Forum Energy Technologies: Navigating Market Challenges and Opportunities in 2025

Forum Energy Technologies Inc (FET) recently released its fourth-quarter and full-year 2024 earnings, providing insights into the company's performance and outlook for the coming year. Despite facing market challenges, FET demonstrated resilience and strategic initiatives that position it for future growth. This article explores the key takeaways from the earnings call and the company's prospects for 2025.

Market Challenges and Opportunities

In 2024, FET faced a net loss of $135 million, primarily due to a non-cash, pre-tax intangible asset impairment of $119 million. Despite this impairment, the company's adjusted EBITDA increased by 49% year-over-year, reflecting improved operational efficiency. Neal Lux, President and CEO of FET, acknowledged the challenges but expressed confidence in the company's long-term outlook.



Strategic Initiatives and Market Share Growth

FET implemented the "Beat the Market" strategy in 2024, focusing on niche markets, innovative solutions, and leveraging its global manufacturing footprint. This strategy, combined with the Variperm acquisition, led to a 15% market share growth as measured by revenue per global rig. The company's strategic initiatives have positioned it well for future growth, despite the current market uncertainties.



Segment Performance and Outlook

The Drilling and Completions segment reported a 10% decrease in revenue, primarily related to lower capital equipment, wireline cable, and coiled tubing sales due to the decline in U.S. completions activity. Conversely, the Artificial Lift and Downhole segment saw a 7% increase in revenue, driven by higher demand for processing equipment technologies and artificial lift products.

For 2025, FET expects global drilling and completion activity to be down 2% to 5%. However, the company's forecast assumes it will overcome most, if not all, of the activity decline through market share gains. Therefore, full-year 2025 adjusted EBITDA and free cash flow guidance ranges are $85 to $105 million and $40 to $60 million, respectively.

Conclusion

Forum Energy Technologies Inc's 2024 performance reflects both the opportunities and challenges within the oil and gas industry. Despite facing market challenges, the company's focus on strategic investments and market share growth positions it well for future success. With a strong balance sheet and a commitment to returning capital to shareholders, FET is well-positioned to navigate the market uncertainties and capitalize on long-term growth prospects.