FET - NYSE

Good morning, ladies and gentlemen. Welcome to the Forum Energy Technologies, Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. My name is Gigi, 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. A link with instructions can be found on the company's Investor Relations under the Events section. All lines have been placed on mute to prevent any background noise. This conference call is being recorded for replay purposes and will be available on the company's website. I will now turn the conference over to Rob Kukla, Director of Investor Relations. Please proceed, sir. Thank you, Gigi. Good morning, everyone.

And welcome to Forum Energy Technologies, Inc.'s fourth quarter and full year 2025 Earnings Conference Call. With me today are Neal A. Lux, our President and Chief Executive Officer, and David 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 Forum Energy Technologies, Inc.'s Form 10-Ks and other SEC filings. Finally, management's statements may include non-GAAP financial measures. For reconciliations of these measures, please refer to our earnings release and website. During today's call, all statements related to EBITDA refer to adjusted EBITDA. And unless otherwise noted, all comparisons are fourth quarter 2025 to third quarter 2025. I will now turn the call over to Neal A. Lux. Thank you, Rob, and good morning, everyone. Our fourth quarter and full year results once again display why Forum Energy Technologies, Inc. is a great business and a compelling long-term investment. Despite a challenging backdrop, including lower global drilling activity, tariffs and geopolitical uncertainty. Our teams executed with discipline and focus. I am extremely proud of what we achieved in 2025. And we are on the right track to realize our strategic vision FET 2030. Let me discuss some of the highlights from last year, starting with market share gains. We continued to execute our beat the market strategy. Through customer engagement, product innovation, and geographic expansion. Since the strategy's inception in 2022, revenue per global rig has grown 20%. In 2025, we increased it again despite a sizable decline in global rig count. These gains reflect disciplined commercial execution, a product portfolio that continues to resonate with customers and the benefits of our global footprint. Our commercial teams delivered a full year book to bill of 113%, with orders well diversified across products, end markets, and geographies. The Subsea product line performed exceptionally well, with a nearly 190% book to bill, supported by awards in the energy and defense markets. Also, capital equipment orders for drilling products increased internationally while we saw continued strength in wireline, coil tubing, and sand and flow control products. As a result, we enter 2026 with our highest year-end backlog in eleven years, up 46% since the start of 2025. Providing both visibility and resilience. A key driver of our market share gains and backlog growth is innovation. New product development remains central to our ability to beat the market and expand our addressable markets. During 2025, we commercialized 10 new products by collaborating with our customers to address specific operational challenges and improve their efficiencies. One innovative example is our Secura Series stage collars, which helped us rapidly grow share in the Middle East with one of the largest oil companies in the world. We are expanding on that line with SecuraSlim, the smallest diameter stage collar in the industry, designed for complex wells. With SecuraSlim, our customers can eliminate a casing string, significantly reducing costs and improving efficiency while maintaining well integrity. Another important product launch was DuraCoil 95, a differentiated coil tubing solution for improved performance in corrosive environments. Developed with Middle East applications in mind, DuraCoil 95 expands our portfolio and supports continued international share gains. The last example I will provide is our DuraLine manifold system, which allows operators and service companies to rig up significantly faster and more safely with far fewer man-hours. This is made possible by proprietary DuraLock connectors, high-pressure hoses, and patent-pending crane systems. We recently commissioned a system for shale development in Argentina and have line of sight for additional sales. Collectively, these innovations strengthen our technology pipeline and support future growth. In addition to our focus on growth, we are maintaining our margin and cost discipline. During the year, our teams mitigated trade and tariff policy impacts through pricing actions, supply chain optimization, and leveraging our global manufacturing footprint. In parallel, we executed significant structural cost reductions and consolidated four manufacturing plants into two. These actions deliver approximately $15,000,000 of ongoing annualized savings. The combination of market share gains, innovation, and cost discipline have translated directly into strong financial results. Free cash flow generation was a defining strength in 2025. Over the course of the year, we delivered $80,000,000 of free cash flow, the top end of our increased guidance range. This performance enables disciplined execution of our capital returns framework. We reduced net debt by 28% and repurchased approximately 11% of our shares outstanding. This is an incredible result for our investors. Looking to the future, we remain confident in our bullish long-term outlook. Over the next five years, oil demand is expected to increase along with global economic growth. And natural gas demand is forecast to grow rapidly through LNG exports and AI-driven electricity demand. The energy industry must supply these needs while also overcoming rapid declines in existing production. To meet this enormous challenge, our customers need to be significantly more efficient while also adding new capacity. Under this scenario, Forum Energy Technologies, Inc.'s addressable markets would expand by more than 50%. This expansion combined with our targeted market share gains could double revenue in five years. And with our strong operating leverage and capital-light business model, our EBITDA and free cash flow would grow significantly. The next step in this exciting journey starts now. While the general consensus for our industry is relatively flat activity, we expect to beat the market through share gains, strong backlog conversion, and benefits from structural cost reductions. We are forecasting revenue growth of 6% and EBITDA to increase by 16%. For full year 2026, we are guiding revenue between $808,880,000 and EBITDA of $90,000,000 to $110,000,000. For adjusted net income, we are guiding between $18,000,000 and $38,000,000. In addition, we expect to convert 65% of EBITDA into free cash flow, or between $55,000,000 and $75,000,000. This is a great start to executing FET 2030. To provide more detail on our fourth quarter results and near-term outlook, I will now turn the call over to David Lyle Williams. Thank you, Neal.

I will begin today with a review of our fourth quarter results, and first quarter guidance. Then shift to a discussion of cash flow and our capital allocation strategy. Fourth quarter revenue of $202,000,000 exceeded the top end of our guidance range and increased 3% sequentially. This performance outpaced a flat global rig count and reflects continued strength in offshore and international markets where our revenue increased 78%, respectively. This is the second consecutive quarter when international exceeded U.S. revenue, which declined 2% due to project timing, and softer demand for valves and artificial lift products. Adjusted EBITDA for the quarter reached the top end of our guidance range at $23,000,000. Higher revenue and cost reduction overcame less favorable product mix and modest increases in healthcare costs and professional fees. Also, income tax expense in the quarter includes $3,000,000 of a foreign tax settlement related to tax years 2017 through 2020. The majority of the expense is from a noncash reduction in deferred tax assets. Fourth quarter book to bill was 93%, primarily reflecting order timing in the Drilling and Completion segment following two exceptionally strong quarters for subsea and international drilling-related equipment. Let me continue with additional color on our segment results. Drilling and Completion revenue was $127,000,000, up 8%. The Subsea product line increased 25% as we recognized revenue on ROV projects and the sizable rescue submarine order announced in June. Coiled tubing revenue was up 13% with strong tubing sales in North America, as well as continued momentum for coiled line pipe. Drilling product line revenue increased 11% supported by international capital equipment demand. Segment EBITDA was essentially flat as cost savings offset unfavorable product mix. Artificial Lift and Downhole delivered a fourth quarter book to bill of 107% driven by large orders for natural gas processing units. And segment revenue was $75,000,000, down 4% sequentially on lower shipments by the Production Equipment product line. Downhole and Valve Solutions revenues were relatively stable, and segment EBITDA was flat, with margin improvement of approximately 90 basis points supported by favorable mix and cost reductions. Free cash flow remained strong in the fourth quarter, totaling $22,000,000 and resulting in full year free cash flow of $80,000,000. Through the year, our teams generated cash of nearly $34,000,000 from working capital efficiencies. We also completed two real estate sale-leaseback transactions that generated another $15,000,000 in net cash proceeds. Excluding this $15,000,000, our 2025 free cash flow conversion would have been an impressive 76%, and a yield of nearly 15% on our year-ending market capitalization. We ended the year with net debt of $107,000,000 and a net leverage ratio of 1.2x. Liquidity of $108,000,000 remains strong, with $73,000,000 available under our revolving credit facility. Subsequent to quarter end, we extended our credit facility maturity to February 2031, with improved pricing and increased letters of credit capacity. The credit facility tenor, plus commitments totaling $250,000,000 provides significant flexibility for Forum Energy Technologies, Inc. to fund strategic initiatives, including long-term debt retirement, organic growth, and acquisitions. We appreciate the long, continued support of our bank group. With this flexible financing structure and our fortified balance sheet, we are well positioned for the future. Looking ahead to the first quarter, we expect activity to remain relatively stable with the fourth quarter. Therefore, our guidance for revenue is $190,000,000 to $210,000,000 and EBITDA is $21,000,000 to $25,000,000. The midpoint of our EBITDA guidance is up about 15% on a year-over-year basis despite a projected 5% decline in global rig count. We are also guiding adjusted net income of between $5,000,000 and $9,000,000. We expect to generate positive free cash flow this quarter. I would like to remind investors that our first quarter is seasonally lower due to annual incentive compensation and property tax payments. Now let me turn to 2026 free cash flow and capital allocation expectations. Our 2026 free cash flow guidance is consistent with our FET 2030 target and reflective of our capital-light operating model. We forecast interest and cash taxes of $35,000,000, capital expenditures of $10,000,000, and a further net working capital reduction of $10,000,000, for full year free cash flow of $55,000,000 to $75,000,000. On a comparable basis to 2025, excluding net working capital and sale-leaseback proceeds, the midpoint of our 2026 cash flow guidance is about 75% higher. Let me provide a bit more color on uses of our free cash flow. The capital returns framework followed in 2025 was incredibly successful. During the year, we returned $35,000,000 to shareholders by repurchasing nearly 1,400,000 shares, 11% of shares outstanding at the beginning of the year. We repurchased these shares at an average price under $25, less than half of the current Forum Energy Technologies, Inc. share price. And we reduced our net debt by $42,000,000, or 28% through the year. Because our balance sheet is in such great shape, we believe any further net leverage reduction should be viewed as dry powder for incremental strategic investments. In fact, with our balance sheet flexibility and capacity, we have the ability to increase net leverage modestly to fund the right acquisition. Forum Energy Technologies, Inc. has a long history of increasing our addressable market through acquisitions. Our criteria identifies companies with differentiated products that compete in targeted markets and would be accretive to Forum Energy Technologies, Inc. per-share metrics. We evaluate these investments in comparison to repurchasing Forum Energy Technologies, Inc. shares. This year, our bonds allow repurchases of around $30,000,000 as long as our net leverage remains below 1.5x. We believe Forum Energy Technologies, Inc., with a forward free cash flow yield around 10%, remains a compelling investment. In summary, 2026 builds upon the success we demonstrated in 2025. Market share gains supporting EBITDA and meaningful free cash flow enabling exciting opportunities for outsized returns. With that, I will now turn the call back to Neal A. Lux for closing remarks.

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

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

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

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

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

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

Thank you. One moment for our next question. Our next question comes from the line of Stephen Michael Ferazani from Sidoti. Good morning, everyone. Appreciate all the detail on the call this morning.

Neal, I just wanted to ask, you came in at the very high end of the guidance range. Where were the pluses and the minuses in the quarter? What came in better than you were expecting?

Yeah. I think it was just I will, I mean, I will start and let Lyle add in. You know, I think the team is just really solidly. You know, coming into Q4, you know, we are always concerned about just the holidays and a slowdown. And we really did not have that impact this year. So I do not know if it is kind of the plus or minuses of what came in. I think it was really we just did not have that end-of-the-year slowdown, you know, around Christmas, call it frac holiday in years past. We did not see that.

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

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

I think it is a continuation, right, of our beat the market strategy. We are gaining share and expanding on that. And thinking about the overall guide for 2026, we have backlog coming in in the year. That gives us benefit. We also have the structural cost savings that we executed the back half of last year. And so that is helpful as well.

I think the last thing, have you fully realized that at this point? Have we seen the full realization? There is more—

Not quite. Not quite, Steve, but I think the back half of the year will have 100%. But we are about two-thirds of the way.

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

I appreciate the comments on the number, but also on the working capital challenge as we grow. So maybe key components that we talked about in the script, just as a reminder, walking from EBITDA down, $35,000,000 of cash taxes and interest, then $10,000,000 of CapEx. So really in line with what we have done the last few years, and a $10,000,000 release or source of cash from working capital. So good job by our teams to continue to do that with revenue growth. I think a lot of that focus is around the area of inventory. If you look at last year, we released about $34,000,000 of cash from working capital. Great moves in the area of DSOs and receivables, also good on inventory. So I think next year is a continuation of that. And, really, as we think about that cash flow, one of the ways that we have done that is by looking at year-over-year comparison excluding the sale-leasebacks that we had in 2025 and also excluding net working capital benefit in both years. If you do that, then on a comparable basis, the 2026 number is 75% more cash flow than the 2025 number. So as you mentioned, pretty strong, pretty strong growth there, and confident in our team's ability to squeeze some more value out of working capital.

If I can get one last quick one in. We just looked at the average share count; it did not really move much in 4Q. Can you talk about the timing of the buyback in 4Q? And then how we are thinking about timing in 2026? Typically, cash flow is better in the second half; reasonable to think that is the more likely period you might execute?

Steve, I think you are on there. We did repurchase about 400,000 shares, just over 400,000 shares in the fourth quarter, and we did that. I think as we think about our buyback strategy and how we have that in place, if you remember last year, we were trying to buy about use about half of our cash for share repurchases. We wanted to see that cash flow come in. So while we are really confident in this 2026 number, I think a more back-end weighted, like we did in 2025, might be appropriate. One of the things that is different this year than last is the 1.5x net leverage ratio constraint. So at the beginning of 2025, we were limited on share buybacks because we had leverage. We have effectively pulled that down to 1.2x at the end of 2025. So a little more of an open window there. But, yeah, I would think that buybacks may be a little more back-end loaded this year.

Got it. Thanks, everyone. Thank you.

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

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

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

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

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

I will turn it back. That is very helpful. Thanks for taking my questions.

Thanks, Dan.

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

Hey, guys. Thanks for including me. First, just a congratulations on the tremendous improvement in the stock price. Impressive. Was hoping you could elaborate a little bit on just the opportunities that you guys are seeing for M&A opportunities and maybe valuation expectations on the part of sellers today?

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

Okay. And that preference offshore versus land, international, North America, any color there would be it. That is all for me. Thank you.

Yeah. No. I think, again, earlier, just find the best business possible, John. Okay. And whether it is land, offshore, or, you know, it really fits our mix. K. Thanks for including me, guys.

Thanks, John.

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

Morning. I guess maybe start, did not spend a lot of time on U.S., but when you think about, I mean, you have basically proven in the market that you have diversified and kind of right-sized the business to be a very good performer, kind of despite what we have seen in the rig count over the past few years. I think U.S. rig count down 30%, frac spread down about 50% from kind of peak late 2022, early 2023. And can you just maybe describe the torque available in just if the U.S. rebounds even marginally? I mean, what is the significance that the business—

Yeah. Yeah. I think in the U.S., our revenue per rig is significantly higher than international. So if there is a rebound in U.S. rig count, it will be a tremendous torque for us. You know? Obviously, high service intensity. I think as you were laying out kind of the historical trend there, Eric, I think it is interesting to note that, you know, rig count down, frac fleets down, but I think total footage drilled, you know, let us call it the length of the wells, is maybe up, and stages completed is up. So I think that is the service intensity. And as we think about that, we view that increased service intensity as more demand for activity-based consumables. So I think that is a bonus there. I think maybe the other part that adds on to that for U.S. land is the equipment is getting older. Right? You know, Lyle and I were talking the other day about when is the last time we have delivered a catwalk for U.S. land, and he has been here longer than me, and he had to scratch his head to try to remember. So it has been probably over ten years. So what we are starting to see from our customers, though, is interest in upgrading their capital, you know, whether it is drilling rigs or frac fleets. And I think for those who are not as familiar with our story, you know, we do not build entire drilling rigs or build entire frac fleets. We provide, you know, kind of the key components for them. So as the customer base in the U.S. continues to increase the intensity of the assets they have, they are going to need to upgrade and add, you know, add our equipment. A great example is our FR120, you know, the iron roughneck, which, for those that follow the show Landman, they were able to see it on the season two, episode six. You know, the roughnecks of Amtex Oil called our product the future. So that was good to see.

Yeah. I appreciate that. And, yeah, I did catch that. And then maybe just when you think about kind of the core OFS equipment business versus some of these newer opportunities, whether it is kind of Subsea, not directly related to oil and gas, or maybe kind of one of the recent conversations I had was with kind of a large data center real estate investor, and they said, I mean, people are moving and just trying to find mobile power generation to kind of bridge the gap, kind of as they wait for kind of firm baseload to be delivered by the utility. And I know you guys offer, like, some, whether it is kind of the radiators or whatever it might be. Can you talk about some of maybe just the markets that are non-oil-and-gas-related and kind of are those early stages? Is there a really big opportunity there? Is it, I mean, marginally better? Just provide some feedback there. Be interesting.

Yeah. You mentioned Subsea. I will just start, but think the data center one is obviously very interesting too. But, you know, on Subsea defense, you know, we think that is a long-term growth opportunity. Right? We provide key equipment. We were already in that business. I think as other countries around the world rearm and look to avoid satellite detection, working underwater is incredible. So it is a key part of their defense capabilities. So I think that is a long-term growth area, and I think it is a great opportunity. The data center side, you mentioned mobile power. So we do provide key heat exchangers, radiators, for that market. Again, we have taken the lead, or the great product we had for heat exchangers in mobile frac, and those customers are now adopting that for mobile power generation. You know, we also see the fixed radiator possibility as a huge market, and it is one that we are looking at developing products for. I think it is early on. We want to see if it fits our engineering and supply chain manufacturing wheelhouse. But that would be a key area for us as well. And then, you know, maybe last area would be a good example is coiled line pipe. You know, we have talked about that in prior calls, but we are providing that product into non-oil-and-gas applications, you know, renewable natural gas, you know, opportunities like that. So that has been a good add to our nontraditional base. But, you know, overall, thinking about the data center opportunity, kind of view it as more of a second-derivative growth for us. I think the increase in gas demand overall, whether it is LNG, data centers, that is going to drive U.S. Drilling and Completion. And I think that is where we are going to really see the benefit as well.

Great. And then maybe shift to the capital returns framework, which you kind of laid out. I mean, when you guys look at acquisitions, I mean, are things still trading around that 3x to 5x EBITDA multiple? Like, if someone is holding something privately or you can carve something out of someone else who is public that wants to shed a legacy business or a private equity firm that has been holding a business for the last dozen years that needs an exit. I mean, do you have any sense of, like, what are multiples looking like on either EBITDA or cash flow or both? I am just curious if you are kind of looking at your pipeline.

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

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

Yeah. Again, we have started that FET 2030 growth plan really from the bottoms up, right? Looking at all of our businesses, what we could do organically. I think about an acquisition and adding on to that as a way to really supercharge that as well. So can we add somebody that we have, you know, revenue synergies? Can we have some cost synergies? And, you know, by having this type of product, could we then, you know, grow faster our existing organic story? So I think there are definitely opportunities out there like that. And I think you have to look at them on an individual basis. You know, we have our criteria that I think we have talked about a lot. You know, it has got to be differentiated. You know, it has got to be a targeted market. And we want to have it accretive to our financial measures. So you are right, though. The story, you know, buying our own stock, has played out really well. It has been a good use of capital. And, you know, our investors have taken notice. But I think it is one part of our capital allocation strategy. I think M&A is another. I think overall, as long as the acquisition hits the criteria and adds to our FET 2030 story, we will take a serious look at it.

Great. That is helpful. Okay. I have two more questions, then I will shut up. When you think about, I mean, so Veraperm, heavy oil sands in Canada primarily. There are obviously international indications to that. I mean, and this is very early stages, but, like, is Veraperm something that can be used in Venezuela eventually or something like that if a market like that would open up?

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

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

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

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

That is helpful. Alright. Great. Thanks.

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

Alright. Well, thank you for your support and participation on today's call. We look forward to our next meeting in May to discuss Forum Energy Technologies, Inc.'s first quarter 2026 results.