What changed in this filing

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Item 1A. Risk Factors

2025-03-03 compared with 2024-03-05 · 52 added, 78 removed, 525 unchanged (20% of the section changed)

26 unchanged sentences

• A natural disaster, catastrophe or other event could result in severe property damage, which could curtail our operations.

Risks Related to the Variperm Acquisition:

• We may not be able to integrate Variperm successfully or manage the combined business effectively, and the benefits of acquiring Variperm may not be realized or may not be realized within the expected time frame.

• Variperm may have liabilities that are not known, probable or estimable at this time.

• We will incur significant costs in connection with the Variperm Acquisition, which may be in excess of those anticipated.

• Failure to retain key employees and attract new talent to fill new roles created by the integration or vacant roles created by attrition could diminish the anticipated benefits of the Variperm Acquisition and otherwise harm our business.

Legal and Regulatory Risks:

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• Provisions in our organizational documents and under Delaware law could delay or prevent a change in control of our company, which could adversely affect the price of our common stock.

• We have incurred impairment charges and we may incur additional impairment charges in the future.

• During the year ended December 31, 2024, we incurred impairment charges and we may incur additional impairment charges in the future.

Risks Related to our Business and Operations:

5 unchanged sentences

• prices, and expectations about future prices, of oil and natural gas;

• ability or willingness of the Organization of Petroleum Exporting Countries (“OPEC”) and other major producers to set and maintain production limits;

• ability or willingness of the Organization of Petroleum Exporting Countries and other allied producing countries (“OPEC+”) and other major producers to set and maintain production limits;

• cost of exploring for, developing, producing and delivering oil and natural gas;

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As a result, there are periodic reductions in the demand for our products and services, downward pressure on the prices that we charge and ultimately an adverse impact on our business.

Although during 2022 and 2023, oil and gas prices and demand increased significantly from the historic lows seen in the first half of 2020, it is uncertain whether prices will maintain current levels, decline or increase.

Furthermore, there can be no assurance that the demand or pricing for oil and

natural gas will follow historic patterns, including as a result of increased availability of alternative energy sources.

Although during 2023 and 2024, oil and gas prices and demand remained relatively steady, it is uncertain whether prices will maintain current levels, decline or increase.

Furthermore, there can be no assurance that the demand or pricing for oil and natural gas will follow historic

patterns, including as a result of increased availability of alternative energy sources.

Declines in oil and natural gas prices, decreased levels of exploration, development, and production activity, use of alternative sources of energy, and the willingness of customers to invest in their equipment relative to historical norms may negatively affect:

33 unchanged sentences

As a result, we would hold excess or obsolete inventory, which would reduce gross margin and adversely affect financial results upon writing down the value of inventory.

In addition, any future significant cancellations or deferrals of product orders or the return of previously sold products

could materially and adversely affect profit margins, increase product obsolescence and restrict our ability to fund our operations.

In addition, any future significant cancellations or deferrals of product orders or the return of previously sold products could materially and adversely affect profit margins, increase product obsolescence and restrict our ability to fund our operations.

We may not realize revenue on our current backlog due to customer order reductions, cancellations or acceptance delays, which may negatively impact our financial results.

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In some cases, the suppliers own the intellectual property rights to the products we sell, or possess the technology or specialized tooling required to manufacture them.

As a result of this concentration in part of our supply chain, our business and operations may be negatively affected if our key suppliers were to experience significant disruptions affecting the price, quality, availability or timely delivery of their products, or if they were to decide to terminate their relationships with us.

availability or timely delivery of their products, or if they were to decide to terminate their relationships with us.

For example, we have a limited number of suppliers for our bearings product lines and certain of our valve product lines.

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Our contracts with customers and customer requests for bids often set forth detailed specifications or technical requirements (including that they meet certain industrial code requirements, such as API, ASME or similar codes, or that our processes and facilities maintain ISO or similar certifications) for our products and services, which may also include extensive testing requirements.

We anticipate that such code testing requirements will become more common in our contracts.

We anticipate that such code testing requirements will become more common in our

We cannot assure that our products or facilities will be able to satisfy the specifications or requirements, or that we will be able to perform the full-scale testing necessary to prove that the product specifications are satisfied in future contract bids or under existing contracts, or that the costs of modifications to our products or facilities to satisfy the specifications and testing will not adversely affect our results of operations.

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If we are not able to continue to provide new and innovative services and technologies in a manner that allows us to meet evolving industry requirements, including the focus on renewable energy opportunities, at prices acceptable to our customers, our financial results would be negatively affected.

In addition, some of our competitors are large national and multinational companies that we believe are able to devote greater financial, technical, manufacturing and marketing resources to research and develop more or better systems, services and technologies than we are able to do.

In addition, some of our competitors are large national

and multinational companies that we believe are able to devote greater financial, technical, manufacturing and marketing resources to research and develop more or better systems, services and technologies than we are able to do.

Moreover, as a result of the currently depressed levels of customer activity, we may be unable to allocate sufficient amounts of capital to research and new product development activities, which may limit our ability to compete in the market and generate revenue.

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The existence of a material weakness in the future or a failure of our internal controls could affect our ability to obtain financing or increase the cost of any such financing.

The identification of a

material weakness in the future could also cause investors to lose confidence in the reliability of our financial statements and could result in a decrease in the value of our common stock.

The identification of a material weakness in the future could also cause investors to lose confidence in the reliability of our financial statements and could result in a decrease in the value of our common stock.

In addition, the entities that we acquire in the future may not maintain effective systems of internal control or we may encounter difficulties integrating our system of internal controls with those of acquired entities.

58 unchanged sentences

As a result, our financial results were negatively impacted by foregone revenue and under-absorption of manufacturing costs, and, indirectly, due to supplier and logistical delays.

Risks Related to the Variperm Acquisition:

We may not be able to integrate Variperm successfully or manage the combined business effectively, and the benefits of acquiring Variperm may not be realized or may not be realized within the expected time frame.

We consummated the Variperm Acquisition with the expectation that it would result in various benefits.

Achieving the anticipated benefits of the Variperm Acquisition is subject to a number of uncertainties, including whether the businesses of FET and Variperm can be integrated in an efficient and effective manner.

We will be required to devote significant management attention and resources to integrating Variperm’s operations into our operations.

Delays or unexpected difficulties in the integration process may cause the anticipated benefits of the Variperm Acquisition to not be fully realized or to take longer to realize than expected.

Issues that must be addressed in integrating Variperm’s operations include, among other things:

• conforming standards, controls, procedures and policies, business cultures and compensation structures;

• integrating supply chain, procurement, corporate, accounting, information technology, communications, administration and other systems;

• consolidating sales and marketing operations;

• retaining existing customers and attracting new customers;

• retaining key employees and attracting new talent to fill new roles created by the integration or vacant roles created by attrition;

• identifying and eliminating redundant and underperforming operations and assets;

• minimizing the diversion of management’s attention from ongoing business concerns;

• operating the combined business in markets and geographies in which we do not currently operate;

• managing tax costs or inefficiencies associated with integrating Variperm’s and FET’s operations.

Failure to achieve the anticipated benefits of the Variperm Acquisition could adversely affect our future business, financial condition, results of operations and prospects.

Even if we are able to integrate Variperm’s operations successfully, this integration may not result in the realization of the full benefits we expect or the achievement of these benefits within a reasonable period of time.

In addition, we may have not discovered during the due diligence process prior to closing all known and unknown factors regarding Variperm that could produce unintended and unexpected consequences for us.

Undiscovered factors could result in us incurring financial liabilities, which could be material, and could result in us not achieving the expected benefits from the Variperm Acquisition within our desired time frames, or at all.

Variperm may have liabilities that are not known, probable or estimable at this time.

As a result of the Variperm Acquisition, Variperm has become our wholly-owned subsidiary, and we effectively assume all of Variperm’s liabilities, whether or not currently known.

There may be claims, assessments or liabilities that we did not discover or identify in the course of performing due diligence investigations of Variperm.

In addition, there may be liabilities that are neither probable nor estimable at this time which may become probable and estimable in the future.

Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business.

We may uncover additional information about Variperm that adversely affects us, such as unknown, unasserted or contingent liabilities and issues relating to compliance with applicable laws.

We will incur significant costs in connection with the Variperm Acquisition, which may be in excess of those anticipated.

We have incurred and expect to continue to incur a number of non-recurring costs associated with negotiating and completing the Variperm Acquisition and combining the operations of FET and Variperm.

These fees and costs have been, and will continue to be, substantial.

A significant portion of such expenses consist of transaction costs related to the Variperm Acquisition and include, among others, fees and expenses of professional advisors, including legal and accounting advisors, and financing costs.

We will also incur fees and costs related to the integration of FET and Variperm, which could include severance costs and capital expenditures.

Moreover, we may incur additional unanticipated expenses in connection with the integration.

Although we expect the elimination of duplicative costs and the realization of other efficiencies related to the integration of Variperm into FET’s operations to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all.

We cannot assure you that we will successfully integrate the Variperm business.

The costs described above, as well as other unanticipated costs and expenses, could have a material adverse effect on the financial condition and operating results of the combined company following the completion of the Variperm Acquisition.

Failure to retain key employees and attract new talent to fill new roles created by the integration or vacant roles created by attrition could diminish the anticipated benefits of the Variperm Acquisition and otherwise harm our business.

The success of our business, including the Variperm Acquisition, will depend in part upon the retention of key employees critical to the Variperm business.

Current employees may experience uncertainty about their future roles until clear strategies are announced or executed.

Some Variperm employees may choose not to remain with the combined company.

If we are unable to retain personnel that are critical to our operations and the integration of FET and Variperm, or if we are unable to attract talent to fill new roles created by the integration or vacant roles created by attrition, we could experience disrupted operations, including loss of customers, key information, expertise and know how, or unanticipated hiring and training costs.

In addition, the loss of key personnel could diminish the benefits of the Variperm Acquisition actually achieved by us.

Legal and Regulatory Risks:

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The Northern District of California upheld the rescission in 2020, but this decision was then appealed to the Ninth Circuit Court of Appeals.

This litigation is ongoing and future implementation of the BLM rules is uncertain at this time.

These challenges remain ongoing and future implementation of the BLM rules is uncertain at this time.

In past sessions, Congress has considered, but not passed, the adoption of legislation to provide for federal regulation of hydraulic fracturing under the SDWA and to require disclosure of the chemicals used in the hydraulic fracturing process.

4 unchanged sentences

In addition, the legislation broadened the authority for local governments to further regulate or restrict hydraulic fracturing.

In April 2021, the California Governor’s Office directed state regulators to end the issuance of new permits for hydraulic fracturing by January 2024.

In April 2021, the California Governor’s Office directed state regulators to end the issuance of new permits for hydraulic fracturing, rules effective October 2024.

In February 2018, the Oklahoma Corporation Commission released a protocol that requires operators to suspend hydraulic fracturing well completion operations in response to certain levels of seismic activity.

9 unchanged sentences

In August 2022, a federal judge for the U.S.

District Court of the Western District of Louisiana issued a permanent injunction against the pause of oil and natural gas leasing on public lands or in offshore waters of the thirteen plaintiff states that brought the lawsuit, which followed a June 2021 nationwide preliminary injunction by the district court that was subsequently vacated by the U.S.

preliminary injunction by the district court that was subsequently vacated by the U.S.

Court of Appeals for the Fifth Circuit.

The full impact of these federal actions remains unclear, and if other restrictions or prohibitions become effective in the future, they could have an adverse impact on our business, financial condition, results of operations and cash flows.

Further, there exists the potential that the Trump Administration pursues new or amended laws, regulations, executive actions, or other initiatives that may alter restrictions on hydraulic fracturing activities and states may act to further regulate such activities in the absence of federal regulations or in light of regulatory uncertainty.

Our operations are subject to environmental and operational safety laws and regulations that may expose us to significant costs and liabilities.

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government entered into tariff agreements with Mexico and Canada to remove Section 232 tariffs, and, in 2021 and 2022, the U.S.

government entered into tariff agreements with the European Union, Japan, and the United Kingdom to ease Section 232 tariffs on the close allies and trade partners, but Section 232 tariffs still remain in effect with

respect to the other nations.

In addition, the U.S.

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government conducted a sunset review on its existing anti-dumping duty on certain hot-rolled steel products from Australia, Brazil, Japan, the Republic of Korea, the Netherlands, the Republic of Turkey, and the United Kingdom that was issued in 2016, and determined to continue the anti-dumping duty order on all subject steel products except for those from Brazil.

More recently, the Trump Administration has proposed significantly increased tariffs on foreign imports into the U.S., particularly from China, which may impact our cost of raw materials.

Our efforts to mitigate the impact of tariffs on raw materials through the diversification of our supply chain, exemption requests and other measures may not be sufficiently successful.

1 unchanged sentence

We are subject to litigation risks that may not be covered by insurance.

In the ordinary course of business, we become the subject of claims, lawsuits and administrative proceedings seeking damages or other remedies concerning our commercial operations, products, employees and other matters, including occasional claims by individuals alleging exposure to hazardous materials as a result of our products or operations.

products or operations.

Some of these claims relate to the activities of businesses that we have acquired, even though these activities may have occurred prior to our acquisition of such businesses.

27 unchanged sentences

In addition, we provide certain services that could cause, contribute to or be implicated in these events.

If our products or services fail to meet specifications or are involved in accidents or failures, we could face

warranty, contract or other litigation claims, which could expose us to substantial liability for personal injury, wrongful death, property damage, loss of oil and natural gas production, and pollution or other environmental damages.

If our products or services fail to meet specifications or are involved in accidents or failures, we could face warranty, contract or other litigation claims, which could expose us to substantial liability for personal injury, wrongful death, property damage, loss of oil and natural gas production, and pollution or other environmental damages.

In addition, failure of our products to operate properly or to meet specifications may increase costs by requiring additional engineering resources and services, replacement of parts and equipment or monetary reimbursement to a customer.

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Court of Appeals for the District of Columbia struck down the ACE rule but did not reinstate the former CPP regulation.

In June 2022, the CPP was struck down by the United States Supreme Court, which held that Congress did not grant EPA the authority to devise emissions caps based on the generation-shifting approach the EPA took in the CPP.

In June 2022, the CPP was struck down by the U.S.

Supreme Court, which held that Congress did not grant EPA the authority to devise emissions caps based on the generation-shifting approach the EPA took in the CPP.

In May 2023, the EPA proposed to vacate the ACE rule and establish control methods to reduce the GHG emissions of power generation sector through control methods that include carbon capture and storage, low-GHG hydrogen co-firing and natural gas co-firing.

In April 2024, the EPA published rules to regulate greenhouse gas emissions from fossil fuel-fired power plants (Clean Power Plan 2.0), which faced immediate criticism and challenges.

• In August 2020, the EPA rescinded methane and volatile organic compound emissions standards for new and modified oil and gas transmission and storage infrastructure previously promulgated in 2016, as well as methane limits for new and modified oil and gas production and processing equipment.

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In July 2023, the EPA proposed to add reporting that would capture “other large release events” such as abnormal methane emission events that are not fully accounted for using existing methods.

There is ongoing D.C.

Circuit litigation for these standards, and in October 2024, the U.S.

Supreme Court denied industry and state petitioners’ applications to stay the implementation of the rule while merits of the challenges are litigated.

Additionally, at the end of 2024, EPA announced proposed amendment to the NSPS with additional emissions standards and limitations for GHGs and other hazardous air pollutants.

The White House has also taken actions targeting emissions of GHGs.

1 unchanged sentence

Efforts have also been made and continue to be made in the international community toward the adoption of international treaties or protocols that would address global climate change issues.

Although the U.S.

had withdrawn from the Paris Agreement in November 2020, the Biden Administration officially reentered the U.S.

into the agreement in February 2021.

Under the Paris Agreement, the Biden Administration has committed the United States to reducing its GHG emissions by 50 - 52% from 2005 levels by 2030.

In November 2021, the U.S.

and other countries entered into the Glasgow Climate Pact, which includes a range of measures designed to address climate change, including but not limited to the phase-out of fossil fuel subsidies, reducing methane emissions 30% by 2030, and cooperating toward the advancement of the development of clean energy.

Although the Biden Administration officially reentered the U.S.

into the Paris Agreement in February 2021, the Trump Administration signed an executive order withdrawing the U.S.

from the agreement in January 2025.

While it is not possible at this time to predict how any such actions may impact our business, such actions could reduce activity from federal, state, and local legislative bodies and administrative agencies and the number of GHG laws, regulations, and other binding commitments.

The adoption of additional legislation or regulatory programs to reduce emissions of GHGs could require us to incur increased operating costs to comply with new emissions-reduction or reporting requirements.

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We may be held responsible for violations by our employees, contractors and agents for violations of anti-corruption laws.

We may also be held

responsible for violations by an acquired company that occur prior to an acquisition, or subsequent to an acquisition but before we are able to institute our compliance procedures.

We may also be held responsible for violations by an acquired company that occur prior to an acquisition, or subsequent to an acquisition but before we are able to institute our compliance procedures.

In addition, our non-U.S.

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Likewise, the market price of our common stock has varied significantly in the past.

For example, in 2023, the market price of our common stock reached a high of $33.84 per share on February 10, 2023, and a low of $19.31 per share on December 12, 2023.

For example, in 2024, the market price of our common stock reached a high of $23.21 per share on January 2, 2024, and a low of $12.83 per share on November 1, 2024.

We expect our stock price to continue to remain volatile given the cyclical nature of our industry and our limited public float.

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• execute our acquisition strategy.

Our senior secured asset-based lending facility (the “Credit Facility”) and our second lien seller term loan credit agreement we entered into to fund a portion of the purchase price of the Variperm Acquisition (the “Seller Term Loan”) also contain covenants, which, among other things, require us in certain circumstances, on a consolidated basis, to maintain specified financial ratios or conditions.

Our senior secured asset-based lending facility (the “Credit Facility”) and the bond terms (the “Bond Terms”) that govern our outstanding 10.50% senior secured bonds (the “2029 Bonds”) also contain covenants, which, among other things, require us in certain circumstances, on a consolidated basis, to maintain specified financial ratios or conditions.

As a result of these covenants, we are limited in the manner in which we conduct our business, and we may be unable to engage in favorable business activities or finance future operations or capital needs.

Our ability to borrow under the Credit Facility and comply with some of the covenants, ratios or tests contained in our debt agreements may be affected by events beyond our control.

Our ability to borrow under the Credit Facility and comply with some of the covenants, ratios or tests contained in our debt

agreements may be affected by events beyond our control.

If market or other economic conditions deteriorate, and there is a decrease in our accounts receivable and inventory, our ability to borrow under our Credit Facility will be reduced and our ability to comply with these covenants, ratios or tests may be impaired.

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If interest rates were to increase, our debt service obligations on such variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease.

Assuming all loans available under our amended Credit Facility upon closing of the Variperm Acquisition are fully drawn, each quarter point change in interest rates would result in an approximately $0.6 million change in annual interest expense on our indebtedness under our Credit Facility.

Assuming borrowings under our amended Credit Facility outstanding as of December 31, 2024, each quarter point change in interest rates would result in an approximately $0.2 million change in annual interest expense on our indebtedness under our Credit Facility.

In the future, we may enter into interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate volatility.

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In addition, our amended and restated bylaws establish advance notice provisions for stockholder proposals and nominations for elections to the board of directors to be acted upon at meetings of stockholders.

We have incurred impairment charges and we may incur additional impairment charges in the future.

During the year ended December 31, 2024, we incurred impairment charges and we may incur additional impairment charges in the future.

For goodwill, an assessment for impairment is performed annually or when there is an indication an impairment may have occurred.

Goodwill is reviewed for impairment by comparing the carrying value of each reporting unit’s net assets, including allocated goodwill, to the estimated fair value of the reporting unit.

We determine the fair value of each of our seven reporting units using a discounted cash flow approach.

Determining the fair value of a reporting unit requires the use of estimates and assumptions.

If the reporting unit’s carrying value is greater than its calculated fair value, we recognize a goodwill impairment charge for the amount by which the carrying value of goodwill exceeds its fair value.

There was no impairment of goodwill during the year ended December 31, 2024.

There are significant inherent uncertainties and management judgment in estimating the fair value of each reporting unit.

While we believe we have made reasonable estimates and assumptions to estimate the fair value of our reporting units, it is possible that a material change could occur.

If actual results are not consistent with our current estimates and assumptions, or if changes in macroeconomic conditions outside the control of management change such that it results in a significant negative impact to our estimated fair values, the fair value of these reporting units may decrease below their net carrying value, which could result in a material impairment of our goodwill.

We evaluate our long-lived assets, including property and equipment, intangible assets with definite lives and operating lease right of use assets for potential impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable.

3 unchanged sentences

The fair value is determined either through the use of an external valuation, or by means of an analysis of discounted future cash flows based on expected utilization.

For the year ended December 31, 2024, we recognized intangible asset impairment charges totaling $119.1 million, which are included in “Impairment of intangible assets” in the consolidated statements of comprehensive loss.

See Note 7 Goodwill and Intangible Assets for further information related to these charges.

There was no impairment of intangible assets during the year ended December 31, 2023.

If we determine that the carrying value of our long-lived assets is less than their fair value, we would be required to record additional charges in the future, which could adversely affect our financial condition and results of operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors