Summary of NOV Inc. Q2 2026 Earnings Call

1Key Financial Results and Metrics

Revenue: $2.13 billion, a 4% increase sequentially but down 2.5% year-over-year.

Net Income: $112 million, or $0.31 per fully diluted share.

Adjusted EBITDA: $283 million (13.3% of sales), with a notable $40 million benefit from AIPA tariff refunds. Excluding this, adjusted EBITDA was $243 million, reflecting an 80% incremental EBITDA conversion on revenue growth.

Operating Profit: $193 million, including $17 million in pretax other items.

Free Cash Flow: Negative $64 million due to timing of milestone billings and elevated inventory.

Share Repurchases: 3.2 million shares for $63 million; dividends paid totaled $64 million.

2Strategic Updates and Business Highlights

NOV is focusing on operational efficiencies and positioning for the next investment cycle in the energy sector.

Strong performance in the Middle East despite logistical challenges, with improved demand for NOV's technologies.

Significant revenue growth in Argentina (20% sequentially, 33% year-over-year) driven by unconventional resource development.

The offshore market is showing a recovery, with increased contracting activity and demand for subsea flexible pipe and related technologies.

The company has made strides in safety performance, achieving record safety metrics.

3Forward Guidance and Outlook

For Q3 2026, NOV expects revenue growth of 1% to 3% year-over-year in the Energy Equipment segment, with EBITDA guidance of $160 million to $190 million.

The Energy Products and Services segment anticipates revenue growth of 5% to 7% year-over-year, with EBITDA in the range of $130 million to $150 million.

The company remains optimistic about a pickup in capital equipment orders in the second half of 2026 and a more significant increase in 2027.

4Bad News, Challenges, or Points of Concern

Ongoing geopolitical uncertainty and commodity price volatility are causing some customers to remain cautious, impacting capital equipment orders.

The Middle East remains a challenging environment with logistical constraints affecting operations and project timelines.

Year-over-year revenue declines in certain segments, particularly in the Energy Products and Services segment, which saw a 5% drop compared to Q2 2025.

The company faces rising tariff expenses, which increased from $10 million in Q2 2025 to $30 million in Q2 2026.

5Notable Q&A Insights

Management expressed cautious optimism regarding the Middle East's recovery, anticipating a 10% to 15% increase in activity in Q3 compared to Q2, contingent on the stability of the region.

The company expects to approach a book-to-bill ratio of 90% to 100% for 2026, with a more favorable outlook for 2027.

Management highlighted that NOV's operational improvements and diverse portfolio position it well for a synchronized recovery in the market, despite the challenges faced in the past decade.

There is a strong emphasis on maintaining operational efficiencies and cost reductions beyond the initial $100 million target, with ongoing initiatives to streamline processes and improve margins. Overall, NOV's performance in Q2 2026 reflects a mix of operational success and ongoing challenges, with a cautiously optimistic outlook for the second half of the year and beyond.