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    NOV
    Earnings call· Jun 2026(Q2 FY26)

    NOV Q2 FY26 earnings call NOV

    Jul 29, 2026 Source

    Executive summary

    NOV Inc. Q2 FY26 — Strong Operational Execution and Broadening Market Recovery

    NOV Inc. delivered strong Q2 FY26 results, driven by operational efficiencies and a broadening market recovery across most segments, despite ongoing geopolitical uncertainty in the Middle East. The company is increasingly confident in its substantially greater earnings power, positioning itself for a differentiated market cycle with earlier capital equipment investment. Management expects continued sequential revenue growth and healthy free cash flow generation in the second half of the year.

    Highlights

    5

    • Revenue of $2.13 billion, up 4% sequentially.

    • Adjusted EBITDA of $283 million, with 80% incremental EBITDA conversion on sequential revenue growth (excluding tariff benefit).

    • Energy Equipment segment achieved a record quarterly EBITDA margin of 16.4%.

    • Subsea flexible pipe business delivered record EBITDA performance and a 135% trailing 12-month book-to-bill.

    • Drill pipe business achieved its strongest first-half bookings in over 10 years, with backlog roughly doubled year-over-year.

    Concerns

    3

    • Middle East conflict caused logistical challenges, deferred orders, and lower overall activity, impacting year-over-year aftermarket revenue.

    • Free cash flow was negative $64 million for the quarter due to timing of milestone billings and elevated inventory.

    • Capital equipment orders in the Energy Equipment segment remained below 100% book-to-bill at 74% for the quarter.

    Guidance & targets

    13
    CategoryTargetConfidence
    Energy Equipment segment revenue
    between 1% to 3% lower year-over-year
    medium materiality
    Medium
    Energy Equipment segment EBITDA
    $160 million and $190 million
    medium materiality
    Medium
    Energy Products and Services segment revenue
    increase between 5% to 7% year-over-year
    medium materiality
    Medium
    Energy Products and Services segment EBITDA
    $130 million to $150 million
    medium materiality
    Medium
    Energy Equipment segment book-to-bill
    90% to 100%
    high materiality
    Medium
    Energy Equipment segment book-to-bill
    meaningfully above 100%
    high materiality
    High
    Free Cash Flow conversion
    40% to 50% of 2026 EBITDA
    high materiality
    High
    Capital Expenditures
    $340 million and $370 million
    medium materiality
    High
    Annual Effective Tax Rate
    34% to 36%
    low materiality
    High
    Annualized Revenue
    approximately $9.8 billion
    high materiality
    High
    Annualized EBITDA
    roughly $1.5 billion
    high materiality
    High
    EBITDA Margin
    mid-teens
    high materiality
    High
    Return on Capital Employed (ROACE)
    minimum of mid-teens percentage range
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Energy Equipment
    Achieved highest quarterly EBITDA margin since segment establishment, driven by operational excellence, favorable pricing/mix, and cost reductions. Orders led by subsea flexible pipe and offshore production equipment. Aftermarket revenue down YoY due to Middle East conflict, but up sequentially.
    Capital equipment sales: 63% of segment revenueAftermarket sales and services: 37% of segment revenueCapital equipment orders: $474 millionBook-to-bill: 74%Backlog: $4.1 billionFirst half 2026 orders: exceeded first half 2025Shipments: improved almost 10%
    		$1.22 billion1%2%$200 million Adjusted EBITDA (16.4% of sales)
    Energy Products and Services
    Year-over-year decline due to lower composite pipe shipments and Middle East impact, but strong sequential improvement across nearly all businesses. Market share gains in drill bits, digital services, and artificial lift. Capital equipment bookings remained healthy.
    Sales mix: 53% services and rental, 30% capital equipment, 17% product salesServices and Rentals revenue: -1% YoY, 4% QoQCapital Equipment revenue: -15% YoY, low teens % QoQDrill Pipe first half bookings: strongest in over 10 yearsDrill Pipe backlog: roughly doubled from 12 months agoFiberglass backlog: 20% YoY growth
    		$974 million-5%9%$144 million Adjusted EBITDA (14.8% of sales)

    Operational metrics

    22
    Adjusted EBITDA
    $283 million
    Q2 FY26

    Excluding the approximately $40 million IEPA tariff benefit, adjusted EBITDA was $243 million, reflecting approximately 80% incremental EBITDA conversion on sequential revenue growth.

    Incremental EBITDA conversion
    80%sequential
    Q2 FY26

    Excluding the approximately $40 million IEPA tariff benefit recognized during the quarter, adjusted EBITDA was $243 million, reflecting approximately 80% incremental EBITDA conversion on our sequential revenue growth.

    IEPA tariff benefit
    $40 million
    Q2 FY26

    Recorded a benefit of approximately $40 million related to IEPA tariff refunds, which is included in adjusted operating profit and adjusted EBITDA.

    Net benefit from tariff refunds
    slightly more than $20 millionYoY
    Q2 FY26

    The net benefit from tariff refunds on year-over-year financial results is slightly more than $20 million as our overall tariff expense has increased from the second quarter of 2025.

    Tariff expense
    $30 millionup from $10 million in Q2 2025
    Q2 FY26

    Quarterly tariff expense that increased approximately $20 million year-over-year from roughly $10 million during the second quarter of 2025 to $30 million in the second quarter of 2026.

    Cash increase
    $700 million
    Since Q2 2024

    Since implementing our return of capital program during the second quarter of 2024, we've returned over $1 billion to shareholders through share repurchases and dividends, while cash has increased approximately $700 million.

    Real estate sales
    $45 million
    Last 6-12 months

    We sold about $45 million worth of real estate and buildings as part of facility utilization analysis.

    Total shareholder returns
    over $1 billion
    Since Q2 2024

    Since implementing our return of capital program during the second quarter of 2024, we've returned over $1 billion to shareholders through share repurchases and dividends.

    Share repurchases
    3.2 million shares for $63 million
    Q2 FY26

    During the quarter, we repurchased 3.2 million shares for $63 million.

    Dividends paid
    $64 million
    Q2 FY26

    and paid dividends of $64 million, which included a supplemental dividend of $0.09 per share related to the true-up of our 2025 return of capital program.

    Total Recordable Incident Rate (TRIR)
    improvedfrom a year ago
    Q2 FY26

    During the quarter, our Total Recordable Incident Rate and Lost Time Incident Rate both improved from a year ago, marking a second consecutive quarter of improvements and record safety performance in the first half of the year.

    Lost Time Incident Rate (LTIR)
    improvedfrom a year ago
    Q2 FY26

    During the quarter, our Total Recordable Incident Rate and Lost Time Incident Rate both improved from a year ago, marking a second consecutive quarter of improvements and record safety performance in the first half of the year.

    Argentina revenue growth
    20%sequential
    Q2 FY26

    it helped drive 20% sequential and 33% year-over-year revenue growth in Argentina for NOV during the second quarter.

    Argentina revenue growth
    33%year-over-year
    Q2 FY26

    it helped drive 20% sequential and 33% year-over-year revenue growth in Argentina for NOV during the second quarter.

    Offshore contracting activity growth
    32%sequential
    Q2 FY26

    Offshore contracting activity increased 32% sequentially

    Drill bit business revenue growth
    record quarterly revenueeighth consecutive quarter of year-over-year revenue growth
    Q2 FY26

    In the U.S., these gains drove record quarterly revenue and marked the eighth consecutive quarter of year-over-year revenue growth.

    Drilling motor rentals revenue
    strongest U.S. revenue in over 6 years
    Q2 FY26

    Drilling motor rentals achieved their strongest U.S. revenue in over 6 years

    Artificial lift installs growth
    over 20%compared to the prior 2 quarters
    Q2 FY26

    posting strong revenue growth as the number of installs during the quarter increased over 20% compared to the prior 2 quarters.

    Well Site Services revenue growth
    double-digit growthyear-over-year
    Q2 FY26

    higher rentals of our Alpha Shakers across the U.S. drove double-digit growth in the region year-over-year

    NOV Digital Services revenue growth
    4 straight quarters of year-over-year revenue growthyear-over-year
    Q2 FY26

    NOV Digital Services continued its trend of 4 straight quarters of year-over-year revenue growth.

    Wired drill pipe services revenue growth
    nearly doubled
    Q2 FY26

    Revenue from our wired drill pipe services nearly doubled.

    Fuel handling tanks bookings growth
    doubledcompared to the preceding 18-month period
    Last 18 months

    bookings for fuel handling tanks have doubled over the past 18 months compared to the preceding 18-month period.

    Industry KPIs

    7
    MetricValueDetails
    Rpo backlog$4.1 billionUSD
    Book to bill ratio74%%
    FCF CAPEX leverage-$64 millionUSD
    Digital recurring revenue4 straight quarters of year-over-year revenue growth
    Aftermarket installed base37% of segment revenue%
    Orders bookings by segment$474 millionUSD
    Segment adjusted EBITDA margin16.4%%

    Deals & partnerships

    4
    leading Argentine operatorProvide real-time drilling and completion data acquisition, visualization and analytics

    Awarded a significant contract to provide real-time drilling and completion data acquisition, visualization and analytics across a leading Argentine operators development program.

    nullOrders supporting offshore gas project

    During the quarter, the business booked orders supporting offshore gas project in Indonesia

    nullGas dehydration package

    and a gas dehydration package for an operator in West Africa.

    super majorDeployed MAX completions remote service rig monitoring solution

    deployed our MAX completions remote service rig monitoring solution for a super major providing centralized oversight of workover operations through real-time monitoring and improved reporting capabilities.

    Risks & headwinds

    3
    Middle East conflict and geopolitical uncertaintyongoing

    approximately $30 million impact in EBITDA (Q1 FY26), logistical constraints limited our ability to secure commitments from suppliers affecting certain deliveries and our ability to bid on some projects, certain operations, particularly offshore, were curtailed, resulting in certain orders being deferred and lower overall activity levels.

    Mitigation: NOV's global supply chain capabilities and operational flexibility allowed us to win work that competitors were unable to execute, priorities remain unchanged, keeping our employees out of harm's way, supporting our customers and continuing to execute safely.

    Commodity price volatilityongoing

    null

    Mitigation: resiliency of our intentionally diversed portfolio has masked meaningful shifts occurring beneath the surface.

    Inflationary pressures and tariffshistorical, now being outpaced by cost savings

    tariff expense that increased approximately $20 million year-over-year from roughly $10 million during the second quarter of 2025 to $30 million in the second quarter of 2026.

    Mitigation: operational initiatives that are beginning to outpace inflationary pressures, cost savings would start to overlap some of the headwinds on the cost inflation.

    What to watch in Q3 FY26

    5

    Middle East activity levels

    Q3 FY26
    Currentstabilized, gradually higher activity with more rigs coming back to work
    Target10% to 15% sequential increase in activity

    Why it matters

    The Middle East is a significant market (15% of revenue), and its recovery or further disruption will materially impact company-wide results and guidance.

    As we mentioned in our press release, our outlook reflects a scenario in which conditions on the ground in the Middle East during the third quarter remained consistent with what we saw in the second quarter. That doesn't mean activity remains exactly the same. It means the trends that we saw emerging during that time period continue meaning higher levels -- gradually higher levels of activity with more rigs coming back to work during that time period.

    Q&A highlights

    6

    How does NOV see the Middle East progressing in H2, given other oil service peers' expectations of potential revenue decline?

    Jose Bayardo explained the Q1 EBITDA impact ($30M), stabilization in Q2 with logistical constraints, and the assumption for Q3 that conditions remain consistent with Q2, implying gradually higher activity. He noted that land-based activity was stable, while offshore was impacted. He provided a scenario where a 10-15% sequential increase in Middle East activity (which is 15% of total revenue) might not materialize, leading to a $20-25M EBITDA impact.

    “As we mentioned in our press release, our outlook reflects a scenario in which conditions on the ground in the Middle East during the third quarter remained consistent with what we saw in the second quarter. That doesn't mean activity remains exactly the same. It means the trends that we saw emerging during that time period continue meaning higher levels -- gradually higher levels of activity with more rigs coming back to work during that time period.”

    asked by Arun Jayaram · answered by Jose Bayardo

    2 min read7 chapters

    Detailed Narrative

    01

    Middle East Operations and Outlook

    NOV successfully navigated continued logistical challenges in the Middle East, delivering orders and supporting customers despite a complex operating environment. While activity remained below pre-conflict levels, conditions stabilized when kinetic activity ceased, with land-based unconventional gas plays remaining stable. Offshore operations were more impacted but slowly resumed. The company's Q3 guidance assumes conditions remain consistent with Q2, with a potential 10-15% sequential increase in activity, though geopolitical uncertainty🌐 remains a risk.

    02

    International Unconventional Development

    The company is seeing encouraging momentum in international unconventional resource development, particularly in Argentina, Algeria, and Pakistan. This is driving significant demand for high-spec equipment and technologies, leading to 20% sequential and 33% year-over-year revenue growth in Argentina. NOV is supplying pressure pumping, coiled tubing, drilling and completion tools, composite pipe, and supporting LNG exports.

    03

    Offshore Market Recovery

    The outlook for deepwater activity continues to grow constructive, benefiting from increased focus on energy security. Industry forecasts anticipate approximately 10 FPSO awards in 2026, up from 6 in 2025. The mix of offshore developments is shifting towards gas-rich reservoirs and deeper, more technically demanding environments, which plays into NOV's strengths and drives demand for specialized equipment like subsea flex, pipe gas, water treatment systems, and mooring technologies. Offshore contracting activity increased 32% sequentially.

    04

    Earnings Power and Market Cycle Thesis

    NOV believes its earnings power is underappreciated, with a high-watermark analysis suggesting annualized revenue of $9.8 billion and EBITDA of $1.5 billion based on individual business unit peaks over the last four years. The company anticipates a different market cycle than historically, with customers needing to invest in equipment earlier due to a tightened global service complex and underinvestment over the past decade, allowing NOV to participate more meaningfully in the recovery.

    05

    Operational Efficiencies and Cost Reductions

    NOV is realizing benefits from operational improvements, translating into stronger margins and improved productivity. The company achieved 80% incremental EBITDA conversion on sequential revenue growth (excluding tariff benefit) and the Energy Equipment segment reached a record 16.4% EBITDA margin. Initiatives include simplifying the organization, consolidating facilities, improving manufacturing efficiency, and optimizing the portfolio. The company is on track with its $100 million annualized cost reduction target, with efforts now outpacing inflationary pressures.

    06

    Subsea Flexible Pipe Business Strength

    The subsea flexible pipe business delivered record EBITDA performance, driven by exceptional execution, favorable project mix, and higher-margin backlog. Demand and bookings remain strong, with a trailing 12-month book-to-bill of 135% and backlog up 28% year-over-year. The business is nearing capacity constraints, with sizable orders looking at 2028 deliveries, and additional capacity expected in early 2029.

    07

    Drill Pipe and Fiberglass Business Growth

    The drill pipe business achieved its strongest first-half bookings in over 10 years, with backlog roughly doubled year-over-year. The fiberglass business also recorded healthy bookings, leading to 20% year-over-year backlog growth, despite reduced Middle East demand. These businesses are positioned for improved performance in the second half of the year due to strong bookings and increasing customer demand for differentiated technologies.

    AI-generated summary of the company’s earnings call. Not investment advice.