NOV Inc.

Good day and thank you for standing by. Welcome to the first quarter of 2026 NOV Inc. Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Amy D'Ambrosio, Director of Investor Relations. Please go ahead.

Welcome everyone to NOV's first quarter 2026 earnings conference call. With me today are Jose Bayardo, our chairman, president, and CEO, and Rodney Reed, our senior vice president and CFO. Before we begin, I would like to remind you that some of today's comments are forward-looking statements within the meaning of the federal securities laws. They involve risks and uncertainty, and actual results may differ materially. No one should assume these forward-looking statements remain valid later in the quarter or later in the year. For a more detailed discussion of the major risk factors affecting our business, please refer to our latest forms 10-K and 10-Q filed with the Securities and Exchange Commission. Our comments also include non-GAAP measures. Reconciliations to the nearest corresponding GAAP measures are in our earnings release available on our website. On a U.S. GAAP basis for the first quarter of 2026, NOV reported revenues of $2.05 billion and a net income of $19 million, or 5 cents, per fully diluted share. Our use of the term EBITDA throughout this morning's call corresponds with the term adjusted EBITDA, as defined in our earnings release. Later in the call, we will host a question and answer session. Please limit yourself to one question and one follow-up to permit more participation. Now, Let me turn the call over to Jose.

Thank you, Amy. Good morning, everyone, and thank you for joining us. The first quarter of 2026 unfolded against a rapidly changing backdrop due to the conflict in the Middle East. And I'd like to start by thanking our team, particularly those in the region, for keeping each other safe while doing everything possible to support our customers in a very chaotic environment. Despite the disruption, NOV achieved its lowest ever total recordable incident rate and lost time incident rate during the quarter. As I mentioned on our last call, HSE performance reflects pride, accountability, and ownership in operations, which translates into higher quality, reduced downtime, and better service for our customers. The actions of our people and the results they achieved demonstrate how deeply these values are embedded in our culture. Turning to our financial results, NOV generated revenue of $2.05 billion and adjusted EBITDA of $177 million during the first quarter of 2026. As previously disclosed, we estimate that the conflict in the Middle East negatively impacted revenue by approximately $54 million and EBITDA by $32 million. Bookings in our energy equipment segment for the quarter totaled $520 million. While this resulted in a book-to-bill of 80%, orders improved by $83 million year-over-year and represented our strongest first quarter order intake since 2019. We also had strong bookings in our fiberglass and drill pipe businesses within our energy products and services segment where we do not report book-to-bill and backlog figures. As the conflict escalated during the quarter, the most pronounced impacts were felt across our capital equipment and aftermarket operations, where the movement of goods, access to customer sites, and overall logistics became increasingly constrained, significantly affecting quarter-end deliveries. Our service and rental businesses, particularly those supporting land-based operations, experienced substantially less disruption. For our capital equipment businesses, the primary challenges were associated with shipping finished equipment into and out of the region. As shipments were rerouted through alternate ports, transit times were extended and freight costs increased materially. In addition, safety concerns and access limitations prevented customers from visiting facilities or project sites to participate in typical factory acceptance testing and inspections for manufactured equipment and goods, resulting in delayed delivery schedules. Supply chain constraints became more pronounced as we progressed through the month of March. We experienced delays in receiving raw materials and critical components, and the unpredictability of logistics introduced additional costs and complexity. These disruptions impacted manufacturing throughput, thereby reducing absorption and contributing to higher costs. In our aftermarket operations, the challenges were somewhat different but equally impactful. We experienced difficulties getting spare parts into the region, while safety concerns affected customers' willingness to pick up or accept orders. At the same time, customer activity was curtailed and certain projects were suspended, deferring demand for parts and limiting service and repair activity. Offshore projects, in particular, face disruptions and rig-related slowdowns. Together, these factors created meaningful disruption in the final month of the quarter. Importantly, much of this impact was timing-related, and in many cases, deliveries have now occurred and others have been delayed rather than canceled. Freight costs increased significantly during the quarter, at times by as much as three to four times normal levels, and combined with lower manufacturing absorption contributed to higher operating costs. Outside of the affected region, our businesses performed well and in line with expectations. We remain focused on improving operational efficiency in what continues to be an inflationary environment that may be further pressured by the ongoing supply chain disruptions and knock-on effects to the petrochemical complex. Rodney will cover second quarter guidance, which assumes conditions in the Middle East remain consistent with where they are today, meaning the ceasefire holds, but the Strait remains closed, which continues to constrain logistics and increase both the time and cost of doing business. While that is our current assumption, the situation remains extremely fluid. Logistics have improved since the height of the conflict, but trade routes are more complex, more costly, and carry higher risk of delays. While we cannot predict how conditions will evolve, our supply chain and operations teams have significant experience managing through disruption, and they're taking action to mitigate risk and serve more customers. Our operations in the Middle East serve not only as a regional hub, but also support customers across both eastern and western hemispheres. One of the actions we're taking is to reroute manufacturing for customers outside the region to facilities elsewhere in our global network. While this helps mitigate risk, it may not necessarily improve delivery times and it adds additional cost. No one can predict when the conflict will end, so we cannot reliably forecast the second half of the year. What we can say is the market is increasingly primed for a recovery, and if the conflict ended and the strait reopened in the near term, we could still conceivably achieve our prior expectation of full-year 2026 results that are broadly in line with 2025. With that context, let me now step back and talk about what we're seeing more broadly in the market. Coming into the year, the prevailing view was that the global oil market was oversupplied by 2 to 3 million barrels per day. This was driven by a wave of non-OPEC production growth from projects sanctioned during the COVID period, combined with the unwinding of OPEC Plus production curtailments. As a result, we expected 2026 would be another challenging year as the industry worked through the supply overhang. Against that backdrop, in North America, operators were expected to remain disciplined and focused on maintaining production levels efficiently while returning capital to shareholders. In the Middle East, activity was expected to gradually improve, supported by the reactivation of suspended rigs in Saudi Arabia and continued momentum in the UAE, Kuwait, and Oman. Offshore momentum was expected to build steadily with an increasing need for long cycle deep water developments to offset plateauing short cycle North American supply as the primary source of incremental production in the coming years. That was the setup just a few months ago. Today, the world looks dramatically different and the market outlook has shifted materially. The conflict in the Middle East has resulted in approximately 10 million barrels per day of shut-in production and damaged key energy infrastructure, shifting the market from a modest surplus to a meaningful deficit and requiring drawdowns of strategic reserves worldwide. While there's no clear timeline for when trade flows will normalize or when production can fully return, it is increasingly clear that even after the conflict is resolved, the market will remain undersupplied for an extended period of time and will require a significant increase in investments. One industry analysis suggests that approximately 10,000 wells across the region are currently offline, with up to 3,000 requiring meaningful intervention to return to normal operations, and roughly 1,000 potentially requiring major workovers or recompletions following extended shut-ins. Not all this production may return. Depending on the duration of the disruption, there is the potential for permanent capacity loss ranging from approximately 500,000 to as much as 2.5 million barrels per day. Restoring this production will require meaningful activity, beginning with intervention and work over operations, followed by incremental drilling to replace lost capacity. In addition, depleted strategic reserves will need to be refilled, and energy security concerns are likely to reinforce the need for exploration, development, and production capacity. Many countries are likely to expand or build new reserves over time, creating an additional source of demand. At the same time, reserve lives have declined meaningfully during the last decade, and current conditions likely serve as an additional catalyst for operators to replenish and increase reserves, reinforcing the need for increased exploration and development activity. While the conflict has clearly created near-term disruption, we believe it will also accelerate and amplify a meaningful new recovery cycle. The work required to restore production alone will drive elevated levels of activity over multiple quarters and potentially longer, depending on how conditions evolve. However, the implications extend well beyond the Middle East. We believe the combination of supply disruption, tighter market conditions, and a renewed focus on energy security will increase the urgency for investment across the industry, not only to restore production, but to also secure reliable and diversified sources of supply. For much of the past decade, the industry has operated with constrained investment, limited exploration, and reduced greenfield development. the industry became highly efficient and focused on doing more with less. As a result, reinvestment in assets declined and attrition occurred across the global equipment base. Even prior to the conflict, we saw areas where we expected that a modest increase in activity would require a disproportionate increase in investment in the service complex. However, with the prevailing view just a few months ago, it appeared that the industry would have time to gradually increase investment over the coming years as markets rebalanced. That is no longer the case. And for NOV, this change is particularly meaningful. As a provider of capital equipment and technologies used to drill, complete, and produce oil and gas, our business is directly tied to the level of investment across the industry. After years of underinvestment, the industry is not starting from a position of excess capacity. Demand will not inflect overnight, but the events of the past two months have accelerated and amplified the need for investment. And we are beginning to see early indications of this in our customer conversations. In North America, operators remain disciplined, but some are accelerating plans to complete drilled but uncompleted wells that they had previously planned to defer, while others are backing away from plans to release rigs, and some will add rigs. The North American service complex is already tight, having experienced significant attrition in the export of excess equipment to international markets. While pricing will need to improve before service providers and drilling contractors materially increase capital spending, the conditions for that to occur are increasingly falling into place. In international land markets, investment had already begun to increase, driven by the emergence of unconventional development and a growing focus on energy security. As mentioned, a healthy amount of the equipment supporting this growth has come from underutilized assets in North America. But the availability of these underutilized assets has largely been exhausted, meaning new build equipment will be required for higher levels of activity. Once conditions normalize in the Middle East, we expect a meaningful increase in activity associated with restoring curtailed production. followed by a resumption of longer-term development programs, including unconventional resource development. We also expect continued growth in other international markets, including Argentina, where our revenue increased 14% year-over-year, and Venezuela, where we have already seen a step change in demand for our progressive cavity pumps and are now fielding an increasing number of customer inquiries for additional tools and equipment. In offshore markets, we continue to see the early stages of sustained upcycle, supported by improved project economics driven by standardization, industrialization, and technology. These factors have materially lowered break-even costs, making long-cycle offshore developments increasingly competitive and positioning them as key sources of incremental supply. We have seen steady growth in demand for offshore production-related equipment, and we expect and are preparing for that trend to accelerate. Consistent with that view and our focus on leaning into high return growth opportunities, we recently approved a $200 million expansion of our subsea flexible pipe manufacturing facility in Brazil. This investment is intended to address what we believe is developing capacity shortfall in the industry as offshore activity increases. Bookings for offshore production-related equipment remained healthy in the first quarter, supported by a large subsidy-flexible pipe order for Brazil and a large feed study associated with the complex harsh environment FPSO, reflective of increasing confidence in the long-term market outlook. In offshore drilling, our customers are seeing an increasing pace of contracting activity, along with a meaningful increase in the duration of those new contracts. We now expect the number of drill ships in our contract in 2027 to reach the highest level since 2015. Higher levels of future activity drive reactivations and upgrades, such as the large reactivation project we recently received for a rig going to the North Sea and drives additional recurring spare part sales. While offshore project timelines are longer and more complex, we believe the outlook for increased activity has become even more compelling. Energy security concerns are increasing the urgency to advance offshore developments, which offer scale, longevity, and better economics. Additionally, we are seeing operators beginning to increase exploration budgets and accelerate development activity, including brownfield expansion that leverage existing infrastructure to efficiently increase production. And our pipeline of opportunities is expanding, consistent with improving industry forecasts for new project FIDs. As a result, we expect an acceleration in deep water investment and project activity over the coming years. Looking ahead, while near-term conditions remain fluid, the broader setup is becoming increasingly constructive. We remain focused on disciplined execution, improving operational efficiency, expanding margins, and delivering for our customers as we navigate a dynamic environment. The near term will continue to be influenced by the situation in the Middle East. However, when conditions stabilize, we expect delayed activity to resume and underlying demand trends to become more evident. The industry is entering a period of increased activity and reinvestment to restore production, rebuild capacity, and meet future demand. NOV is extremely well positioned for this environment. Our global footprint, intentional and diverse portfolio, and strong market positions will provide meaningful earnings leverage to improving market conditions over time. With that, I'll turn the call over to Rodney.