NOV Inc.

NOV reported second-quarter revenue of $2.13 billion, up 4% sequentially and down 2% year over year. Net income was $112 million, or $0.31 per diluted share. Operating profit was $193 million; adjusted operating profit was $190 million, or 9% of sales; and adjusted EBITDA was $283 million, or 13.3% of sales. Excluding the roughly $40 million AIPA tariff refund benefit, adjusted EBITDA was $243 million, implying about 80% incremental EBITDA conversion on sequential revenue growth. Free cash flow was negative $64 million due to milestone billing timing and slightly elevated inventory. For the third quarter, management expects Energy Equipment revenue to be 1% to 3% lower year over year with EBITDA of $160 million to $190 million, and Energy Products and Services revenue to increase 5% to 7% year over year with EBITDA of $130 million to $150 million. Management also said full-year 2026 cash conversion should be 40% to 50% of EBITDA, capital expenditures should be $340 million to $370 million, and the annual effective tax rate should be 34% to 36%.

Jose Bayardo said NOV executed exceptionally well, with operational improvements starting to show up in stronger margins and better execution across the portfolio. He highlighted improving demand across most end markets, market-share gains in differentiated technologies, and increasing confidence that the broader investment cycle is broadening beyond isolated pockets. His tone was upbeat but measured: he acknowledged geopolitical uncertainty, especially in the Middle East, while arguing that NOV is entering a different cycle with earlier capital spending and more opportunity for earnings leverage.

Rodney Reed focused on the numbers: $2.13 billion of revenue, $112 million of net income, $193 million of operating profit, and $283 million of adjusted EBITDA at 13.3% of sales. He noted roughly $40 million of AIPA tariff refund benefit in the quarter, $17 million of which was collected during the period, and said the net year-over-year tariff benefit was slightly more than $20 million because tariff expense rose to about $30 million from roughly $10 million a year ago. He also highlighted $63 million of share repurchases, $64 million of dividends, over $1 billion returned to shareholders since the program began, and about $700 million of cash increase over that period. On capital allocation and liquidity, he said free cash flow should improve in the second half, with 40% to 50% of 2026 EBITDA expected to convert to free cash flow, and reiterated capex and tax-rate guidance.

Analysts focused on how the Middle East conflict could affect second-half revenue and EBITDA, and Bayardo quantified the risk by saying NOV’s Middle East exposure is about 15% of total company revenue and that a miss versus the company’s assumed Q3 trend could imply a $20 million to $25 million EBITDA impact. He also said the company is planning for Q3 to reflect conditions similar to Q2, with a 10% to 15% sequential increase in Middle East activity embedded in the forecast. On Energy Equipment bookings, management said the 0.74 book-to-bill should improve in the second half, with full-year 2026 likely near 90% to 100% book-to-bill and 2027 meaningfully above that. They also said Q3 guidance does not include any tariff refund benefit.