Inquired about the expected order inflection in H2, the reasons for Q2 revenue being light, and the impact of geopolitical events, specifically the Middle East.

Tom McGee clarified that the Middle East situation caused a $10 million revenue headwind in Q2 due to installation and commissioning delays. He noted an acceleration in digital orders, but delays in repair spend due to customers waiting longer. Eirik added that geopolitical situations make drillers more cautious about upgrade work. “I mean first of all, yes, it's all recoverable. So every bit of that, we think, yes, will be recovered. I think in terms of installation and commissioning, yes, I think you see that as soon as the situation kind of resolves itself.”

Asked about the margin contribution and revenue stickiness as the digital and automation mix grows within the Services segment.

Tom McGee stated that the margin profile for digital is similar to aftermarket margins. He highlighted that the growth in digital allows for better operational planning and involves both upfront upgrade spend and an annuity component. “Margin profile is similar. I mean I think it's an aftermarket margin profile, so what you'd expect. There is a little bit -- if you take that -- and there's more on the back end of that, we believe. But some of that is just spend around the upgrade itself and then some of it is an annuity beyond that.”

Followed up on the $10 million Middle Eastern headwind, asking if it's recoverable revenue that shifts to the back half of 2026 and 2027.

Tom McGee confirmed that the $10 million revenue is fully recoverable. He expects installation and commissioning activities to resume once the situation resolves, but new order delays might extend beyond this year due to the need to rebuild infrastructure. “On the new orders, I think we see -- without getting any specifics on the customers, an acceleration of discussions, but just like I need to wait on this, I have to rebuild infrastructure. And so you have the order delays could extend further than this year would be my belief.”

HMH

HMH Holding (HMH) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Energy· Aug 6, 2026

Source: earnings call transcript

Executive summary

HMH Holding Q2 FY26 — Strong Order Intake and Offshore Market Acceleration

HMH Holding reported resilient Q2 FY26 results, marked by strong order intake and expanded adjusted EBITDA margins, despite some short-term headwinds in product orders and repair activity. The company is benefiting from a constructive offshore market, with increased visibility into future floater rig years and robust demand for digital technology upgrades. Management remains confident in market acceleration through H2 2026 and into 2027, expecting delayed opportunities to materialize.

Highlights

Orders for the quarter were $205 million, representing a book-to-bill ratio of 1.2x.
Adjusted EBITDA margins grew year-over-year to 20%.
Free cash flow was positive at $22 million, excluding IPO impact.
Aftermarket services order intake increased 50% year-over-year to $118 million.
Visibility into projected 2027 floater rig years reached 80%, up from 65% last year.

Concerns

Product revenue was $21 million, down 66% year-over-year and 38% quarter-over-quarter.
The Middle East situation caused a $10 million revenue headwind due to installation and commissioning delays.
Repair activity was slower than planned, impacting service revenue, though offset by digital technology volume.

Guidance & targets

Category	Target	Timeline	Confidence
Full year 2026 Adjusted EBITDA	$157 million to $177 million high materiality	FY26	High
Second half 2026 revenue	meaningfully stronger than the first half medium materiality	H2 FY26	High
Full year 2026 Capital Expenditures	2% of revenue medium materiality	FY26	High
Q3 FY26 book-to-bill ratio	above 1x medium materiality	Q3 · FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Aftermarket Services Revenue down year-over-year due to lower repair activity, partially offset by stronger digital technology volume. Quarter-over-quarter increase driven by increased demand for repairs, digital technology and other services. Longer cycle digital technology orders replaced shorter-cycle repair activity. Order intake: $118 millionOrder intake YoY growth: 50%Order intake QoQ growth: 19%	$89 million	down 4%	up 24%	supported by service mix, execution focus and selective cost actions
Spares Year-over-year increase due to increased demand from customers preparing for upcoming contracts. Quarter-over-quarter decrease. Order intake driven by global offshore market dynamics. Order intake: $65 millionOrder intake YoY growth: 1%Order intake QoQ growth: 2%	$61 million	up 17%	down 8%	—
Product Reflects lower backlog to start the quarter and partially due to delay in equipment deliveries and installation and commissioning work in the Middle East. Order and delivery delays in the Middle East adversely impacted revenue.	$21 million	down 66%	down 38%	—

Deals & partnerships

Various Strategic M&A opportunities

Advancing several strategic opportunities, encouraged by both the quality of assets under review and the broader opportunity set available in the market. Consistent with disciplined capital allocation strategy.

Risks & headwinds

Geopolitical uncertainty and Middle East situation Q2 FY26, potentially extending beyond this year for new orders

$10 million revenue headwind in Q2 FY26

Mitigation:Revenue is recoverable; discussions accelerating; installation/commissioning expected to resume once situation resolves; opportunities are timing shifts.

Slower customer decision-making Q2 FY26

Concentrated in product orders and repairs, leading to delays in project approvals and purchase orders

Mitigation:Underlying demand environment remains intact; customer discussions continue to progress; opportunities represent timing shifts rather than changes in spending intentions.

Slower repair activity Q2 FY26

Impacted service revenue, partially offset by stronger digital technology volume

Mitigation:Longer cycle digital technology orders replaced shorter-cycle repair activity; underlying demand for upgrades remains strong.

What to watch in Q3 FY26

Middle East revenue recovery

Next quarter / H2 FY26

Current $10M headwind in Q2 FY26

Target Resumption of installation/commissioning and new orders

Why it matters

Recovery of delayed revenue and orders from a significant regional market is crucial for overall revenue performance.

I mean first of all, yes, it's all recoverable. So every bit of that, we think, yes, will be recovered. I think in terms of installation and commissioning, yes, I think you see that as soon as the situation kind of resolves itself.

Find out whether HMH delivers this. Inve re-checks your case every morning.

Q&A highlights

Understand the 80% visibility for 2027 floater rig years and scenarios for closing the remaining 20% gap.

Tom McGee explained the remaining 20% involves rigs rolling off contract or reactivations, with increased certainty in forecasts. Eirik added that contracted rig years for the first 7 months of 2026 were 50% higher than the same period in 2025, indicating an upward trend for 2027.

“I'd say you're starting to narrow the gap on the downside just by seeing the contract announcements that we've had. So we don't go rig by rig, but it's just trying to give comfort that what we see today is exactly what we've expected to see.”

asked by Derek Podhaizer · answered by Tom McGee

2 min read 5 chapters

Detailed narrative

Offshore Market Dynamics and Visibility

The offshore market continues to show positive momentum, particularly in the Floater segment, with healthy contract award activity across key basins. Operators are sanctioning projects and securing drilling capacity well ahead of required start dates, increasing visibility into 2027. Contract durations are extending to multi-well and multi-year campaigns, especially in deepwater and harsh environment markets.

Industry forecasts suggest marketed floater utilization could reach 90% in 2027, with harsh environment assets being the strongest performers.

Digital Technology and Aftermarket Services Strength

HMH saw strong order intake in aftermarket services, up 50% year-over-year, driven by robust digital technology upgrade orders. This indicates healthy upgrade demand and positions HMH to benefit from increased customer investment in equipment upgrades, automation, and digital solutions. While shorter-cycle repair activity was slower, longer-cycle digital technology orders replaced this, allowing for better operational planning and contributing to a stable margin profile for the segment.

Product and Regional Headwinds

Product revenue declined significantly due to lower backlog and delays in project approvals and purchase orders, partly attributed to geopolitical uncertainty. Specifically, the Middle East situation resulted in a $10 million revenue headwind in Q2 due to installation and commissioning delays. Management views these delays as timing shifts rather than changes in customer spending intentions, expecting the revenue to be recoverable once the situation resolves.

Capital Structure and M&A Strategy

The company completed its IPO on April 2, significantly strengthening its capital structure. HMH ended the quarter with $120 million in cash and cash equivalents and total liquidity of approximately $195 million, with no long-term debt maturity until June 2028. HMH is actively advancing several strategic M&A opportunities, focusing on enhancing capabilities and expanding market presence in line with its disciplined capital allocation strategy.

Operational Efficiency and Margin Resilience

Despite revenue choppiness, HMH demonstrated underlying margin resilience. Adjusted EBITDA margins grew year-over-year to 20%, driven by disciplined cost execution, favorable product mix, and a continued focus on operational efficiency. The company maintains an asset-light business model, carefully managing capital intensity while preserving flexibility for growth.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.