Forum Energy Technologies (FET) Q3 2025: Backlog Jumps 21%, Fueling Multi-Year Growth Ambition
Forum Energy Technologies’ Q3 saw a 21% surge in backlog, the highest since 2015, as targeted commercial execution and cost discipline offset U.S. softness and tariff volatility. Management’s “beat-the-market” strategy continues to drive differentiated product adoption and market share gains, while facility consolidation and capital returns set the stage for sustained free cash flow. Looking to 2026 and beyond, FET’s long-term plan to double revenue is anchored by growth market penetration and operating leverage, despite near-term macro caution.
Summary
- Backlog Inflection: Backlog reached a decade high, reflecting strong offshore and international wins.
- Cost Structure Reset: Facility consolidation and structural savings boost efficiency and future margin potential.
- Growth Market Focus: Doubling share in underpenetrated segments is central to FET’s five-year revenue ambition.
Performance Analysis
Forum Energy Technologies delivered Q3 revenue at the top end of guidance, driven by robust offshore and international sales even as U.S. land activity and rig count declined. Offshore revenue, now 22% of the total, was propelled by drilling and subsea product strength, while international sales outpaced domestic for the first time, with Middle East and Canada each up over 10% sequentially. U.S. revenue, by contrast, dropped 10%—a reminder of the ongoing drag from lower rig activity and conservative customer behavior.
Bookings were a defining highlight, with a consolidated book-to-bill ratio of 122% and both operating segments exceeding 100%. Subsea bookings, in particular, pushed above 200% book-to-bill, fueled by ROV, remotely operated vehicle, orders and new land rig capital equipment in the Middle East. EBITDA rose 13% sequentially, aided by a 150 basis point margin expansion to nearly 12%. Cost reductions, favorable product mix, and tariff mitigation efforts contributed to the margin outperformance. Free cash flow climbed 23% to $28 million, supporting accelerated buybacks and a further reduction in net leverage to 1.3 times, ahead of target.
- International Shift: International revenue surpassed U.S. for the first time, highlighting FET’s global diversification.
- Structural Cost Leverage: Facility consolidation and progress toward $15 million in annualized savings underpin future margin upside.
- Capital Returns Acceleration: Buybacks reached 8% of shares YTD, with $15 million in capacity still available for Q4.
This quarter’s mix of backlog growth, operating leverage, and disciplined capital allocation positions FET for resilience into 2026, even as management signals caution on near-term North America demand.
Executive Commentary
"Our beat the market strategy, which centers on new product development and targeted commercial efforts, drove strong bookings and meaningful backlog growth. During the quarter, we captured several offshore and international awards. This success increased our backlog by 21%, its highest level since 2015."
Neil Lux, President and Chief Executive Officer
"Margins improved by 150 basis points to nearly 12% due to favorable product mix, ongoing cost reductions, and tariff mitigation efforts. In the third quarter, we made the strategic decision to consolidate four of our manufacturing plants into two. By the second quarter of 2026, we expect these facility consolidations to contribute over $5 million of additional annualized cost savings."
Lyle Williams, Chief Financial Officer
Strategic Positioning
1. Beat-the-Market Strategy Drives Differentiation
FET’s “beat-the-market” strategy, launched in 2022, targets leadership markets—where it holds a 36% share of a $1.5 billion segment—and growth markets, which are twice as large but where FET’s share is only 8%. By focusing on new product development and targeted commercial efforts, FET continues to gain market share in both categories. Notably, annualized revenue per rig has risen 20% since 2022, demonstrating the strategy’s traction even in subdued market conditions.
2. Growth Market Penetration Is the Core Upside Lever
Growth markets, defined as underpenetrated segments where FET’s differentiated products are gaining traction, represent a $3 billion opportunity. Products like coiled line pipe, which grew 28% sequentially, and artificial lift solutions, now expanding internationally, are central to FET’s ambition to double its growth market share to 16% over five years. Success here could organically add $250 million in revenue even if the broader market remains flat.
3. Operating Leverage and Cost Discipline
Facility consolidation and structural cost reductions are unlocking margin expansion and future scalability. The closure of four plants into two is expected to yield $5 million in additional annualized savings by mid-2026, bringing the total to $15 million. With manufacturing capacity still sufficient to support a 50% revenue increase, FET’s asset base is well positioned for future growth without major capex outlays.
4. Capital Returns Framework Remains Aggressive
Accelerated share repurchases—8% of shares repurchased year-to-date—are supported by robust free cash flow and a net leverage ratio now below the 1.5x target. With $15 million in buyback capacity remaining for Q4 and a reset in 2026, capital returns remain a core pillar of FET’s value proposition.
5. Product Innovation and Adjacent Market Expansion
Pipeline of new products—including artificial lift solutions for rod lift and the Unity operating system for ROVs—positions FET to address both efficiency demands in oil and gas and opportunities in adjacent sectors such as defense. Management’s willingness to pursue accretive acquisitions and adjacent markets adds further optionality to the growth plan.
Key Considerations
This quarter’s results highlight a business in transition from cyclical recovery to structural growth, with execution discipline and product innovation at the core.
Key Considerations:
- Backlog Duration and Mix: Subsea and offshore projects extend backlog visibility into 2027, but carry lower contribution margins due to higher pass-through content.
- Tariff Volatility: Steel and India tariffs remain a source of cost unpredictability, mitigated by global sourcing and pricing adjustments.
- Facility Rationalization: Plant consolidation enhances near-term efficiency and customer delivery, while preserving capacity for 50% revenue growth.
- Growth Market Execution: Success in scaling coiled line pipe and artificial lift internationally is pivotal to the five-year revenue doubling plan.
- Capital Allocation Discipline: Share buybacks and net debt reduction are balanced with flexibility for accretive M&A and organic investment.
Risks
U.S. land activity softness and oil price volatility present ongoing demand risk, especially for consumables. Tariff rate changes and global supply chain disruptions could erode margin gains. While backlog is at a multi-year high, subsea mix may dilute margin, and execution risk around facility consolidation and new product adoption remains. Management’s long-term plan depends on both market expansion and internal share gains—shortfalls in either could slow the path to revenue doubling.
Forward Outlook
For Q4 2025, FET guided to:
- Revenue of $180 to $200 million
- EBITDA of $19 to $23 million
For full-year 2025, management raised guidance to:
- Revenue of $770 to $790 million
- EBITDA of $83 to $87 million
- Free cash flow of $70 to $80 million
Management highlighted:
- Backlog strength and cost savings will help offset expected activity declines in Q4.
- Discussions with customers for 2026 are underway, with a cautious view on calling a bottom in U.S. land activity.
Takeaways
FET’s Q3 performance underscores a pivot toward multi-year growth, with backlog, cost structure, and capital returns all supporting the company’s 2030 doubling plan.
- Backlog Depth: Offshore and international wins provide revenue visibility into 2027, but subsea mix may pressure margins.
- Structural Leverage: Facility consolidation and cost reductions will drive incremental margin as volumes recover.
- Growth Market Execution: Investors should watch for sustained growth in coiled line pipe and artificial lift adoption, especially internationally, as the main upside lever into 2026.
Conclusion
Forum Energy Technologies exits Q3 with a record backlog, a leaner cost base, and an aggressive capital returns posture. The company’s strategic focus on differentiated products and global market penetration positions it for long-term growth, though near-term macro and margin headwinds warrant close monitoring.
Industry Read-Through
FET’s results signal that offshore and international energy markets are providing a buffer against U.S. land softness, a trend likely to benefit other diversified oilfield equipment providers. The emphasis on structural cost reduction and manufacturing consolidation is a playbook for margin defense in a volatile demand environment. Tariff volatility and global supply chain adaptation remain industry-wide challenges. FET’s push to double revenue through growth market penetration and product innovation is a roadmap for peers seeking to decouple from U.S. rig count cycles and capitalize on global energy infrastructure investment.