NOV Q3 Earnings Call Highlights

Key Points

• NOV reported improving third-quarter performance, with revenue of $2.23 billion, up 4% sequentially, adjusted EBITDA of $281 million, and a 12.6% EBITDA margin. Management credited stronger execution, efficiency initiatives, and growth in key technology markets.
• Energy Products and Services was the strongest segment, with revenue rising 9% year over year and sequentially, supported by drill pipe, drill bits, fiberglass systems, artificial lift, and record NOV Digital revenue. Fourth-quarter segment revenue is expected to grow 6% to 8% year over year.
• Middle East disruptions pressured near-term activity and cash flow, contributing to negative third-quarter free cash flow of $47 million and an expected mid-single-digit activity decline in the region during the fourth quarter. NOV expects significant cash-flow improvement in Q4 and continued share repurchases, having bought back more than 10% of shares over the past 10 quarters.

NOV NYSE: NOV reported third-quarter 2026 revenue of $2.23 billion, up 4% sequentially and 2% from a year earlier, as both operating segments improved margins. Net income was $90 million, or $0.25 per diluted share, while adjusted EBITDA totaled $281 million, equal to 12.6% of sales.

Chairman, President and CEO Jose Bayardo said the company continued to build on operational momentum established earlier in the year, citing improved execution, efficiency initiatives and growth in markets where NOV has established technology positions.

“We’re seeing a broad recovery across many of our key markets, particularly in areas NOV has strong technology positions and significant opportunity to participate,” Bayardo said.

Margins improve as company pursues efficiency initiatives

Adjusted operating profit was $188 million, or 8.4% of sales. Reported operating profit was $142 million and included $28 million of pre-tax other items and an $18 million net fixed-asset write-down, primarily associated with facility closures.

CFO Rodney Reed said NOV delivered 35% sequential incremental EBITDA margins in the third quarter, following 80% incremental margins in the second quarter. The company expects revenue growth of about 7% from the first half of 2026 to the second half, with incremental EBITDA margins in the mid-40% range excluding tariff-refund benefits.

Bayardo said NOV is simplifying operations, improving manufacturing productivity, using its global supply chain and infrastructure more effectively, and reducing duplication across the organization. He reiterated management’s view that NOV’s businesses have demonstrated the capacity to generate $1.5 billion in annual EBITDA under a constructive market environment, while emphasizing that this was not a forecast with a specified timeline.

“Our confidence in our ability to achieve and exceed this level is increasing,” Bayardo said.

Energy Equipment margins expand despite lower capital-equipment revenue

The Energy Equipment segment generated $1.22 billion in third-quarter revenue, flat sequentially and down 2% year over year. Segment EBITDA rose to $187 million, or 15.3% of sales, representing a year-over-year margin improvement of about 90 basis points.

Capital equipment represented 63% of segment revenue, while aftermarket sales and services accounted for 37%. Capital-equipment orders totaled $577 million, up 22% sequentially, producing a 91% book-to-bill ratio. Reed said NOV expects full-year book-to-bill for the segment to finish in an 80% to 85% range after project timing made the previous 90% to 100% expectation more difficult to achieve.

Management nonetheless pointed to an improving offshore outlook. Bayardo said offshore drilling contract activity has accelerated, floater contract days awarded year to date have more than doubled from the same period last year, and leading-edge day rates for high-specification rigs are approaching $500,000 per day. Spare-parts backlog increased for a fifth consecutive quarter.

Reed said offshore final investment decisions expected in 2026 and 2027 are projected to exceed those in 2024 and 2025 by roughly 50%, supporting expectations for stronger bookings in 2027 and 2028. The company expects fourth-quarter Energy Equipment revenue to decline 4% to 6% year over year as certain offshore-production projects conclude, with EBITDA forecast at $175 million to $205 million.

Products and Services posts 9% revenue growth

The Energy Products and Services segment recorded revenue of $1.06 billion, up 9% both sequentially and year over year. Adjusted EBITDA was $153 million, or 14.5% of sales. Excluding tariff-refund benefits, third-quarter sequential incremental EBITDA margins were 39%.

Growth was supported by drill pipe, drill bits, fiberglass systems and artificial lift. NOV Digital posted record quarterly revenue, rising by double-digit percentages both sequentially and year over year, according to Reed. ReedHycalog drill-bit revenue increased more than 20% year over year, including 30% growth in U.S. land revenue, while downhole-tools revenue grew by low double-digit percentages year over year and sequentially.

The fiberglass systems business posted its fourth straight quarter with a book-to-bill ratio above 100%, with backlog up 30% from a year earlier. Drill-pipe revenue rose about 20% year over year, with trailing-12-month book-to-bill exceeding 120% and backlog up 50%.

NOV expects fourth-quarter Energy Products and Services revenue to rise 6% to 8% year over year, with EBITDA of $140 million to $160 million.

Middle East disruptions weigh on cash flow and near-term activity

Bayardo said NOV’s Middle East revenue grew more than 20% sequentially and year over year in the third quarter, but maritime-security conditions created logistics disruptions, elevated costs, delayed equipment and spare-parts deliveries, and postponed some tenders. The company began seeing moderation in regional activity late in the quarter and expects it to continue through at least year-end.

Management expects Middle East activity to decline in the mid-single-digit range during the fourth quarter because of suspended rigs and customer drilling-program adjustments. Bayardo said the long-term importance of the region remains unchanged because of its reserve base and need for continued investment in unconventional resources.

Free cash flow was negative $47 million in the third quarter, affected by delayed Middle East milestone billings and collections as well as inventory buffers held to manage logistics disruptions. Reed said NOV expects significant fourth-quarter improvement, with working capital at about 25% of annualized fourth-quarter revenue. The company expects EBITDA-to-free-cash-flow conversion to return to the 50% range in 2027.

NOV paid $32 million in dividends and repurchased 800,000 shares for $15 million during the quarter. Over the past 10 quarters, the company has repurchased 44.5 million shares for $689 million, representing more than 10% of shares outstanding, Reed said.

About NOV (NYSE:NOV)

NOV Inc NYSE: NOV is a Houston-based technology and equipment provider serving the global energy industry. The company develops and manufactures products and systems used in oil and natural gas drilling, well construction, completion and production operations.

Its offerings include land and offshore drilling rigs, rig equipment and components, downhole tools, drill pipe, wellbore technologies, pressure-control systems, and equipment used to enhance production. NOV also provides aftermarket parts, technical support, maintenance and other services designed to help energy companies operate and maintain their equipment.

The company was formed in 2005 through the merger of National Oilwell and Varco International, building on businesses with much longer histories in the oilfield equipment industry.

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