NOV NYSE: NOV reported second-quarter 2026 revenue of $2.13 billion and net income of $112 million, or $0.31 per diluted share, as operational improvements, favorable project execution and stronger deliveries supported results despite continued disruption in the Middle East.
Revenue increased 4% sequentially but declined about 2% from the prior-year period. Adjusted EBITDA was $283 million, including an approximately $40 million benefit from refunds related to IEEPA tariffs. Excluding that benefit, adjusted EBITDA was $243 million, according to Chairman, President and CEO Jose Bayardo.
“The strong incremental margins reflect excellent execution on several large projects nearing completion, a more favorable sales mix, improved deliveries into the Middle East, and operational initiatives that are beginning to outpace inflationary pressures,” Bayardo said.
The company reported adjusted operating profit of $190 million, or 9% of sales, and adjusted EBITDA of 13.3% of sales. CFO Rodney Reed said the company incurred approximately $30 million in tariff expense during the quarter, compared with roughly $10 million in the second quarter of 2025, though tariff refunds produced the reported quarterly benefit.
Middle East Conditions Remain a Key Variable
NOV said its Middle East operations performed generally in line with, or modestly better than, expectations during the quarter. Bayardo said activity in the region remained below pre-conflict levels, particularly offshore, while land-based activity and unconventional gas development were more stable.
Although the cessation of most “kinetic activity” during the quarter allowed customers to adapt operations, logistics remained constrained and costly. NOV said its supply-chain and operations teams delivered previously delayed orders and won some work where competitors could not meet customer requirements.
For the third quarter, the company’s guidance assumes operating conditions in the Middle East remain consistent with the second quarter. Bayardo said NOV expects regional activity to improve by roughly 10% to 15% sequentially under that scenario, though the company has risked its outlook toward the lower end of that range.
The Middle East currently accounts for approximately 15% of NOV’s total revenue, Bayardo said. If the expected activity improvement does not materialize because of further disruptions, he estimated the potential EBITDA impact at roughly $20 million to $25 million, though he stressed that outcomes could be either better or worse depending on developments in the region.
Energy Equipment Posts Record Margin
NOV’s Energy Equipment segment generated $1.22 billion in second-quarter revenue, up 2% sequentially and 1% year over year. Adjusted EBITDA rose $42 million from a year earlier to $200 million, or 16.4% of sales, marking the segment’s highest quarterly EBITDA margin since its formation.
Excluding tariff refunds, Reed said the segment still achieved a record margin, supported by operational execution, favorable pricing and product mix, and cost reductions. Capital equipment represented 63% of segment revenue, while aftermarket sales and services accounted for 37%.
Capital equipment orders totaled $474 million, up 13% from a year earlier, producing a 74% book-to-bill ratio. Quarter-end backlog was $4.1 billion. Orders were led by subsea flexible pipe and offshore production equipment.
NOV’s subsea flexible pipe business delivered record EBITDA, helped by project execution and higher-margin backlog. The business had a trailing-12-month book-to-bill ratio of 135%, while backlog was 28% above its level a year earlier. Bayardo said the business is nearing capacity constraints, with sizable new orders largely expected to be delivered in 2028; added capacity is anticipated in early 2029.
Management also cited strength in process systems, marine and construction equipment, and drilling capital equipment. Offshore drilling activity and improving floater utilization are expected to support demand for spare parts, recertifications, automation upgrades and modernization work.
For the third quarter, NOV expects Energy Equipment revenue to decline 1% to 3% year over year, with EBITDA of $160 million to $190 million. Reed said the revenue outlook reflects project timing, including certain production-equipment projects that neared completion in the second quarter, even as rig aftermarket activity is expected to improve during the second half.
Energy Products and Services Sees Sequential Recovery
The Energy Products and Services segment reported revenue of $974 million, up 9% sequentially but down 5% from the prior year. Adjusted EBITDA was $144 million, or 14.8% of sales.
Revenue improved sequentially across nearly all businesses, NOV said, with market-share gains and increased activity supporting drill bits, downhole tools, artificial lift, drilling motor rentals and well-site services. The company said its drill bit business posted record quarterly U.S. revenue and its drilling motor rental business recorded its strongest U.S. revenue in more than six years.
Digital Services recorded its fourth consecutive quarter of year-over-year revenue growth. NOV said revenue from wired drill pipe services nearly doubled, and the company deployed its Max Completions remote rig-monitoring offering for a supermajor. It also won a contract to provide real-time drilling and completion data capabilities for an Argentine operator’s development program.
Capital equipment revenue in the segment declined 15% year over year, primarily due to lower Middle East demand, fewer deliveries of conductor pipe connectors and the absence of prior-year composite solutions deliveries for floating production, storage and offloading vessels. However, sequential capital-equipment revenue rose in the low-teens percentage range as shipments recovered from first-quarter Middle East delays.
NOV said its drill pipe business recorded its strongest first-half bookings in more than a decade, with backlog roughly doubling from a year earlier. Fiberglass backlog increased 20% year over year.
For the third quarter, NOV expects Energy Products and Services revenue to rise 5% to 7% year over year, with EBITDA between $130 million and $150 million. The company expects seasonal Eastern Hemisphere downhole tool sales, stronger backlog conversion in drill pipe and composite solutions, and continued market-share gains to support growth.
Cash Flow, Capital Returns and Longer-Term Outlook
Free cash flow was negative $64 million in the quarter, affected by milestone billing timing and elevated inventory buffers maintained amid Middle East supply-chain uncertainty. NOV expects working capital to support cash generation in the second half and continues to forecast conversion of 40% to 50% of 2026 EBITDA into free cash flow.
During the quarter, NOV repurchased 3.2 million shares for $63 million and paid $64 million in dividends, including a $0.09-per-share supplemental dividend. Since launching its capital-return program in the second quarter of 2024, the company said it has returned more than $1 billion to shareholders through dividends and share repurchases while increasing cash by approximately $700 million.
Management reiterated expected 2026 capital expenditures of $340 million to $370 million and an annual effective tax rate of 34% to 36%.
Bayardo said NOV expects Energy Equipment’s full-year book-to-bill ratio to be near 90% to 100%, with a more meaningful increase expected in 2027. He also said the company sees a broadening investment cycle across offshore production, offshore drilling, international unconventional development and higher-value digital technologies, although geopolitical uncertainty and commodity-price volatility could affect timing.
About NOV (NYSE:NOV)
National Oilwell Varco NYSE: NOV is a leading provider of equipment and technology to the oil and gas industry. The company designs, manufactures and services an extensive portfolio of products used in drilling, completion and production operations. Its offerings include drilling rigs and related components, wellbore technologies such as tubulars and completion tools, surface equipment including mud pumps and blowout preventers, and aftermarket parts and services that support ongoing field operations.
NOV's business is organized to serve upstream energy companies around the world.
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