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DATE
Tuesday, April 28, 2026 at 11 a.m. ET
CALL PARTICIPANTS
- Senior Vice President & Chief Financial Officer — Jose A. Bayardo
- Senior Vice President & Chief Administrative Officer — Rodney C. Reed
- Operator
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RISKS
- Middle East conflict caused estimated revenue and EBITDA losses of $54 million and $32 million, respectively, through deferred sales and higher costs.
- Freight costs rose materially, “at times by as much as three to four times normal levels,” further impacting margins.
- Aftermarket revenues and service activity were “down 13%-15% year-over-year” due to “suspended rig operations, logistical challenges and delays in upgrade projects.”
- Tariff and inflationary pressures “offset most” benefits of NOV cost-reduction actions so far and “negatively impacted by about $30 million in tariff costs year over year.”
TAKEAWAYS
- Revenue — $2.05 billion, down 2% year over year, with a $54 million adverse impact attributed to the Middle East conflict.
- Net income — $19 million, translating to $0.05 per fully diluted share.
- Adjusted EBITDA — $177 million, representing 9% of sales, and negatively impacted by $32 million due to geopolitical disruptions.
- Operating profit — $47 million (including $37 million in other items), with adjusted operating profit of $85 million at a 4% margin.
- Book-to-bill, Energy Equipment — 80%, with first-quarter bookings of $520 million and a segment backlog of $4.23 billion.
- Capital equipment revenue, Energy Equipment — $749.7 million (63% of segment), increasing 16% year over year, led by subsea flexible pipe, process systems, and marine construction businesses.
- Aftermarket revenue, Energy Equipment — $440.3 million (37% of segment), down 12% year over year, due to project completions in 2025 and Middle East disruptions.
- Energy Equipment EBITDA — $131 million, or 11% of sales; margins were constrained by a weaker aftermarket mix and higher costs from disruptions.
- Offshore subsea flexible pipe business — Delivered record quarterly EBITDA for the third consecutive quarter, with quarterly book-to-bill above 100% and backlog extending into 2028.
- Process systems revenue — Increased more than 50% compared to 2025, driven by offshore production and international gas demand; four additional FPSO FIDs forecast in 2026.
- Energy Products and Services revenue — $897 million, declining 10% year over year, impacted by Middle East disruption and lower global activity.
- Adjusted EBITDA, Energy Products and Services — $96 million, or 10.7% of segment sales.
- Drill bit business (ReedHycalog) — North America revenue grew 8% despite a 7% U.S. rig count decline since Q1 2025.
- Aftermarket drilling equipment revenue — Down 13%-15% year over year and down 12% sequentially, mainly due to Middle East disruptions and timing of active projects.
- Global headcount reduction — Eight percent reduction and more than 40 facility exits since 2025 as part of ongoing cost-out initiatives.
- Shareholder returns — $67 million share repurchase (three and a half million shares) and $33 million dividends paid, reflecting a 20% increase in the quarterly dividend.
- Credit facility extension — $1.5 billion revolving credit facility extended by one year through 2030.
- Capital expenditures guidance — $340 million to $370 million for the full year, including Brazil flexibles facility investment.
- EBITDA-to-free cash flow conversion — Expected between 40% and 50% for the full year, with cash generation ramping through subsequent quarters.
- Second quarter segment guidance, Energy Equipment — Revenue anticipated to decline 2%-4% year over year; EBITDA expected within $135 million to $155 million.
- Second quarter segment guidance, Energy Products and Services — Revenue projected to decrease 6%-8% year over year; EBITDA expected between $100 million and $120 million.
- Tariff and inflationary impacts — Tariff costs increased by about $30 million year over year, offsetting cost reductions; refund claims filed on $40 million paid under AIPA tariffs, pending resolution.
- Flexible pipe expansion — A $200 million investment in Brazil to double capacity, addressing anticipated global shortfalls amid high offshore demand.
- Bookings and backlog, fiberglass and drill pipe — Record bookings in fiberglass and drill pipe businesses with highest backlog in more than ten quarters, despite revenue declines due to shipment delays.
- Market activity in Latin America — Revenue in Argentina increased 14% year over year, and Venezuela showed a step-change in demand for progressive cavity pumps.
- Return of capital program — More than $900 million returned to shareholders via dividends and repurchases in the last eight quarters; supplemental dividend planned to bring 2025 capital return to at least 50% of excess free cash flow.
SUMMARY
NOV (NOV 2.52%) reported first-quarter results heavily influenced by geopolitical disruptions in the Middle East, resulting in significant shipment deferrals, increased freight costs, and earnings headwinds. The subsea flexible pipe and process systems businesses delivered record performance, underpinned by robust offshore market demand and multi-year backlog visibility, including substantial capacity expansion in Brazil. Company-wide, capital equipment bookings, particularly in offshore-related lines and select international markets, remained resilient and reflected strong customer activity pipelines. Shareholder returns were emphasized via a 20% increased dividend, repurchases, and a planned supplemental dividend tied to 2025 capital return commitments. Looking ahead, management outlined that resolution of Middle East disruptions and a tightening global supply-demand backdrop could drive a broad-based capital equipment upcycle, positioning NOV for elevated margin leverage and accelerated free cash flow conversion.
- Company leaders characterized offshore project FIDs as accelerating, with four achieved so far in the year and six to eight more anticipated, expanding long-term demand sources beyond the Middle East.
- Customer conversations reveal emergent urgency and activity planning in North America and international land markets, as operators accelerate production from previously deferred assets.
- Management confirmed that full-year book-to-bill is expected “to be near 100%” for Energy Equipment, despite the quarter’s disruptions.
- Segment commentary highlighted digital services growth and market share gains in drill bits, even as total segment revenue declined due to weaker overall drilling activity.
- Rodney C. Reed said, “and into 2027, we see a meaningful impact from rig aftermarket going forward,” signaling anticipated margin recovery in that unit.
- Refund claims for approximately $40 million in AIPA tariffs are pending; the outcome could affect future financials but is excluded from current quarter metrics and guidance.
- Backlog for spare parts and drill pipe is at multi-year highs, with management citing robust demand and increased project execution levels across key product lines.
- Rodney C. Reed said, “tariffs being in that ~$30 million range—which is reflected in our Q2 guidance—is a good marker,” identifying ongoing cost structure headwinds in the near term.
INDUSTRY GLOSSARY
- Book-to-bill: Ratio of orders received to revenues recognized, used to gauge demand strength and future revenue visibility for equipment manufacturers.
- FPSO: Floating Production, Storage, and Offloading vessel used in offshore oil and gas production.
- FID: Final Investment Decision, the point at which a company formally commits capital to develop a project.
- AIPA tariffs: Tariffs imposed under the American Iron and Steel Protection Act; recently deemed unlawful by the Supreme Court, raising potential refund scenarios.
- Backlog: Accumulated value of outstanding, unfulfilled customer orders, indicating future revenue streams.
- Aftermarket: Revenue from servicing, upgrading, or providing parts for equipment after its original sale.
- WTIV: Wind Turbine Installation Vessel, used for offshore wind energy construction projects.
- KBAL vessels: Specialized ships equipped with the KBAL (Kalmar Ballast Water Management) system, designed for eco-friendly water treatment and regulation compliance on marine vessels.
Full Conference Call Transcript
On a U.S. GAAP basis, for the first quarter of 2026, NOV Inc. reported revenues of $2.05 billion and net income of $19 million, or $0.05 per fully diluted share. Our use of the term EBITDA throughout this morning’s call corresponds with the term EBITDA as defined in our earnings release. Later in the call, we will host a question-and-answer session. Please limit yourself to one question and one follow-up to permit more participation. Now let me turn the call over to Jose.
Jose A. Bayardo: Thank you, Amie. Good morning, everyone, and thank you for joining us. The first quarter of 2026 unfolded against a rapidly changing backdrop due to the conflict in the Middle East, and I would like to start by thanking our team, particularly those in the region, for keeping each other safe while doing everything possible to support our customers in a very chaotic environment. Despite the disruption, NOV Inc. achieved its lowest ever total recordable incident rate and lost time incident rate during the quarter. As I mentioned on our last call, HSE performance reflects pride, accountability and ownership in operations, which translates into higher quality, reduced downtime and better service for our customers.
The actions of our people and the results they achieved demonstrate how deeply these values are embedded in our culture. Turning to our financial results, NOV Inc. generated revenue of $2.05 billion and adjusted EBITDA of $177 million during the first quarter of 2026. As previously disclosed, we estimate that the conflict in the Middle East negatively impacted revenue by approximately $54 million and EBITDA by $32 million. Bookings in our Energy Equipment segment for the quarter totaled $520 million; while this resulted in a book-to-bill of 80%, orders improved by $83 million year over year and represented our strongest first quarter order intake since 2019.
We also had strong bookings in our fiberglass and drill pipe businesses within our Energy Products and Services segment where we do not report book-to-bill and backlog figures. As the conflict escalated during the quarter, the most pronounced impacts were felt across our capital equipment and aftermarket operations, where the movement of goods, access to customer sites and overall logistics became increasingly constrained, significantly affecting quarter-end deliveries. Our service and rental businesses, particularly those supporting land-based operations, experienced substantially less disruption. For our capital equipment businesses, the primary challenges were associated with shipping finished equipment into and out of the region. As shipments were rerouted through alternate ports, transit times were extended and freight costs increased materially.
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