Good morning, ladies and gentlemen, and welcome to the Forum Energy Technologies second quarter 2022 earnings conference call. My name is Livia and I'll be your coordinator for today's call. As a reminder, there's a new process for entering the question-and-answer queue. To ask a question during the Q&A session, you will need to press star one one. A link with instructions can be found on the company's investor relations website under the events section. At this time, all participants are on a listen-only mode and all lines have been placed on mute to prevent any background noise. As a reminder, this conference call is being recorded for replay purposes. I will now turn the conference over to Lyle Williams, Chief Financial Officer. Please proceed, sir. Thank you, Livia. Good morning, and welcome to FET's second quarter 2022 earnings conference call. With me today is Neal Lux, our President and Chief Executive Officer. We issued our earnings release after the market closed yesterday, and it is available on our website. Before we begin, we would like to caution listeners regarding forward-looking statements. Our remarks today may contain information other than historical information. Please note that we are relying on the safe harbor protections afforded by federal law. All such remarks should be considered in the context of the many factors that affect our business, including those disclosed in our Form 10-K along with other SEC filings. Management statements may include non-GAAP financial measures. For a reconciliation of these measures, refer to our earnings release. During today's call, all statements related to EBITDA refer to adjusted EBITDA. This call is being recorded, and a replay of the call will be available on our website. I will now turn the call over to Neal. Thank you, Lyle. We just wrapped up a great quarter with a lot of highlights. Second quarter bookings were over $200 million, the highest since June 2019. We've increased our backlog for six consecutive quarters. Gross margins were the highest in three years. Revenue and EBITDA are up 25% and 138% respectively on a year-over-year basis. We are now more profitable than prior to the pandemic. These excellent financial results are the product of our business strategy and improving macro environment. Two years ago, we implemented a strategy to radically improve the profitability of FET by implementing and maintaining a lean cost structure, focusing on markets where we have meaningful share, and commercializing new products. Today, I wanna thank our teams for executing on that strategy. These initiatives have served us well over the past two years and position us for outsized returns as activity accelerates in the current environment. Our market is the best it has been in many years. Macroeconomic indicators signal an extended period of growth for our industry. Oil and gas inventories remain at very low levels. Worldwide spare capacity is limited and increases in supply cannot occur until investment grows significantly. Oil field service companies have increased spending on consumable items and replacing capital components just to maintain current activity levels. These customers will need to invest more in equipment upgrades and new builds to grow activity further. FET is meeting these demands with a differentiated portfolio of consumable and capital products. On recent calls, we have highlighted a few of our new capital products, such as the FR-120 Iron Roughneck for drilling rigs and Serpent Series manifold and flexible hose system for hydraulic fracturing well sites. This quarter, I wanna highlight two of our consumable and aftermarket items. The first example is our Quality Wireline conventional and greaseless cables used by completions-focused service companies. The performance of these electric line cables is critical to the efficiency of zipper frac and simul-frac operations. Our teams with many years of field experience have developed innovative designs that can run in and out of the wellbore faster while lasting longer than competitive offerings. This performance has allowed us to win new customers and gain share. Another example is within our drilling product line, where one of our products we offer is mud pump consumables. I recently visited a customer's drilling rig with our technical team and inspected one of our patented banded bore fluid end modules. Even though our module has seen many years of service, it was in an almost new condition. The module performed significantly better than a competitive product from a low-cost country, which tends to fail in less than a year. While I was very pleased with the durability of our product, I was even more excited to see our customer recognize its value. Our customers' teams in the field want reliability and performance over cheap and disposable. This is a change in sentiment from the last few years and will favor manufacturers of highly engineered solutions like FET. Before handing it over to Lyle, I wanna summarize why FET is in an outstanding position to thrive. The market fundamentals are the best they have been in many years. There are very few industries that have the wind at their backs like we do. We have the right portfolio of products to address fast-growing niche markets in traditional oil and gas and new energy applications. Over the past two years, activity increases have driven strong revenue for our drilling and completions consumable products. Demand for our capital components will add another lever of growth. FET is well-positioned for this demand. We have the capacity to increase revenue by 50% or more without significant growth CapEx. Very few companies are in the position to excel like we are. I'll turn the call over to Lyle for more detail on our second quarter results and our updated guidance. Thank you, Neal. Our second quarter financial results were indeed strong. Revenue of $172 million and EBITDA of $15.5 million Both exceeded the high end of our guidance range. EBITDA margin was 9% for the second quarter. On a sequential basis, revenue and EBITDA grew by $17 million and $7 million dollars respectively, yielding a 38% incremental EBITDA margin. Revenue growth was roughly in line with the increase in U.S. rig count, and our sequential bookings growth of 23% resulted in a second quarter book-to-bill ratio of 118%. Our increased profitability reflects significant operating leverage, continued net price improvement, and favorable mix associated with completions segment revenue growth. Looking ahead to the rest of the year, industry activity continues to drive strong demand for our products. We therefore forecast third quarter revenue to be between $170 million and $180 million, and EBITDA to increase to between $16 million and $19 million. For the full year, we now expect EBITDA to be near the top end of our previous guidance range of $50 million-$60 million. Second quarter free cash flow of -$26 million was in line with the first quarter and with our guidance. As expected, our net working capital increased by $30 million as revenue drove higher accounts receivable and inventory grew to mitigate supply chain challenges. We also made our semiannual interest payment of $12 million at the beginning of the second quarter. As indicated last quarter, we forecast net working capital to decrease by the end of the year. We estimate second half free cash flow to be between + $30 million and $40 million, and we ended the quarter with total cash of $27 million and availability under our revolving credit facility of $114 million, for total liquidity of $141 million. Since FET is an asset-light products company with minimal required CapEx for growth, we expect to see a return to significant cash conversion of our EBITDA over the near term. We will continue to look for ways to free up cash from our balance sheet to reduce net debt. For example, subsequent to the end of the second quarter, we sold the inventory and assets associated with one of our non-core drilling products to a competitor. The sale pulls forward a little more than $1 million in cash by monetizing that inventory and allows us to improve overall profitability. Let me share a few highlights from our segment results for the second quarter. Our drilling and downhole segment EBITDA increased by $3 million on a $5 million revenue increase, resulting in the second consecutive quarter of segment incremental EBITDA margins greater than 50%. Significant operating leverage and pricing in our drilling product line and favorable mix drove this strong performance. Orders for the drilling and downhole segment grew by 5%, driven by strong growth in our drilling capital equipment, where we are seeing inquiries and orders accelerate as domestic and international customers upgrade and build new drilling rigs. Highlights for the quarter include an order for two drilling catwalks from a Middle East contractor. Orders for our new FR-120 Iron Roughnecks tripled, and bookings for our Hawker well service units nearly tripled in the quarter. Completion segment revenue was $66 million in the second quarter, an increase of $14 million or 26% sequentially. Bookings for the segment were $65 million for a book-to-bill ratio just under one, which is typical as most of our completion products are short cycle consumables. All of the product lines in this segment grew revenue on the back of increased demand and improved performance by our supply chain. Of note, our Global Tubing revenues grew 28% as domestic and international customers increased their orders. Also, our Quality Wireline revenues grew 33%, with this operation achieving near record revenues in May. We are pleased to see these two strong contributors grow in the second quarter. We are also pleased with a meaningful increase in demand for our hydraulic fracturing capital products. Revenues for our Power Ends, GHT Radiators and our Serpent Series, single line manifold and flexible hose offerings grew meaningfully. We've received positive feedback from our customers on the performance of our Serpent Series based on the ease of setup and downtime reduction compared with legacy high pressure iron. We expect demand to further increase for these capital items as our customers upgrade existing frac fleets and add new ones. Sequential incremental EBITDA margins for the segment of 28% were lower than typical due to less favorable mix and steel price inflation impacting second quarter results. In our production segment, revenue declined sequentially by $2 million or 5% as COVID lockdowns implemented by the Chinese government disrupted manufacturing operations and shipments for our valves product line. Since these precautionary measures were lifted in June, our supply chain has recovered and we expect an uplift in the second half of the year. While revenues for the segment were slightly down, bookings were strong for both product lines. Valve bookings grew sequentially by 26% as customer demand increased for every market segment, led by a 35% increase in orders from upstream and midstream customers. Our production equipment bookings grew by $18 million or 85% sequentially. We received a large order from an operator in the Marcellus, covering more than half of their demand for 2023. In addition, we received two meaningful orders for electrostatic processing technology equipment from customers in the Middle East. While some of the revenue for these orders will be recognized in 2022, we are already building a solid backlog for delivery next year. Segment EBITDA increased on favorable valve margins and operating leverage in our production equipment product line. Let me provide a few details for modeling purposes. In the second quarter, corporate costs increased by approximately $1 million due to the timing of certain variable employee compensation costs. For the third quarter, we expect corporate costs to be unchanged, interest expense to be $8 million and depreciation and amortization expense of roughly $10 million. We continue to expect full year capital expenditure of less than $10 million and cash income taxes of roughly $4 million-$5 million. In summary, FET results reflect solid performance by our team in an improving market. We expect to take advantage of the strengthening market to drive further revenue growth and enhance product margins. With a decrease in our net working capital, we expect to generate positive free cash flow. Now let me turn the call over to Neal for closing remarks. Neal? Thanks, Lyle. The story is simple. Industry fundamentals are strong. Orders are accelerating. Profitability is increasing. FET is a compelling company with a great future. Operator, please take the first question. Thank you. As a reminder, ladies and gentlemen, if you would like to ask a question, please press star one one. Please stand by while we compile the Q&A roster. Our first question coming from the line of John Daniel from Daniel Energy Partners. Your line is open. Hey, guys. Good morning. Hi, John. Good to see bookings and margins heading in the right direction. If you please forgive me, I'm away from my desk, so I haven't had a chance to really scrub the release and everything. You called out a lot of nice victories and wins, in terms of, you know, opportunities going forward. Just can you kind of rank for me, if you will, like most excited over the next, call it six-12 months? Yeah. I think, John, as you said, you know, we had a lot of broad strength across the portfolio. You know, we saw it, you know, with consumables, you know, like for example, our artificial lift business, Multi-Lift Solutions. Saw it in the completion side with Quality Wireline and Global Tubing. Also seeing good growth with our drilling consumables. But we also see more inquiries and orders for our capital equipment that's in the stimulation line, product line with single line manifold and Power Ends. Then we're also seeing in drilling, as Lyle mentioned, with the FR-120 Iron Roughneck and catwalks. Also seeing good inbound inquiries for subsea ROVs. Okay. If I heard correctly, you called out a situation where a customer was basically pleased with your product offering and perhaps shying away from a lower price for an offering. Normally, at least the last couple of years, it's been people buying the cheapest they can get. Do you see this trend continuing to quality, if you will? And from an ESG perspective, do any of your customers at this point care about buying American, North American versus international? Just any thoughts there would be appreciated. Yeah. Yeah, John, that's a great question. You know, again, we are seeing a flight to quality. You know, I think I know you follow our industry really well. What we hear is high utilization, right? So our customers are working. They're fracking more hours in the day than they had been in the past. They're drilling as fast as they can, and they need reliability. You know, a few years ago, you know, cash was tight. You know, it was a tough industry environment. Our customers did what they had to do to survive and generate, you know, cash to do that. Today, you know, they are doing really well, right? We saw a lot of great earnings calls from that our segment. They're busy, and they need reliable equipment. I do see a flight to quality. Okay. The last one for me, sort of a, not asking for formal guidance, Neal or Lyle, but your book-to-bill is, call it 1.2x. Where do you think this could realistically get to over the next year? You know, for us, it's. Let's just say, what would be your hope, if you will? Yeah. That's a dumb question. It would be high. No, no. I think it's a great question. I I mean, we're excited about our industry, right? Yeah. When you think about the macro environment, it is really strong. You know, I think there's an obvious need to increase rig count, and our revenue is gonna grow with that activity. You know, 1,000 rigs next year, I think is quite possible, and that gets us to a run rate of, you know, let's call it $1 billion. Okay. You know, we have strong incrementals, and I think, you know, with 30% incremental EBITDA margins, I think that's a very transformative result. Okay. Thank you for taking that and giving an answer. I appreciate it. Yep, absolutely. One moment for our next question. Our next question coming from the line of Dan Pickering with Pickering Energy Partners. Your line is open. Thanks. Hey, Dan. My phone blanked out as you were talking about your revenue potential at 1,000 rigs next year. I think you said $1 billion, but I just wanna confirm that. Yeah, Dan. As Neal mentioned, we do correlate really well with U.S. rig activity. While that's not always the driver of each of our product lines and businesses, it does correlate well. Our historic correlation would say 1,000 rigs is roughly $1 billion of revenue. That's, you know, 50% more than we have. We feel good about our capital capacity to be able to do that. We could do 50% more revenue without significant CapEx in our facilities, and the flow-through and drop-through of operating leverage and what that means from the bottom line is impressive. Excited about the potential. We've got to watch what our customers ultimately do with CapEx, both E&P operators and the service companies, but all indications are spending in the industry is gonna go up. Yeah, that makes sense. Lyle, during the call, I didn't hear you talk much about pricing. Can you just give us a view on, you know, kinda gross pricing and net pricing? Are you able to pass along your cost increases? Can you ballpark for us what, you know, kinda new orders look like from a pricing perspective? Sure. Sure, Dan. We've been talking about pricing for nearly a year now and pushing pricing and winning pricing gains really across the board. I think your question is really a good one. It's where are we getting net pricing gains that beat inflation. I think the areas where we've seen those most net pricing gains are in our more differentiated products, where we add additional value to our customers. For example, the drilling fluid end module that Neil talked about, we're able to to really push price and products like that, where we're creating extra value. We're also starting to see some net pricing gains in even some more of our commoditized products, whether that's on some more of our drilling consumables or even in our valves product line. We're seeing pricing across the board and continue to push that as it goes. I think it's important to note that our prices are still below where they were back in 2019. As spending goes up, as the market is getting tighter, as our service company customers are pushing pricing and getting price with their customers on higher demand, we'll be looking to do the same. Lyle, does that flow through almost immediately, or does it take a little while to get, you know, to kinda push price, get price, and then realize it? Is it really a 2023 event before it impacts margins, or could we see that in as quickly as Q4? Yeah. As we look at the business, I think that depends on the kind of nature. Our consumable products, Dan, that are more book and ship, we're gonna see that flow through more quickly. Things like our capital items or, you know, we mentioned the order for production equipment that's gonna ship mostly in 2023, any gain there is gonna be a much longer term drive to get there. Our second quarter incrementally, but our margins of 38% were substantially higher than our gross margins. And that is a drive. A little bit of operating leverage there is clearly some favorable mix with completions, but also recognizing some net pricing benefit. Gotcha. When you think about energy transition, I know that you've talked in the past that that's one area you hope to generate some revenues on a go-forward basis. Could you just talk a little bit about where you might see your products applicable for, you know, non-oil patch applications? Yeah. Dan, I think, you know, as an equipment manufacturer, again, we have the engineering and capability to make a lot of different products. Thankfully, because of our portfolio, we are adjacent to, I think, a lot of those energy transition markets. You know, great example, offshore wind farms. Those wind farms require support for installation and maintenance. You know, our ROVs from our subsea product line, where we have decades of experience, are really well positioned to address that. We also see, you know, emissions control as a key, especially at the well site. With our production equipment product line, you know, we are touching those customers today. You know, we're developing, you know, new products and technologies to help with that. Okay. Thank you. Last question, Lyle. Working capital, you guided toward a substantial kind of release of working capital, if you will, or free cash for the second half of the year. I think you said, or maybe Neal said in his closing remarks, will we see free cash net for 2023? So that's, or sorry, for 2022. Then as we look to 2023, you know, let's pretend that billion-dollar number happens, would you see consuming working capital to help deliver that revenue growth? Dan, good question. Kind of recap key points on cash. In the first half of the year, we grew our net current assets, excluding cash, by about $50 million, with the most of that coming from increasing inventories. Unplanned to mitigate what was going on in supply chain. We built a good buffer there. As we look ahead to the back half of the year, our guidance implies kind of a slowing rate of top line growth. With that, lower growth in receivables, but we do see inventory balances turn and decline. The buffers we put in place, we think we can pull those out later in the year, as we get there. Looking ahead, where do we get? FET has always been a good story with high free cash flow relative to our EBITDA, 'cause we have really low CapEx. We've mentioned where our CapEx position is. I think we're in good shape there. While as we grow, we'll undoubtedly need to build some level of working capital, we ought to have really good EBITDA cash flow conversion metrics, with strong top-line growth. Great. The tailwinds are behind you. Thanks, guys. Thank you, Dan. Our next question coming from the line of Eric Carlson. Your line is open. Hi, guys. Hi. Congrats on the results. Thank you, Eric. I'll maybe just piggyback a little bit on what everybody else has said and kind of when we focus on the outlook maybe going into the end of the year, into 2023, and the cash flow available. What do you guys look at in terms of return of capital? I know that there's a buyback outstanding. Some comments on that would be great. Then additionally, I believe there's of the debt outstanding, $116 million of that principal value automatically converts at $27 per share. Clearly we're below that number now. As we look ahead, is there any ability to, I guess, look at potentially calling that debt and removing what is approximately 4.3 million shares of dilution? Just some comments on that would be great. Thanks. Yeah. Yeah, Eric, you know, I think, you know, redeeming bonds prior to conversion with, if we had, you know, the free cash flow, I think is a good investment and one we would look to do at, you know, as we, again, as we generate free cash flow. Great. Yeah, Eric, let me jump in maybe with a little bit of some detail there. The first half of the year, we did consume a good amount of cash in working capital. As we step back and think macro, overall leverage for us as a company is still higher than we would like to see it. We need that number, we need that overall leverage to come down. Free cash flow, as you mentioned, clearly is a step in the right direction and seeing net debt come down. We're looking at, you know, all the different options that we have to get that leverage in the right place. Mentioned the small asset divestiture that we had, not a giant needle mover for us, but I think indicative of the kind of thinking we're having of continuing to get there. Give some details back on those convertible notes. We do have the notes convertible. We've talked about that being a key drive and way to get there. A reminder that at roughly half the notes, we updated that number in the Q that we'll file later today. It's about $122 million worth of notes would convert when our stock trades at $30 a share. We see that as a very nice plan for us. It's what we've had in place for the last couple of years. As you say, $30 a share is a little bit out. We are looking at other options and ways that we could manage the debt. We've got three years until maturity, so we have time to deal with that. We'll keep looking at ways to get cash out of our balance sheet, being more efficient, and ultimately reducing our total level of leverage. Very helpful. Thanks. Thanks. Congrats again. Thanks, Eric. Yep. Our next question coming from Delana, Peter Ehret with ERS of Texas. Your line is open. Hi. Thanks for taking the call. Congrats on the quarter. I'm sure that's gotta feel pretty good at this point after a long time. Absolutely, Peter. Oh, yeah. Anyways, congrats and nice work, and thank you. Going back to the notes just for a minute and to dwell on this too much, but I know that there's just not a lot of liquidity there. You really couldn't do a lot anyways with just open market purchases, but did you do any of that during the quarter? Do you at least try to chip away on it in that way? Yeah, Peter, let me take that. We did not repurchase any notes in the quarter. As you mentioned, liquidity's really thin. Yeah. On the notes. Our big repurchases that we did were back in 2021 following the asset divestiture we did at the end of 2020, kind of a return of cash back to note holders per the indenture. Definitely some opportunity out there. The notes have traded a little below par. As you mentioned, there's not a lot of liquidity in the notes. I think a big change for us is that in August the effective no call period on those notes expires, and there's a call premium out there, but they become callable in August. That presents a new opportunity that we really haven't had there before that time. Right. Okay. Yeah, of course. All you could do is buy in kinda $1 million-$2 million kind of things, and wouldn't make a lot of progress, but at least save you some dilution, maybe if the stock does hit $30. Another thing I was just wondering about, what do you see out there just M&A-wise? Things picking up? Bid offer spreads kinda. What are your thoughts in general? Yeah. You know, again, I think we said in prior calls, you know, we think we are, you know, logical, you know, consolidator. You know, we did this last year in our drilling product line with Hawker Well Works. You know, we think that type of acquisition makes sense. You know, we also like, you know, that technology that's disruptive or addresses, you know, new energy applications. Again, a good example of that was a Reach Production Solutions acquisition that we did, again, at the end of last year. You know, always looking at good opportunities. We continue to look at our portfolio and analyze and we wanna make sure we're, you know, we have the highest margin products that we can and address the largest addressable markets we can. Okay. Are things functioning out there? Do you at least see just how's the balance? Are things better bid or better offered for other companies? Or how would you characterize that? Well, Peter, we're definitely seeing more activity in the M&A markets. Sellers, some of those who have been in whether they're private equity sellers or even, you know, families that have been in business a long time, are seeing a rising market as an opportunity to monetize something. The bid-ask spreads from our view are still extremely high. Yeah. Okay Okay With sellers thinking they've got something really big here, and buyers recognizing that if you've got cash in this market, it's really valuable. There's still that spread. We haven't seen a ton of deals get done as a result, but I think we'll continue to see, you know, activity out in the space and question as to how much is actually gonna get completed. Okay. All right. Great. Thanks for the color. All right. Thanks, Peter. This will conclude our call. We thank everybody for joining us today. Ladies and gentlemen, that does end our conference for today. Thank you for your participation. You may now disconnect.