NOV Q3 2025 Earnings Call Summary

1Key Financial Results and Metrics

Revenue: $2.18 billion, down slightly (<1%) year-over-year and sequentially.

Net Income: $42 million, or $0.11 per diluted share.

Adjusted EBITDA: $258 million, representing 11.9% of revenue, up sequentially.

Free Cash Flow: $245 million, with a 95% conversion rate of EBITDA to free cash flow.

Operating Profit: $107 million, or 4.9% of sales.

Tariff Expense: Approximately $20 million, expected to rise to $25 million in Q4.

Share Repurchases: 6.2 million shares for $80 million, with total capital returns to shareholders year-to-date at $393 million.

2Strategic Updates and Business Highlights

Energy Equipment Segment: Revenue of $1.25 billion, up 2% year-over-year. Strong demand for production-related equipment, particularly in offshore markets, led to record revenues and high EBITDA margins (14.4%).

Backlog: Reached $4.56 billion, the highest since reporting Energy Equipment as a segment, with a book-to-bill ratio of 141%.

Drilling Products: Continued demand for drill pipe and efficiency-enhancing technologies, though overall drilling activity softened.

International Markets: Growing interest in unconventional shale developments in regions like Argentina, Saudi Arabia, and the UAE, with increasing demand for NOV's equipment and technologies.

3Forward Guidance and Outlook

Near-Term Expectations: Anticipate continued softness in market conditions through Q4 2025, with revenue expected to decline 2-4% year-over-year in the Energy Equipment segment.

Long-Term Outlook: Positive growth anticipated in late 2026 and beyond due to expected increases in offshore drilling activity and unconventional resource development. NOV expects to exceed its threshold of returning 50% of excess free cash flow to shareholders in 2025.

4Bad News, Challenges, or Points of Concern

Market Softness: General decline in oilfield activity, particularly in North America, with E&Ps reducing short-cycle oil activity.

Tariff and Inflation Headwinds: Rising costs from tariffs and inflation are expected to weigh on margins in the near term.

Declining Aftermarket Revenue: Significant year-over-year declines in aftermarket sales, particularly in drilling services, due to reduced spending by customers amid contracting gaps.

Global Rig Count: An 8% decline year-over-year in global rig count, which may affect future demand for NOV's products.

5Notable Q&A Insights

Backlog and Growth: Management expressed confidence that the strong backlog will support growth despite current market softness, particularly in capital equipment.

Margin Outlook: Questions about maintaining margins in 2026 were met with optimism, citing a favorable mix of production-related equipment and ongoing operational efficiencies.

International Unconventionals: There is a growing trend of North American shale operators exploring international unconventional opportunities, which could drive future demand for NOV's technologies.

FPSO Orders: Management noted a cautious outlook on FPSO orders due to current market conditions but expects a rebound in late 2026 as the oil overhang clears. This summary encapsulates NOV's performance and strategic direction while highlighting both opportunities and challenges facing the company.