NOV Inc. Q4 FY2025 earnings call

• Recognized Clay Williams' leadership and retirement, noting his impact on NOV over nearly 30 years.
• Fourth quarter revenue improved 5% sequentially but decreased 1% year-over-year; full-year revenue decreased 1% to $8.74 billion, with EBITDA exceeding $1 billion for the third straight year.
• Achieved a full year book-to-bill of approximately 91% on a 15% increase in revenue out of backlog, ending the year with a total backlog of $4.34 billion.
• Focused on driving operational efficiencies through a $100 million cost-out program, facility consolidations, and exiting underperforming lines; many operations achieved record performance.
• Disciplined approach to M&A, with acquisitions to fit core business technology, direct consolidation, or larger scale with competitive advantage, and must be accretive to margins, earnings, etc.
• Positive outlook on offshore markets, with strong demand for offshore production equipment, increasing offshore rig tendering, and potential for FPSO and FLNG-related awards.

For the Energy Equipment segment, fourth quarter revenue was $1.33 billion, up 7% sequentially and 4% year-over-year. Capital equipment accounted for 63% of the segment's revenues in Q4 2025, increasing 8% sequentially and 15% year-over-year, while aftermarket sales and services made up the remaining 37%, growing 6% sequentially but declining 12% year-over-year. For the Energy Products and Services segment, Q4 revenue was $989 million, a sequential increase of 2% but a 7% year-over-year decline. The sales mix was 49% service and rental, 33% capital equipment, and 18% product sales.

• Expect global industry spend and drilling activity to decline slightly in 2026; U.S. activity expected down mid-single digits Y/Y, with modest recovery by late 2026/early 2027; international activity flat to slightly up.
• 2026 free cash flow conversion expected to be between 40% to 50%; CapEx expected between $315 million and $345 million.
• Anticipate a slow start to 2026, with Q1 book-to-bill likely below 1x, but expect to even out to around 1x for the year.
• Mid- to longer-term outlook for oil markets is compelling, with expected balance in H2 2026 driving higher customer spend.

• Tariff expense and inflationary pressures as headwinds to margins; tariff expense expected to slightly increase in Q1 2026 and level off, but secondary supply chain costs remain.
• Uncertainty in offshore wind demand, with forecasted turbine capacity additions through 2030 down over 35% since last year.
• Market volatility and geopolitical risks affecting oil prices and industry spending.

Q: On the offshore rig ramp late this year going into '27, and order opportunity set for spares and upgrades.

A: Excited about offshore space, with strong demand for offshore production equipment, increasing offshore rig tendering, and expected benefit to aftermarket parts, service, repair, recertifications, and upgrades.

Q: Thoughts on M&A intentions now that the company is in a better position to pursue it.

A: Focused on internal efficiencies and growth opportunities, with disciplined approach to M&A, looking for core business bolt-ons, direct consolidations, or larger scale with competitive advantage, and must be accretive to margins, etc.

Q: Order outlook, including FPSO FIDs and 1Q shape.

A: Feel good about prospects to win fair share, 2026 book-to-bill expected around 1x, with Q1 likely below 1x due to slow start.

Q: Aftermarket business and third-party competition, and market opportunity for reactivating stacked idle deepwater assets.

A: Feel good about aftermarket position, with customers returning to OEM due to complexity; limited opportunity for reactivating stacked deepwater assets, but large ticket opportunities if they materialize.

Q: Venezuela opportunity and through-cycle CapEx/free cash flow framework.

A: Venezuela opportunity large if right guardrails in place; through-cycle free cash flow conversion expected around 40%-50%, with CapEx in $315M-$345M range for 2026.

Q: Earnings potential of ATOM RTX robotics platform.

A: Excited about robotics platform, with pilot systems operating, 27-30 robot arms sold, and constructive conversations with customers; strong capabilities in automation, data control, and AI.