Forum Energy Technologies Inc.
07/31/2026 | Press release | Distributed by Public on 07/31/2026 10:39
Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)
Management's discussion and analysis of financial condition and results of operations
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Company's control. All statements, other than statements of historical fact, included in this Quarterly Report on Form 10-Q regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Quarterly Report on Form 10-Q, the words "will," "could," "believe," "anticipate," "intend," "estimate," "expect," "may," "continue," "predict," "potential," "project" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.
All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. We disclaim any obligation to update or revise these statements unless required by law, and you should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this Quarterly Report on Form 10-Q are reasonable, forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause actual results to differ materially from our plans, intentions or expectations. This may be the result of various factors, including, but not limited to, those factors discussed in "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K filed with the SEC on February 27, 2026, and elsewhere in this Quarterly Report on Form 10-Q. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.
Overview
FET optimizes customer operations by improving safety, increasing efficiency, and reducing environmental impact. Our highly engineered products include capital equipment and consumable products. FET's customers include oil and natural gas operators, oilfield service companies, pipeline and refinery operators, defense contractors and renewable energy companies. Consumable products are used by our customers in drilling, well construction and completion activities and at processing centers and refineries. Our capital products are directed at drilling rig equipment for constructing new or upgrading existing rigs, subsea construction and development projects, submarine rescue systems and equipment for military use, pressure pumping equipment, the placement of production equipment on new producing wells, downstream capital projects and capital equipment for renewable energy projects. For the six months ended June 30, 2026, approximately 75% of our revenue was derived from consumable products and activity-based equipment, while the balance was primarily derived from capital products with a small amount from rental and other services.
We expect that the world's long-term energy demand will continue to rise for the foreseeable future. Hydrocarbons are expected to play a vital role in meeting the world's long-term energy needs even as renewable energy sources grow in importance. As such, we are focused on developing products to help oil and natural gas operators lower expenses, increase production, and reduce their emissions while also deploying our technologies in renewable energy applications.
The Company operates in the following two reportable segments: (1) Drilling and Completions and (2) Artificial Lift and Downhole. Refer to Note 9 Business Segments for the product lines making up each segment.
A summary of the products and services offered by each segment is as follows:
•Drilling and Completions. This segment designs, manufactures and supplies products and solutions to the drilling, subsea, coiled tubing, well stimulation and intervention markets, including applications in the oil and natural gas, renewable energy, defense and communications industries. The products and solutions consist primarily of (i) capital equipment and consumable products used in the drilling process; (ii) capital equipment and aftermarket products including subsea remotely operated vehicles ("ROVs") and trenchers, submarine rescue vehicles, specialty components and tooling, and technical services; (iii) capital equipment and consumable products sold to the pressure pumping market, including hydraulic fracturing pumps, cooling systems, and high-pressure flexible hoses and flow iron; (iv) wireline cable and pressure control equipment used in the well completion and intervention service markets; and (v) coiled tubing strings and pressure control equipment used in coiled tubing operations, as well as coiled line pipe and related services.
•Artificial Lift and Downhole. This segment designs, manufactures and supplies products and solutions for the artificial lift, well construction, production and infrastructure markets. The products and solutions consist primarily of: (i) products designed to safeguard artificial lift equipment and downhole cables; (ii) well construction casing and cementing equipment; (iii) customized downhole technology solutions, providing sand and flow control products for heavy oil applications; (iv) engineered process systems, production equipment, as well as specialty separation equipment; and (v) a wide range of industrial valves focused on oil and natural gas as well as power generation, renewable energy and other general industrial applications.
Market Conditions
Generally, demand for our products and services is highly correlated with the global drilling rig count. Customer activity and their associated budgets are heavily influenced by forecasted energy prices, production targets and anticipated investment returns. Demand for our capital products is driven by the utilization of service company equipment, which is a function of equipment capacity and durability in demanding environments, as well as equipment replacement cycles and fleet utilization levels.
During the second quarter 2026, global oil and natural gas markets continued to be significantly influenced by Middle East geopolitical developments. Military actions involving the U.S., Israel and Iran contributed early in the quarter to substantial uncertainty in global energy markets and raised concerns regarding supply security. Oil and natural gas markets were particularly focused on the disruption of shipping through the Strait of Hormuz following U.S. and Iranian actions to block all maritime traffic. Near the end of the quarter, the U.S. and Iran announced a memorandum of understanding intended to halt hostilities, and reopen the Strait of Hormuz, and lift sanctions on certain Iranian crude oil supplies. Subsequent to the quarter end, tensions in the region escalated, contributing to heightened uncertainty regarding the ongoing implementation of the memorandum, regional stability, global energy supply and transportation routes.
Over the course of the quarter, energy markets experienced heightened volatility, driven by reduced export capacity, constrained shipping activity in the region and the incorporation of a risk premium into commodity prices. Crude oil prices increased during portions of the quarter, as market participants reacted to both actual and potential disruptions in global supply. While oil prices stabilized near the end of the quarter as market confidence improved regarding diplomatic negotiations and global crude oil supply, prices remained sensitive to geopolitical developments. Natural gas prices decreased in the quarter due to strong supply growth and seasonality.
Despite the elevated energy prices, global average active rig counts decreased compared to the first quarter 2026 and remained below the prior-year period, reflecting continued capital discipline and expectations for a near term resolution to the Middle East conflicts. Looking forward, while commodity prices are expected to continue to fluctuate due to geopolitical developments, we expect customers to maintain their focus on capital discipline, operational efficiency and investment returns. However, we continue to believe that long-term global energy demand, ongoing production declines in mature fields, and customer focus on efficiency, safety, and emissions reduction will continue to support demand for our products and technologies over the long term.
The table below shows average crude oil and natural gas prices for West Texas Intermediate ("WTI"), Brent and Henry Hub. Average crude oil prices during the second quarter 2026 increased compared to the prior year. The higher prices reflected tightening global supply due to the geopolitical uncertainty in Middle East.
| Three Months Ended | |||||||||||||||||
| June 30, | March 31, | June 30, | |||||||||||||||
| 2026 | 2026 | 2025 | |||||||||||||||
| Average global oil, $/bbl | |||||||||||||||||
| WTI | $ | 95.65 | $ | 72.74 | $ | 64.57 | |||||||||||
| Brent | $ | 102.63 | $ | 80.72 | $ | 68.07 | |||||||||||
| Average North American Natural Gas, $/Mcf | |||||||||||||||||
| Henry Hub | $ | 2.95 | $ | 4.71 | $ | 3.19 | |||||||||||
The table below shows the average number of active drilling rigs operating by geographic area and drilling for different purposes based on the weekly rig count information published by Baker Hughes Company. In the third quarter of 2025, Baker Hughes implemented a revised methodology for counting rigs, primarily affecting data pertaining to Saudi Arabia. Consequently, international rig counts reported for the prior period have been adjusted accordingly and may now vary from figures presented in previous disclosures.
| Three Months Ended | |||||||||||||||||
| June 30, | March 31, | June 30, | |||||||||||||||
| 2026 | 2026 | 2025 | |||||||||||||||
| Active Rigs by Location | |||||||||||||||||
| United States | 554 | 548 | 571 | ||||||||||||||
| Canada | 149 | 201 | 128 | ||||||||||||||
| International | 1,056 | 1,083 | 1,078 | ||||||||||||||
| Global Active Rigs | 1,759 | 1,832 | 1,777 | ||||||||||||||
| Land vs. Offshore Rigs | |||||||||||||||||
| Land | 1,510 | 1,582 | 1,527 | ||||||||||||||
| Offshore | 249 | 250 | 250 | ||||||||||||||
| Global Active Rigs | 1,759 | 1,832 | 1,777 | ||||||||||||||
| U.S. Commodity Target | |||||||||||||||||
| Oil | 420 | 411 | 459 | ||||||||||||||
| Gas | 126 | 128 | 108 | ||||||||||||||
| Unclassified | 8 | 9 | 4 | ||||||||||||||
| Total U.S. Active Rigs | 554 | 548 | 571 | ||||||||||||||
| U.S. Well Path | |||||||||||||||||
| Horizontal | 482 | 481 | 515 | ||||||||||||||
| Vertical | 12 | 12 | 13 | ||||||||||||||
| Directional | 60 | 55 | 43 | ||||||||||||||
| Total U.S. Active Rigs | 554 | 548 | 571 | ||||||||||||||
The table below shows the amount of total inbound orders by segment:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | |||||||||||||||||||||||||
| (in thousands of dollars) | 2026 | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||
| Drilling and Completions | $ | 144,308 | $ | 135,458 | $ | 177,792 | $ | 279,766 | $ | 309,926 | |||||||||||||||||||
| Artificial Lift and Downhole | 91,631 | 85,710 | 85,338 | 177,341 | 153,893 | ||||||||||||||||||||||||
| Total Orders | $ | 235,939 | $ | 221,168 | $ | 263,130 | $ | 457,107 | $ | 463,819 | |||||||||||||||||||
Results of operations
Three months ended June 30, 2026 compared with three months ended June 30, 2025
| Three Months Ended June 30, | Change | ||||||||||||||||||||||
| (in thousands of dollars, except per share information) | 2026 | 2025 | $ | % | |||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Drilling and Completions | $ | 139,004 | $ | 117,237 | $ | 21,767 | 18.6 | % | |||||||||||||||
| Artificial Lift and Downhole | 87,422 | 82,547 | 4,875 | 5.9 | % | ||||||||||||||||||
| Eliminations | (209) | (20) | (189) | * | |||||||||||||||||||
| Total revenue | 226,217 | 199,764 | 26,453 | 13.2 | % | ||||||||||||||||||
| Segment operating income | |||||||||||||||||||||||
| Drilling and Completions | 13,715 | 7,271 | 6,444 | 88.6 | % | ||||||||||||||||||
| Operating margin % | 9.9 | % | 6.2 | % | |||||||||||||||||||
| Artificial Lift and Downhole | 16,350 | 10,391 | 5,959 | 57.3 | % | ||||||||||||||||||
| Operating margin % | 18.7 | % | 12.6 | % | |||||||||||||||||||
| Corporate | (8,973) | (9,491) | 518 | 5.5 | % | ||||||||||||||||||
| Total segment operating income | 21,092 | 8,171 | 12,921 | 158.1 | % | ||||||||||||||||||
| Operating margin % | 9.3 | % | 4.1 | % | |||||||||||||||||||
| Transaction expenses | 125 | 184 | (59) | * | |||||||||||||||||||
| Gain on sale-leaseback transactions | - | (6,903) | 6,903 | * | |||||||||||||||||||
| Loss on disposal of assets and other | 460 | 207 | 253 | * | |||||||||||||||||||
| Operating income | 20,507 | 14,683 | 5,824 | 39.7 | % | ||||||||||||||||||
| Interest expense | 4,272 | 4,706 | (434) | (9.2) | % | ||||||||||||||||||
| Foreign exchange losses (gains) and other, net | 226 | (3,942) | 4,168 | * | |||||||||||||||||||
| Total other expense | 4,498 | 764 | 3,734 | 488.7 | % | ||||||||||||||||||
| Income before income taxes | 16,009 | 13,919 | 2,090 | 15.0 | % | ||||||||||||||||||
| Income tax expense | 3,602 | 6,219 | (2,617) | (42.1) | % | ||||||||||||||||||
| Net income | $ | 12,407 | $ | 7,700 | $ | 4,707 | 61.1 | % | |||||||||||||||
| Weighted average shares outstanding | |||||||||||||||||||||||
| Basic | 11,290 | 12,350 | |||||||||||||||||||||
| Diluted | 11,773 | 12,554 | |||||||||||||||||||||
| Earnings per share | |||||||||||||||||||||||
| Basic | $ | 1.10 | $ | 0.62 | |||||||||||||||||||
| Diluted | $ | 1.05 | $ | 0.61 | |||||||||||||||||||
| * not meaningful | |||||||||||||||||||||||
Revenue
Our revenue for the three months ended June 30, 2026 was $226.2 million, an increase of $26.5 million, or 13.2%, compared to the three months ended June 30, 2025. For the three months ended June 30, 2026, our Drilling and Completions and our Artificial Lift and Downhole segments comprised 61.4% and 38.6% of our total revenue, respectively, compared to 58.7% and 41.3% of our total revenue, respectively, for the three months ended June 30, 2025. The changes in revenue by operating segment consisted of the following:
Drilling and Completions segment - Revenue was $139.0 million for the three months ended June 30, 2026, an increase of $21.8 million, or 18.6%, compared to the three months ended June 30, 2025. The increase was primarily attributable to higher revenue recognized from ROVs and part sales in the Subsea product line, as well as increased demand for wireline cable, coiled tubing and drilling-related capital products.
Artificial Lift and Downhole segment - Revenue was $87.4 million for the three months ended June 30, 2026, an increase of $4.9 million, or 5.9%, compared to the three months ended June 30, 2025. The increase in revenue was primarily attributable to higher sand and flow control product sales, as well as higher valve product sales reflecting the absence of prior-year period tariff-related sales impacts. These increases were partially offset by lower demand for production equipment and technologies.
Segment operating income and segment operating margin percentage
Segment operating income for the three months ended June 30, 2026 was $21.1 million, a $12.9 million increase compared to income of $8.2 million for the three months ended June 30, 2025. For the three months ended June 30, 2026, segment operating margin percentage was 9.3% compared to 4.1% for the three months ended June 30, 2025. Segment operating margin percentage is calculated by dividing segment operating income (loss) by revenue for the period. The change in operating income for each segment is explained as follows:
Drilling and Completions segment - Segment operating income was $13.7 million, or 9.9%, for the three months ended June 30, 2026 compared to income of $7.3 million, or 6.2%, for the three months ended June 30, 2025. The $6.4 million increase in segment operating results was driven by revenue growth across all product lines, as well as benefits from cost savings initiatives including the Company's strategic decision to consolidate facilities in the second half of the prior year.
Artificial Lift and Downhole segment - Segment operating income was $16.4 million, or 18.7%, for the three months ended June 30, 2026 compared to $10.4 million, or 12.6%, for the three months ended June 30, 2025. The $6.0 million increase was primarily driven by increased sales volume, favorable product mix, operating leverage and benefits from cost savings initiatives.
Corporate - Selling, general and administrative expenses for Corporate were $9.0 million for the three months ended June 30, 2026, comparable to the three months ended June 30, 2025.
Other items not included in segment operating income
Transaction expenses, gain on sale-leaseback transactions, and gain (loss) on the disposal of assets and other are not included in segment operating income, but are included in total operating income.
Other income and expense
Other income and expense includes interest expense and foreign exchange gains (losses) and other. We incurred $4.3 million of interest expense during the three months ended June 30, 2026, a decrease of $0.4 million compared to the three months ended June 30, 2025, due to decreased borrowings. See Note 6 Debt for further details related to debt.
The foreign exchange gains and losses are primarily the result of movements in the British pound, Canadian dollar and Euro relative to the U.S. dollar. These movements in exchange rates create foreign exchange gains or losses when applied to monetary assets or liabilities denominated in currencies other than the location's functional currency, primarily U.S. dollar denominated cash, trade account receivables and net intercompany receivable balances for our entities using a functional currency other than the U.S. dollar.
Taxes
We recorded tax expense of $3.6 million and $6.2 million for the three months ended June 30, 2026 and 2025, respectively. The income tax expense during the three months ended June 30, 2026 was partially driven by a decrease to valuation allowances on certain deferred tax assets. The estimated annual effective tax rates for the three months ended June 30, 2026 and 2025 were impacted by changes in earnings relative to tax expense and by fluctuations in valuation allowances on certain net operating loss carryforwards. Furthermore, the tax expense or benefit recorded can vary from period to period depending on the Company's relative mix of earnings and losses by jurisdiction.
Results of operations
Six months ended June 30, 2026 compared with six months ended June 30, 2025
| Six Months Ended June 30, | Change | ||||||||||||||||||||||
| (in thousands of dollars, except per share information) | 2026 | 2025 | $ | % | |||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Drilling and Completions | $ | 265,743 | $ | 232,806 | $ | 32,937 | 14.1 | % | |||||||||||||||
| Artificial Lift and Downhole | 169,520 | 160,343 | 9,177 | 5.7 | % | ||||||||||||||||||
| Eliminations | (346) | (106) | (240) | * | |||||||||||||||||||
| Total revenue | 434,917 | 393,043 | 41,874 | 10.7 | % | ||||||||||||||||||
| Segment operating income | |||||||||||||||||||||||
| Drilling and Completions | 22,624 | 16,650 | 5,974 | 35.9 | % | ||||||||||||||||||
| Operating margin % | 8.5 | % | 7.2 | % | |||||||||||||||||||
| Artificial Lift and Downhole | 27,934 | 17,688 | 10,246 | 57.9 | % | ||||||||||||||||||
| Operating margin % | 16.5 | % | 11.0 | % | |||||||||||||||||||
| Corporate | (18,483) | (17,189) | (1,294) | (7.5) | % | ||||||||||||||||||
| Total segment operating income | 32,075 | 17,149 | 14,926 | 87.0 | % | ||||||||||||||||||
| Operating margin % | 7.4 | % | 4.4 | % | |||||||||||||||||||
| Transaction expenses | 273 | 235 | 38 | * | |||||||||||||||||||
| Gain on sale-leaseback transactions | - | (6,903) | 6,903 | * | |||||||||||||||||||
| Loss on disposal of assets and other | 290 | 330 | (40) | * | |||||||||||||||||||
| Operating income | 31,512 | 23,487 | 8,025 | 34.2 | % | ||||||||||||||||||
| Interest expense | 8,413 | 9,689 | (1,276) | (13.2) | % | ||||||||||||||||||
| Foreign exchange gains and other, net | (297) | (5,010) | 4,713 | * | |||||||||||||||||||
| Total other expense | 8,116 | 4,679 | 3,437 | 73.5 | % | ||||||||||||||||||
| Income before income taxes | 23,396 | 18,808 | 4,588 | 24.4 | % | ||||||||||||||||||
| Income tax expense | 6,497 | 9,986 | (3,489) | (34.9) | % | ||||||||||||||||||
| Net income | $ | 16,899 | $ | 8,822 | $ | 8,077 | 91.6 | % | |||||||||||||||
| Weighted average shares outstanding | |||||||||||||||||||||||
| Basic | 11,252 | 12,327 | |||||||||||||||||||||
| Diluted | 11,707 | 12,542 | |||||||||||||||||||||
| Earnings per share | |||||||||||||||||||||||
| Basic | $ | 1.50 | $ | 0.72 | |||||||||||||||||||
| Diluted | $ | 1.44 | $ | 0.70 | |||||||||||||||||||
| * not meaningful | |||||||||||||||||||||||
Revenue
Our revenue for the six months ended June 30, 2026 was $434.9 million, an increase of $41.9 million, or 10.7%, compared to the six months ended June 30, 2025. For the six months ended June 30, 2026, our Drilling and Completions and our Artificial Lift and Downhole segments comprised 61.1% and 38.9% of our total revenue, respectively, compared to 59.2% and 40.8% of our total revenue, respectively, for the six months ended June 30, 2025. The changes in revenue by operating segment consisted of the following:
Drilling and Completions segment - Revenue was $265.7 million for the six months ended June 30, 2026, an increase of $32.9 million, or 14.1%, compared to the six months ended June 30, 2025. The increase was primarily attributable to higher revenue recognized from ROVs and part sales in the Subsea product line, as well as increased demand for wireline cable, coiled tubing and drilling-related capital products.
Artificial Lift and Downhole segment - Revenue was $169.5 million for the six months ended June 30, 2026, an increase of $9.2 million, or 5.7%, compared to the six months ended June 30, 2025. The increase in revenue was primarily attributable to higher sand and flow control product sales, as well as higher valve product sales reflecting the absence of prior-year period tariff-related sales impacts. These increases were partially offset by lower demand for production equipment and technologies.
Segment operating income and segment operating margin percentage
Segment operating income for the six months ended June 30, 2026 was $32.1 million, a $14.9 million increase, compared to $17.1 million for the six months ended June 30, 2025. For the six months ended June 30, 2026, segment operating margin percentage was 7.4%, compared to 4.4% for the six months ended June 30, 2025. Segment operating margin percentage is calculated by dividing segment operating income by revenue for the period. The change in operating income for each segment is explained as follows:
Drilling and Completions segment - Segment operating income was $22.6 million, or 8.5%, for the six months ended June 30, 2026 compared to $16.7 million, or 7.2%, for the six months ended June 30, 2025. The $6.0 million increase in segment operating results was driven by revenue growth across all product lines, as well as benefits from cost savings initiatives including the Company's strategic decision to consolidate facilities in the second half of the prior year.
Artificial Lift and Downhole segment - Segment operating income was $27.9 million, or 16.5%, for the six months ended June 30, 2026 compared to $17.7 million, or 11.0%, for the six months ended June 30, 2025. The $10.2 million increase was primarily driven by increased sales volume, favorable product mix, operating leverage and benefits from cost savings initiatives.
Corporate - Selling, general and administrative expenses for Corporate were $18.5 million for the six months ended June 30, 2026 compared to $17.2 million for the six months ended June 30, 2025. This increase was primarily related to higher performance-based stock incentive compensation costs.
Other items not included in segment operating income
Transaction expenses, gain on sale-leaseback transactions, and gain (loss) on the disposal of assets and other are not included in segment operating income, but are included in total operating income.
Other income and expense
Other income and expense includes interest expense and foreign exchange gains (losses) and other. We incurred $8.4 million of interest expense during the six months ended June 30, 2026, a decrease of $1.3 million compared to the six months ended June 30, 2025, due to decreased borrowings. See Note 6 Debt for further details related to debt.
The foreign exchange gains and losses are primarily the result of movements in the British pound, Canadian dollar and Euro relative to the U.S. dollar. These movements in exchange rates create foreign exchange gains or losses when applied to monetary assets or liabilities denominated in currencies other than the location's functional currency, primarily U.S. dollar denominated cash, trade account receivables and net intercompany receivable balances for our entities using a functional currency other than the U.S. dollar.
Taxes
We recorded tax expense of $6.5 million and $10.0 million for the six months ended June 30, 2026 and 2025, respectively. The income tax expense during the six months ended June 30, 2026 was favorably impacted by a decrease to valuation allowances on certain deferred tax assets and the relative mix of earnings and losses by jurisdiction. The estimated annual effective tax rates for the six months ended June 30, 2026 and 2025 were driven primarily by changes in earnings relative to tax expense and to fluctuations in valuation allowances on certain net operating loss carryforwards. Furthermore, the tax expense or benefit recorded can vary from period to period depending on the Company's relative mix of earnings and losses by jurisdiction.
Liquidity and capital resources
Sources and uses of liquidity
Our internal sources of liquidity are cash on hand and cash flows from operations, while our primary external sources include trade credit, the Credit Facility and the 2029 Bonds. Our primary uses of capital have been for inventory, sales on credit to our customers, maintenance and growth capital expenditures, repurchases of stock, debt repayments and acquisitions. We continually monitor other potential capital sources, including equity and debt financing, to meet our investment and target liquidity requirements. Our future success and growth will be highly dependent on our ability to generate positive operating cash flow and access outside sources of capital.
As of June 30, 2026, we had $45.0 million of borrowings under our revolving Credit Facility and $100.0 million principal amount of the 2029 Bonds outstanding. See Note 6 Debt for further details related to the terms for our debt arrangements.
As of June 30, 2026, we had cash and cash equivalents of $33.7 million and $62.0 million of availability under the Credit Facility. We anticipate that our future working capital requirements for our operations will fluctuate directionally with revenues. Furthermore, availability under the Credit Facility will fluctuate directionally based on the level of our eligible accounts receivable and inventory subject to applicable sublimits. In addition, we expect total 2026 capital expenditures to be below $10.0 million, primarily for replacement of end of life machinery and equipment.
We expect our available cash on-hand, cash generated by operations, and estimated availability under the Credit Facility to be adequate to fund current operations for at least the next 12 months and for the foreseeable future. In addition, based on existing market conditions and our expected liquidity needs, among other factors, we may use a portion of our cash flows from operations, proceeds from divestitures, securities offerings or other eligible capital to reduce outstanding debt or repurchase shares of our common stock under our repurchase program.
Our Board of Directors approved programs for the repurchase of outstanding shares of our common stock. From the inception of the programs in November 2021 through June 30, 2026, we repurchased approximately 1.8 million shares of our common stock for aggregate consideration of $49.4 million. We repurchased approximately 0.1 million shares of our common stock for aggregate consideration of $7.6 million during the six months ended June 30, 2026.
Our cash flows for the six months ended June 30, 2026 and 2025 are presented below (in thousands):
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net cash provided by operating activities | $ | 14,056 | $ | 25,099 | |||||||
| Net cash provided by (used in) investing activities | (3,030) | 5,024 | |||||||||
| Net cash used in financing activities | (11,571) | (37,296) | |||||||||
| Effect of exchange rate changes on cash | (400) | 1,479 | |||||||||
| Net decrease in cash and cash equivalents | $ | (945) | $ | (5,694) | |||||||
Net cash provided by operating activities
Net cash provided by operating activities was $14.1 million for the six months ended June 30, 2026 compared to net cash provided by operating activities of $25.1 million for the six months ended June 30, 2025. The decrease was primarily due to higher working capital requirements, driven by an increase in accounts receivable associated with higher revenue, resulting in a use of cash of $31.4 million in the 2026 period compared to net cash provided of $3.4 million in the prior period. Partially offsetting this decline in operating cash flows was the increase in net income adjusted for non-cash items, which provided $45.4 million of cash in 2026 compared to $21.7 million in 2025.
Net cash provided by (used in) investing activities
Net cash used in investing activities was $3.0 million for the six months ended June 30, 2026, driven by capital expenditures. Net cash provided by investing activities was $5.0 million for the six months ended June 30, 2025, primarily from $8.0 million proceeds from a sale-leaseback transaction, offset by capital expenditures of $3.1 million.
Net cash used in financing activities
Net cash used in financing activities was $11.6 million for the six months ended June 30, 2026 compared to $37.3 million of cash used in financing activities for the six months ended June 30, 2025. The change was primarily driven by payments of stock-based compensation taxes of $9.3 million and repurchases of stock of $7.6 million, partially offset by $7.7 million in net borrowings under the revolving Credit Facility during 2026. This compares to $28.0 million in net repayments under the revolving Credit Facility, repurchases of stock of $6.3 million and payments of stock-based compensation taxes of $1.3 million during the prior year period.
Critical accounting policies and estimates
There have been no material changes in our critical accounting policies and estimates during the six months ended June 30, 2026. For a detailed discussion of our critical accounting policies and estimates, refer to our 2025 Annual Report on Form 10-K. For recent accounting pronouncements, refer to Note 2 Recent Accounting Pronouncements.
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