Forum Energy Signals Confident 2026 After Strong 2025
Forum Energy ((FET)) has held its Q4 earnings call. Read on for the main highlights of the call.
Claim 50% Off TipRanks Premium
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Stay ahead of the market with the latest news and analysis and maximize your portfolio's potential
Forum Energy’s latest earnings call struck an upbeat tone, as management highlighted a decisive revenue beat, record backlog, and robust free cash flow for 2025. While acknowledging tariffs, U.S. softness, and some product mix pressure, executives emphasized that cost savings, innovation, and international growth are driving margins higher and setting up constructive momentum into 2026.
Revenue Beat Underscores Resilience
Fourth quarter revenue reached $202 million, topping the high end of guidance and rising 3% sequentially despite a flat global rig count. Management framed this as evidence that the company is gaining share and extracting more value per rig, rather than simply riding the industry cycle.
Backlog Hits 11-Year High
Forum posted a full-year book-to-bill of 113%, with its Subsea line nearing a remarkable 190%, pushing year-end backlog to the highest level in 11 years. Backlog is up 46% since the start of 2025, giving strong visibility on 2026 revenue even as near-term booking timing remains lumpy.
Cash Generation Strengthens Balance Sheet
The company delivered $80 million of free cash flow in 2025, at the top of guidance, enabling a 28% reduction in net debt to $107 million and net leverage of just 1.2x. Liquidity ended the year at $108 million, including $73 million of revolver capacity, giving Forum ample room to navigate volatility.
Share Buybacks Highlight Capital Discipline
Forum returned $35 million to investors through repurchases of about 1.4 million shares, retiring roughly 11% of the float. The company bought stock at an average price below $25, roughly half the share price at the time of the call, underscoring management’s conviction that the shares remain undervalued.
Cost Actions Support Margin Expansion
Management highlighted consolidation of four manufacturing plants into two, which is expected to yield roughly $15 million of recurring annual savings. These structural cuts are helping offset mix and cost headwinds and should support margin durability as volumes grow.
Innovation Boosts Revenue Per Rig
The company commercialized 10 new products in 2025, including Secura Series stage collars, SecuraSlim, DuraCoil 95 and DuraLine manifold, broadening its offerings to operators. Revenue per global rig has increased 20% since 2022 and continued to climb in 2025, even as the rig count declined, highlighting the payoff from innovation.
International and Offshore Drive Growth
International revenue surged about 78% and Subsea revenue climbed 25% in the fourth quarter, helped by remote-operated vehicle projects and a rescue submarine order. Coiled tubing revenue rose 13% and drilling products 11%, reflecting Forum’s growing exposure to offshore and non-U.S. markets.
2026 Outlook Targets Profitable Growth
For full-year 2026, Forum is targeting revenue near $808.88 million, implying around 6% growth over 2025. Adjusted EBITDA is projected between $90 million and $110 million, with adjusted net income of $18 million to $38 million and free cash flow of $55 million to $75 million, roughly 65% EBITDA conversion.
Q1 Momentum Despite Seasonal and Macro Drags
First-quarter 2026 guidance calls for $190 million to $210 million in revenue and $21 million to $25 million in adjusted EBITDA, with the midpoint about 15% higher year on year. This growth comes even as management expects a 5% decline in global rig count, plus normal seasonal drag from incentive compensation and property taxes.
Financing Flexibility Enhances Optionality
Forum extended its credit facility maturity to February 2031, secured better pricing and expanded letters-of-credit capacity, improving financial flexibility. Management said the longer tenor and committed capital provide room to retire debt, fund organic projects, and selectively pursue acquisitions when valuations are attractive.
Tariffs and Industry Headwinds Persist
The company still operates against a mixed macro backdrop, with lower drilling activity in some regions and ongoing geopolitical uncertainty. Even after a Supreme Court ruling on certain tariffs, Section 232 and 301 levies remain in force and continue to pressure steel costs and supply chains.
Tax Noise and One-Time Charges
The fourth quarter included a $3 million foreign tax settlement tied to prior years, which raised income tax expense mainly through a noncash reduction in deferred tax assets. Management acknowledged rising tax complexity as more profits are generated outside the U.S., making tax planning a more important lever.
Product Mix Weighs on Some Margins
Adjusted EBITDA of $23 million in Q4 landed at the top of guidance but was held back by less favorable product mix and higher healthcare and professional costs. The Drilling & Completion segment’s EBITDA was essentially flat, while Subsea margins felt pressure from higher pass-through content that dilutes percentage margins.
U.S. End Markets Show Pockets of Weakness
U.S. revenue slipped 2% in the quarter, affected by project timing and softer demand for valves and artificial lift equipment. Artificial Lift and Downhole revenue was $75 million, down 4% sequentially, as lower Production Equipment shipments more than offset strength elsewhere.
Bookings Timing Adds Near-Term Noise
Fourth-quarter book-to-bill slipped to 93%, below 100%, mainly due to order timing in the Drilling & Completion segment following two very strong quarters. Management framed this as timing variability rather than a demand rollover, pointing to the still-elevated backlog as the more important signal.
Cash Conversion Leans on One-Offs
Forum’s 2025 cash performance was helped by about $34 million of working capital releases and $15 million from two real estate sale-leasebacks. Executives cautioned that relying on such levers makes repeating the same level of cash conversion harder as the business grows and working capital needs normalize.
M&A Getting More Expensive
Management noted that rising public valuations have pushed up seller expectations and deal multiples across the sector. That backdrop could make accretive acquisitions harder to find and may tilt capital allocation more toward internal investments and opportunistic buybacks.
Seasonality to Shape 2026 Capital Returns
Given normal seasonal outflows in early 2026, including incentive and property taxes, Forum expects share repurchases to be more weighted to the back half of the year. Investors should therefore expect a slower start to capital returns, with more flexibility emerging as the year progresses.
Guidance Underscores Confidence in Multi-Year Trajectory
Overall guidance for 2026 signals management’s confidence in growing revenue at a mid-single-digit pace while driving double-digit EBITDA growth and solid free cash flow. With a fortified balance sheet, extended credit facility, and strong backlog, Forum aims to balance investment, debt reduction, and shareholder returns despite a still-choppy macro backdrop.
Forum Energy’s earnings call painted the picture of a company shifting from recovery to disciplined growth, blending cost control, innovation, and international expansion. While tariffs, tax complexity, and U.S. softness remain watch items, the strong backlog, improving margins, and measured capital strategy suggest a constructive setup for shareholders into 2026 and beyond.
