FE
FORUM ENERGY TECHNOLOGIES, INC. (FET)·Q3 2025 Earnings Summary
Executive Summary
- Q3 2025 print delivered high-end revenue and above-top-end adjusted EBITDA, with adjusted EPS beating consensus; FET raised FY25 free cash flow guidance to $70–$80M and guided Q4 revenue and EBITDA roughly in line with Q3 levels .
- Orders were $240M with a 122% book-to-bill; backlog rose 21% to the highest level in more than ten years, positioning revenue into 2026–2027 (subsea projects extend) .
- Mix tailwind from subsea and coiled line pipe helped bookings, while U.S. short-cycle consumables softened; tariffs remained volatile but were mitigated via pricing and supply-chain relocation (Saudi assembly) .
- Capital returns accelerated—Q3 free cash flow was $28M; FET repurchased 635K shares for $15M in Q3 (8% YTD) and achieved a 1.3x net leverage ratio ahead of schedule, enhancing buyback capacity for Q4 and resetting higher for 2026 .
What Went Well and What Went Wrong
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What Went Well
- Record backlog and strong bookings: “Beat the Market” strategy drove 122% book-to-bill with subsea ROV orders pushing subsea book-to-bill over 200%; backlog increased 21% to a >10-year high .
- Profitability and cash: Adjusted EBITDA of $23M rose 13% q/q to 11.8% margin, and free cash flow of $28M supported $15M of buybacks and lower net debt; FY25 FCF guidance raised to $70–$80M .
- Cost reductions: Management accelerated structural savings from $10M to ~$15M annualized by consolidating 4 plants into 2; actions include $21M non-cash impairments and $1M cash charges to unlock >$5M annualized by Q2’26 .
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What Went Wrong
- U.S. consumables softness: U.S. rig count -5% drove a ~10% U.S. revenue decline; one product line saw deliveries pushed into Q4 .
- Tariff volatility: Higher steel and India-targeted tariffs pressured certain lines (notably valves), though FET passed costs via pricing and shifted assembly to Saudi Arabia to avoid tariffs .
- Mix headwind risk: Strong subsea bookings carry lower contribution margins due to higher pass-through content; 2026 margin mix could face mild pressure without offsetting cost saves .
Financial Results
Actuals by period (oldest → newest)
Q3 2025 vs. S&P Global consensus and Q4 outlook
Values with asterisks are retrieved from S&P Global.
Segment breakdown (Adjusted where shown)
KPIs and cash/returns
Additional mix/geo notes: Offshore revenue was 22% of total; international revenue exceeded U.S.; U.S. revenue declined ~10% q/q as rig count fell 5% .
Guidance Changes
Earnings Call Themes & Trends
Management Commentary
- “Our ‘Beat the Market’ strategy drove strong bookings and meaningful backlog growth. Revenue and EBITDA were at the high end of our guidance range… we exceeded free cash flow expectations and are raising 2025 guidance to between $70 and $80 million.” — Neal Lux, CEO .
- “Consolidated EBITDA was $23 million, up 13%, and above the top end of our guidance. Margins improved by 150 basis points to nearly 12% due to favorable product mix, ongoing cost reductions, and tariff mitigation efforts.” — Lyle Williams, CFO .
- “By the second quarter of 2026, we expect these facility consolidations to contribute over $5 million of additional annualized cost savings, taking our total structural savings to approximately $15 million.” — Lyle Williams, CFO .
Q&A Highlights
- Bookings acceleration and sales incentives: Management attributed strength to years of process work under the “Beat the Market” strategy; subsea bookings reflect structural cycle tailwinds .
- Margin outlook on backlog: Subsea mix can modestly dilute contribution margin due to pass-through content; cost reductions are a partial offset into 2026 .
- Capacity and plant consolidation: Despite consolidations, FET retains capacity to grow revenue ~50% from current levels, improving efficiency and on-time delivery .
- Buyback capacity: Framework capped near ~$36M (based on leverage test and prior-year FCF); ~ $15M capacity remained entering Q4; resets ~half of FY25 FCF in 2026 .
- Backlog conversion: Most backlog converts within 2–3 quarters; large subsea projects extend revenue into 2027 (e.g., rescue submarine) .
Estimates Context
- Q3 2025 performance vs consensus (S&P Global): revenue $196.2M vs $194.35M*, adjusted EPS $0.27 vs $0.13*, adjusted EBITDA $23.1M vs ~$21.6M* — broad-based beats on key lines .
- Q4 2025 set up: guidance revenue $180–$200M and EBITDA $19–$23M compare to consensus ~$187.6M* and ~$19.9M*, respectively; midpoint aligns with consensus .
- Target price and recommendation: Target price consensus ~$33*; consensus recommendation not provided in S&P dataset.
Values with asterisks are retrieved from S&P Global.
Key Takeaways for Investors
- Strong execution: Q3 delivered high-end revenue and above-top-end adjusted EBITDA, with positive adjusted EPS and raised FY25 FCF—supportive of ongoing buybacks and deleveraging .
- Visibility improving: Orders/book-to-bill and >10-year-high backlog support revenue through 2026–2027, with subsea a durable multi-year driver .
- Mix watch: Subsea growth can compress contribution margins; structural cost saves target increased to ~$15M to offset mix headwinds .
- Tariff overhang manageable: Price pass-throughs and supply chain shifts (Saudi assembly) mitigate tariff volatility; valves destocking shows early signs of easing .
- Capital returns catalyst: Net leverage at 1.3x ahead of plan expands buyback “windows”; reset of capacity in 2026 (based on FY25 FCF) provides additional dry powder .
- Near-term setup: Q4 guide implies steady performance vs Q3; catalysts include backlog conversion milestones (ROVs/subsea), tariff policy clarity, and further buyback execution .
- Medium-term thesis: International/offshore expansion, coiled line pipe adoption, Unity OS in subsea, and artificial lift/rod lift products underpin FET 2030 ambition to double revenue organically .
Notes: All company figures are as reported or as adjusted per exhibits; non-GAAP reconciliations are provided in FET’s Q3 2025 8-K/press release . Values with asterisks are retrieved from S&P Global.