NOV Inc. Q1 2026 10-Q Summary
Business Context and Reporting Period
This filing is a Quarterly Report (Form 10-Q) for NOV Inc., a leading independent equipment and technology provider to the global energy industry. The report covers the three-month period ended March 31, 2026. The Company operates through two reportable segments: Energy Products and Services and Energy Equipment.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Revenue | $2,052 million | $2,103 million |
| Operating Profit | $47 million | $152 million |
| Net Income (Company) | $19 million | $73 million |
| Diluted EPS | $0.05 | $0.19 |
| Adjusted EBITDA | $177 million (8.6% margin) | $252 million (12.0% margin) |
| Cash from Operations | ($26 million) | $135 million |
| Cash and Equivalents | $1,342 million | $1,157 million |
| Total Debt | $1,715 million | $1,718 million |
| Capital Expenditures | $65 million | $84 million |
Material Changes vs. Prior Period
- Revenue Decline: Total revenue decreased 2% year-over-year. The Energy Products and Services segment saw a 10% revenue drop due to Middle East disruptions and lower North America rig counts. Conversely, the Energy Equipment segment grew 4% driven by strong backlog execution.
- Profitability Compression: Operating profit fell 69% to $47 million. This was driven by a $37 million pre-tax charge for "Other Items" (including a $12 million non-recurring stock-based compensation charge, severance, and facility closures), alongside higher costs and unfavorable sales mix in the Middle East.
- Cash Flow Shift: Operating cash flow turned negative ($26 million outflow) compared to a $135 million inflow in Q1 2025, primarily due to working capital changes (increased inventory and accrued liabilities).
- Capital Allocation: The Company repurchased $67 million of stock (approx. 3.5 million shares) and paid $33 million in dividends.
Guidance, Outlook, and Risks
- Outlook: Management expects increased demand for equipment and technology due to reduced global production capacity and the need for energy security following Middle East conflicts. Approximately 40% of the $4.23 billion capital equipment backlog is expected to convert to revenue in the remainder of 2026.
- Geopolitical Risks: Ongoing conflict in the Middle East has caused logistics disruptions, delayed deliveries, and increased freight costs. The closure of the Strait of Hormuz has tightened oil fundamentals.
- Trade Policy: Uncertainty remains regarding U.S. tariffs and retaliatory measures following recent Supreme Court rulings and new administration policies. The Company is pursuing duty refunds but has not reflected potential benefits in Q1 results.
- Legal Contingencies: NOV is engaged in litigation regarding royalty payments under technology license agreements (leaching technology for drill bits). While the Company believes royalties are due, recent district court rulings have temporarily blocked collection, and the Company is appealing. Royalty receivables of $137 million are recorded net of reserves.
Investor Verification Checklist
- Working Capital Trends: Verify the sustainability of the negative operating cash flow and the drivers behind the $91 million increase in inventory and $106 million decrease in accrued liabilities.
- Backlog Conversion: Monitor the $4.23 billion capital equipment backlog and the impact of Middle East logistics on the projected 40% revenue recognition for the rest of 2026.
- Legal Resolution: Track the status of the royalty litigation appeals and the potential impact on the $137 million receivable balance.
- Cost Structure: Assess the permanence of the $37 million "Other Items" charge and the trajectory of inflationary pressures on raw materials and freight.
- Liquidity Position: Confirm the utilization of the $1.5 billion revolving credit facility, noting that $839 million of cash is held in foreign subsidiaries and may face repatriation taxes.