Forum Energy Technologies: Leveraging Free Cash Flow and Share Repurchases to Drive Shareholder Value in 2025

Forum Energy Technologies (FET) has emerged as a standout performer in the energy sector in 2025, driven by a disciplined capital allocation strategy and a robust order book. The company's Q2 2025 results underscore its ability to generate strong free cash flow, execute strategic share repurchases, and capitalize on a record backlog—factors that position it as a compelling long-term investment.

Free Cash Flow: A Foundation for Shareholder Value

FET's Q2 2025 free cash flow of $23 million marked a 43% sequential increase from Q1, reflecting operational efficiency and demand resilience. This performance has enabled the company to raise its full-year free cash flow guidance to $60–$80 million, a range that implies a free cash flow yield of approximately 30% based on its current market capitalization. Such a yield is rare in the energy sector, where many peers struggle with capital expenditures and cyclical volatility.

The company's ability to generate consistent free cash flow is underpinned by its diversified product portfolio and cost-saving initiatives. For instance, the Drilling and Completions segment saw a 35% sequential jump in orders to $178 million, driven by coiled line pipe sales in the U.S. and a large Middle East project. Meanwhile, the Artificial Lift and Downhole segment delivered a 24% sequential rise in adjusted EBITDA to $17 million, fueled by favorable product mix and higher demand for sand control equipment.

Strategic Share Repurchases: Enhancing Equity Value

FET has been aggressive in returning capital to shareholders, repurchasing 579,000 shares for $11 million through July 2025. CEO Neal Lux has signaled intent to repurchase an additional 10% of shares in 2025, building on the 5% already completed. This disciplined approach to share buybacks—coupled with debt reduction—highlights FET's commitment to optimizing its capital structure.

The company's stock, currently trading at $21.42, has delivered a 17.24% year-to-date return, outperforming the broader energy sector. With a GOOD financial health score of 2.72 (per InvestingPro) and a debt-to-EBITDA ratio well within conservative thresholds, FET is uniquely positioned to sustain its buyback program without compromising operational flexibility.

A Record-Setting Backlog: A Tailwind for Future Growth

FET's Q2 backlog reached its highest level in over a decade, driven by strong bookings of $263 million and a book-to-bill ratio of 132%. This surge was fueled by offshore defense-related orders, including submarine rescue vehicle systems and remotely operated vehicles, as well as sustained demand for coiled tubing. While the exact backlog value remains undisclosed, the qualitative strength of the order book—spanning both energy and defense markets—provides a clear runway for revenue growth.

This backlog, combined with cost-saving initiatives and tariff mitigation strategies, supports FET's full-year adjusted EBITDA forecast of $85 million. Even amid expectations of a near-term industry slowdown, the company's backlog and operational discipline position it to outperform peers.

Investment Thesis: A High-Conviction Play

FET's strategic use of free cash flow—prioritizing share repurchases, debt reduction, and capital preservation—creates a virtuous cycle for long-term shareholders. The company's 30% free cash flow yield, coupled with a record backlog and a disciplined capital return framework, offers a compelling risk-reward profile.

For investors seeking exposure to the energy sector's structural tailwinds, FET represents a high-conviction opportunity. Its focus on capital efficiency, combined with a diversified order book and strong management execution, suggests further upside as it executes its 2025 guidance. With the potential for another 10% share repurchase and a stock price that remains attractively valued relative to its cash flow generation, FET is a name to watch in the second half of 2025.

In a market where many energy companies are grappling with cyclical headwinds, Forum Energy Technologies stands out as a rare combination of operational excellence and shareholder-friendly policies. For those with a long-term horizon, the case for FET is both clear and compelling.