NOV Inc. Q1 FY2026 earnings call

• The first quarter of 2026 unfolded against a backdrop of the Middle East conflict. NOV achieved lowest ever total recordable incident rate and lost time incident rate. - Financial results: Revenue of $2.05 billion and adjusted EBITDA of $177 million. Conflict in Middle East negatively impacted revenue by ~$54 million and EBITDA by ~$32 million. - Energy equipment segment: Bookings in energy equipment segment totaled $520 million, orders improved year-over-year. Subsea flexible pipe business had outstanding performance. - Energy products and services segment: Impacted by Middle East disruptions and lower global activity, but has market share gains in drill bit business and digital services adoption.

For the energy equipment segment, first quarter revenue was $1.19 billion, an increase of 4% from a year ago. EBITDA was $131 million, or 11% of sales. Capital equipment sales accounted for 63% of the segment's revenues, growing 16% year-over-year. Aftermarket sales and services accounted for 37% of energy equipment revenue, experiencing a 12% reduction year-over-year. For the energy products and services segment, it generated revenue of $897 million, down 10% from the first quarter of 2025. Adjusted EBITDA was $96 million, or 10.7% of sales.

• Second quarter guidance assumes Middle East conditions consistent with today, Strait remains closed. Adjusting for Middle East conflict impact, year-over-year revenue would have been flat. - Expect energy equipment segment revenue to be down 2% to 4% year-over-year, EBITDA in range of $135 million to $155 million. - Expect energy products and services segment revenue to decrease between 6% to 8% year-over-year with EBITDA in range of $100 million to $120 million. - Cost-out program expected to realize additional savings, excluding Middle East impacts, to offset tariff and other inflationary costs from second half of 2026.

• Conflict in Middle East led to disruption in capital equipment and aftermarket operations, including constrained movement of goods, access to customer sites, logistics issues, affecting deliveries. - Supply chain constraints with delays in receiving raw materials and critical components, adding costs and complexity.

Q: Talk about the Flexibles business at NOV.

A: Subsea flexible pipe business has strong performance, bookings extend into 2028. Brazil has growth with replacement cycle and new capacity needed. Other markets also have greenfield and infill projects needing pipe.

Q: What's embedded in 2Q regarding Middle East impact?

A: Strait remains closed, conditions otherwise in line with current, Q2 impact slightly larger than Q1 but mostly wash.

Q: Cost and margin outlook?

A: Team has done cost reductions, EE segment has top-line growth and margin improvement, cost out program working, margins expected to improve in second half of 2026 and 2027.

Q: Tariffs and 232 changes?

A: Filed claims for IEPA refund, 232 changes have mixed impact, tariff expense in range reflected in guidance.

Q: Aggressiveness on growth capital or M&A?

A: Remain disciplined but opportunistic on organic growth opportunities like expansion in Brazil.

Q: Impact of Middle East conflict on orders?

A: Customer base over shock, confidence building, FIDs pulling forward.

Q: New capital equipment cycle for NOV?

A: Limited investment in industry, market tight, pricing and utilization to go up, benefit all businesses including digital services and EPS segment.