NOV (NOV) Q2 2025 Earnings Call July 29, 2025 11:00 AM ET Company ParticipantsAmie D’Ambrosio - Director - IRClay Williams - Chairman & CEORodney Reed - SVP & CFOJose Bayardo - President & COOStephen Gengaro - Managing DirectorGrant Hynes - Equity Research AssociateJohn Daniel - Founder & CEOConference Call ParticipantsJim Rollyson - Director & Equity Research AnalystDouglas Becker - Equity AnalystOperatorGood day and thank you for standing by. Welcome to NOV's Second Quarter twenty twenty five Earnings Cal ...

Financial Data and Key Metrics Changes - For Q2 2025, NOV reported revenues of $2.2 billion, a 4% increase sequentially but a 1% decrease year-over-year. Net income was $108 million, or $0.29 per fully diluted share [4][5] - Adjusted EBITDA for the quarter was $252 million, representing 11.5% of sales, with margins pressured by a less favorable sales mix and inflationary cost headwinds [12][14] - Free cash flow generated during the quarter was $108 million, resulting in an 83% conversion of EBITDA to free cash flow over the last twelve months [13] Business Line Data and Key Metrics Changes - The Energy Products and Services segment generated revenue of $1.03 billion, a 2% decrease year-over-year, while adjusted EBITDA declined to $146 million, or 14.2% of sales [16][22] - The Energy Equipment segment's revenue was $1.21 billion, nearly unchanged from the previous year, but EBITDA increased by $16 million to $158 million, resulting in a 130 basis point increase in EBITDA margins to 13.1% [22][23] - Capital equipment sales accounted for approximately 62% of the Energy Equipment segment's revenue mix, driven by production and drilling equipment [23] Market Data and Key Metrics Changes - Global drilling activity declined by 6% sequentially, with North American shale activity expected to drift lower through year-end [6][9] - In North America, exploration and production companies curtailed short-cycle activity, leading to a 9% decline in the U.S. oil-directed rig count since March [7] - The company expects a decline in revenues from the Energy Products and Services segment of 1% to 3% in Q3 compared to the previous year [29] Company Strategy and Development Direction - The company is focused on three long-term trends: offshore production supplanting U.S. unconventional resources, accelerating demand for natural gas, and the application of modern technologies to drive efficiencies [30] - NOV is implementing cost reduction initiatives expected to remove over $100 million in annual costs by 2026, despite headwinds from tariffs and inflation [15][44] - The company is optimistic about the future, anticipating a recovery in offshore drilling activity beginning in 2026 [34][57] Management's Comments on Operating Environment and Future Outlook - Management noted that macroeconomic uncertainty and geopolitical factors have made customers more cautious, impacting short-cycle activity and leading to a decline in rig counts [7][9] - Despite current challenges, management remains confident in the long-term outlook, particularly for offshore activity and LNG investments [10][32] - The company expects to see a slight rebound in aftermarket business in the latter half of the year, driven by a recovery in offshore drilling contractor confidence [33][34] Other Important Information - The company repurchased 10.9 million shares for $150 million during the year, returning over $1.2 billion in free cash flow to shareholders over the last five quarters [13] - Tariff expenses for Q2 were approximately $11 million, with expectations for increases in the following quarters due to rising tariff rates [14][43] - The company is consolidating operations and exiting unprofitable product lines to improve efficiency and margins [45][46] Q&A Session Summary Question: Margin outlook and potential recovery - Management acknowledged margin pressures but expressed optimism about recovery in 2026 as offshore activity increases [50][56] Question: Macro indicators for market recovery - Management indicated that increased contracts and activity in offshore drilling would signal a market turnaround [63] Question: Cash generation and working capital outlook - The company reported strong free cash flow conversion and expects working capital as a percentage of revenue to improve in the second half of the year [66] Question: Market preparation and cost reduction initiatives - Management is preparing for a larger market and continuing cost reduction efforts, emphasizing the importance of efficiency [72][76]

Core Insights - TPI Composites, Inc. is sponsoring the wind tunnel competition at the World KidWind Challenge during the CLEANPOWER Conference in Phoenix, Arizona from May 18-21, 2025 [1][2] - The World KidWind Challenge is designed to engage students in wind energy through hands-on design, building, and testing of small-scale wind turbines [2] - TPI Composites aims to support the next generation of renewable energy leaders through this sponsorship, emphasizing the importance of innovative solutions for a sustainable future [3] Company Overview - TPI Composites, Inc. focuses on innovative and sustainable solutions to decarbonize and electrify the world, delivering high-quality composite solutions through long-term relationships with leading OEMs in the wind market [4] - The company is headquartered in Scottsdale, Arizona, and operates factories in the U.S., Mexico, Türkiye, and India, along with engineering development centers in Denmark and Germany [4] Industry Context - The KidWind Project provides clean energy education for students and educators, aiming to inspire a new generation to address climate change through renewable energy technologies [5]

Company Announcement - TPI Composites, Inc. has rescheduled the release date for its first quarter 2025 earnings results to May 12, 2025, after market close [1] - A conference call will follow at 5:00 p.m. Eastern Time on the same day [1] Conference Call Details - The conference call can be accessed by phone at 1-877-407-8291 for domestic callers and 1-201-689-8345 for international callers [2] - A replay of the call will be available two hours after it concludes, accessible at 1-877-660-6853 for domestic callers and 1-201-612-7415 for international callers, with a passcode of 13752924 [2] - The replay will be available until May 26, 2025 [2] Company Overview - TPI Composites, Inc. focuses on innovative and sustainable solutions aimed at decarbonizing and electrifying the world [4] - The company provides high-quality, cost-effective composite solutions through long-term partnerships with leading OEMs in the wind market [4] - TPI is headquartered in Scottsdale, Arizona, and operates factories in the U.S., Mexico, Türkiye, and India, along with engineering development centers in Denmark and Germany [4]