HMH Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Orders: $205 million, up 19% year-over-year, with a book-to-bill ratio of 1.2x.

Revenue: $171 million, flat quarter-over-quarter; spares revenue increased by 17% year-over-year to $61 million, while product revenue fell 66% year-over-year to $21 million.

Adjusted EBITDA: $34 million, a 3% increase year-over-year, with an adjusted EBITDA margin of 19.8%.

Free Cash Flow: Positive at $22 million for the quarter.

Cash Position: Ended the quarter with $120 million in cash and total liquidity of approximately $195 million.

2Strategic Updates and Business Highlights

Strong demand for digital technology upgrades, with service order intake increasing by 50% year-over-year.

Positive momentum in the floater segment, with healthy contract award activity and longer contract durations.

Increased visibility into 2027 rig years, now at 80%, up from 65% a year ago.

Continued focus on operational efficiency and disciplined cost execution, contributing to improved margins.

3Forward Guidance and Outlook

Full-year adjusted EBITDA guidance remains unchanged at $157 million to $177 million, with expectations for stronger second-half performance driven by service and spares bookings.

Anticipation of improved order activity in the second half of 2026, with another quarter of book-to-bill above 1x expected.

Confidence in long-term offshore investment growth, particularly in Brazil and harsh environment markets.

4Bad News, Challenges, or Points of Concern

Revenue was impacted by delays in product orders and repair activities due to geopolitical uncertainties, particularly in the Middle East, resulting in a $10 million revenue headwind.

Product revenue decline attributed to lower backlog and delays in equipment deliveries.

Customer decision-making has slowed, particularly regarding shorter-cycle repair spending, which may affect near-term revenue.

5Notable Q&A Insights

Management acknowledged the impact of geopolitical events on customer spending and project approvals, particularly in the Middle East.

There was discussion about the recoverability of the $10 million revenue headwind, with management confident that delayed activities would be recouped in the future.

The shift towards digital technology orders is seen as a positive trend, providing better operational planning and maintaining margin profiles similar to aftermarket services.

Management emphasized that the delays in customer spending are viewed as timing shifts rather than changes in overall demand intentions. Overall, HMH's Q2 2026 results reflect a resilient business model with strong order intake and a positive long-term outlook, despite facing short-term challenges related to geopolitical factors and product order delays.