the nine months ended September 30, 2024, we did not repurchase shares of our common stock and the remaining authorization under this program is $2.4 million.

Current wording

In December 2024, our board of directors approved a program for the repurchase of outstanding shares of our common stock with an aggregate purchase amount of up to $75.0 million. Shares may be repurchased under the program from time to time, in amounts and at prices that the company deems appropriate, subject to market and business conditions, applicable legal requirements and other considerations. During the three months ended March 31, 2025, we repurchased 105 thousand shares of our common stock for approximately $2.0 million and the remaining authorization under this program is $73.0 million.

Previous wording

Our cash flows for the nine months ended September 30, 2024 and 2023 are presented below (in millions):

Current wording

Our cash flows for the three months ended March 31, 2025 and 2024 are presented below (in millions):

Previous wording

Net cash provided by operating activities was $53.7 million for the nine months ended September 30, 2024 compared to net cash used in operating activities of $3.1 million for the nine months ended September 30, 2023. This improvement in operating cash flow usage is primarily attributable to changes in working capital which provided cash of $30.8 million for the nine months ended September 30, 2024 compared to a use of cash of $36.8 million for the nine months ended September 30, 2023.

Current wording

Net cash provided by operating activities was $9.3 million for the three months ended March 31, 2025 compared to net cash provided by operating activities of $5.0 million for the three months ended March 31, 2024. This improvement in operating cash flows is primarily attributable to increase in net income adjusted for non-cash items which provided $11.1 million of cash for the three months ended March 31, 2025 compared to $5.9 million for the three months ended March 31, 2024.

Previous wording

Net cash used in investing activities was $155.9 million for the nine months ended September 30, 2024, mainly related to the Variperm Acquisition of $150.4 million, and to $5.7 million of capital expenditures. Net cash used in investing activities was $4.2 million for the nine months ended September 30, 2023, including $5.5 million of capital expenditures, partially offset by $1.3 million of proceeds from the sale of property and equipment.

Current wording

Net cash used in investing activities was $2.1 million for the three months ended March 31, 2025, mainly related to capital expenditures. Net cash used in investing activities was $152.8 million for the three months ended March 31, 2024, mainly related to the acquisition of Variperm Holdings Ltd. (“Variperm”) of $150.1 million and $2.9 million of capital expenditures.

Previous wording

Net cash provided by financing activities was $89.4 million for the nine months ended September 30, 2024 compared to $6.9 million of cash used in financing activities for the nine months ended September 30, 2023. The change in net cash provided by financing activities primarily resulted from $109.0 million in borrowings from the revolving Credit Facility and $59.7 million from the Seller Term Loan, partially offset by the retirement of 2025 Notes of $73.0 million during the nine months ended September 30, 2024 compared to a net zero of borrowings on the revolving Credit Facility during the nine months ended September 30, 2023.

Current wording

Net cash used in financing activities was $21.0 million for the three months ended March 31, 2025 compared to $151.8 million of cash provided by financing activities for the three months ended March 31, 2024. The change in net cash used in financing activities primarily resulted from $16.5 million in net repayments from the revolving Credit Facility during the three months ended March 31, 2025 compared to a $96.5 million in net borrowings on the revolving Credit Facility and $59.7 million proceeds from the second lien seller term loan related to the Variperm acquisition, during the three months ended March 31, 2024.

Previous wording

There have been no material changes in our critical accounting policies and procedures during the nine months ended September 30, 2024. For a detailed discussion of our critical accounting policies and estimates, refer to our 2023 Annual Report on Form 10-K. For recent accounting pronouncements, refer to Note 2 Recent Accounting Pronouncements.

Current wording

There have been no material changes in our critical accounting policies and estimates during the three months ended March 31, 2025. For a detailed discussion of our critical accounting policies and estimates, refer to our 2024 Annual Report on Form 10-K. For recent accounting pronouncements, refer to Note 2 Recent Accounting Pronouncements.