DEF 14A: Forum Energy Technologies Sets Date for 2024 Annual Stockholders Meeting, Announces Board Changes and Strategic Priorities

Forum Energy Technologies announces its 2024 annual meeting of stockholders, highlighting key accomplishments from 2023, board changes, and strategic priorities for the upcoming year.

Summary

• Forum Energy Technologies (FET) will hold its annual meeting of stockholders on May 10, 2024, at its Houston headquarters.
• In 2023, FET reduced long-term debt by 48% through the conversion of $122.8 million of convertible notes into common shares.
• FET acquired Variperm Energy Services, expecting it to significantly increase EBITDA and EBITDA margins.
• Despite volatile oil and gas prices, FET grew revenue and EBITDA by 6% and 14%, respectively, in 2023.
• Katherine Keller, Steven Pounds, and Mark Brookes were appointed to the executive management team.
• John Schmitz and Dr. Emily Reichert retired from the board of directors in March and November 2023, respectively.
• Leslie Beyer was appointed to the board in December 2023.
• C. Christopher Gaut transitioned to non-executive Chairman of the Board effective January 1, 2024.
• For 2024, FET prioritizes generating free cash flow, reducing leverage, technology development, and growing international and offshore businesses.
• The meeting will include the election of directors, an advisory vote on executive compensation, approval of an amendment to the stock and incentive plan, and ratification of the appointment of Deloitte & Touche LLP as the independent auditor.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While it highlights positive achievements like debt reduction and revenue growth, it also acknowledges market challenges and board changes. The focus on future strategic priorities suggests a cautiously optimistic outlook.

Positives

• Significant debt reduction strengthens the balance sheet.
• The Variperm acquisition is expected to boost EBITDA and margins.
• Revenue and EBITDA growth despite market challenges demonstrates resilience.
• Board refreshment brings diverse perspectives and industry expertise.
• Focus on free cash flow and leverage reduction enhances financial stability.
• The company is committed to diversity throughout the organization.
• The company is focused on technology development and leveraging its global footprint.

Negatives

• Oil and gas prices were volatile throughout 2023, and drilling activity did not increase as expected.
• The company's net income attributable to common stockholders was a loss of $18.9 million for the year ended December 31, 2023.

Risks

• Volatile oil and gas prices could impact future performance.
• Failure to successfully integrate the Variperm acquisition could hinder expected benefits.
• Inability to generate free cash flow and reduce leverage could limit strategic flexibility.
• Cybersecurity breaches could have a material effect on the business strategy, results of operations or financial condition.

Future Outlook

FET's board and management are focused on generating free cash flow, reducing leverage, continuing technology development, and growing international and offshore businesses in 2024.

Management Comments

• The FET executive management team has over 150 years of service in the energy industry and is well equipped to lead our Company into the future.
• We are also emphasizing continued technology development and leveraging our global footprint to further grow our international and offshore businesses.

Industry Context

The document acknowledges the volatility in oil and gas prices and the slower-than-expected increase in drilling activity, highlighting FET's ability to outperform the market despite these challenges. The acquisition of Variperm is likely aimed at strengthening FET's position in the energy services sector.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards or competitors.
• However, it mentions the use of a peer group for performance-based equity awards, including companies like Oil States International, Dril-Quip Inc., and NOV Inc.

Management Changes

Corporate Governance

Related Party Transactions

• FET consummated the acquisition of Variperm Holdings Ltd. on January 4, 2024, for approximately $150.0 million of cash and 2.0 million shares of FET's common stock.
• To fund a portion of the purchase price, the Company entered into a $60.0 million Second Lien Seller Term Loan Credit Agreement with the Variperm shareholders.
• The Company and the Sellers entered into an investor rights agreement providing for a lock-up on transfers of the Shares, customary registration rights, a standstill, and a voting agreement as to routine voting items at the 2024 annual meeting.

Stakeholder Impact

• Shareholders are encouraged to vote on key proposals, including executive compensation and board elections.
• Employees are affected by changes in executive management and the company's strategic priorities.
• Customers benefit from the company's focus on technology development and improved products and services.
• The company's commitment to environmental and social responsibility impacts the communities in which it operates.

Next Steps

• Stockholders are urged to vote their shares as promptly as possible.
• The board of directors will review the voting results on the advisory resolution on executive compensation and give consideration to the outcome when making future decisions regarding compensation of named executive officers.

Key Dates

Keywords

annual meeting, stockholders, EBITDA, debt reduction, Variperm, board of directors, executive compensation, stock plan, Deloitte & Touche, corporate governance, energy technology