NOV Inc.

Good day and thank you for standing by. Welcome to the third quarter 2026 NOV Inc.'s earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will 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 that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Amie D'Ambrosio, Director of Investor Relations. Ma'am, please go ahead.

Welcome, everyone, to NOV's third 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 third quarter of 2026, NOV reported revenues of $2.23 billion and a net income of $90 million, or 25 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, Amie. Good morning, everyone, and thank you for joining us. NOV delivered another strong quarter. Our teams continued to execute well and build on the operational momentum we established earlier this year, with improving performance across much of our portfolio. NOV generated revenue of $2.23 billion during the third quarter, an increase of 4% sequentially and 2% year over year. Solid incremental margins on the increase in revenue resulted in $281 million of adjusted EBITDA. Over the past several calls, we've talked about two priorities for NOV. First, improving profitability and returns by operating more efficiently, simplifying how we work and better leveraging the capabilities and scale of the broader NOV organization. Second, positioning NOV to capitalize on attractive growth opportunities We're making meaningful progress on both fronts. This quarter, both reporting segments delivered improved margins, reflecting better execution, continued efficiency gains, and the benefits of the actions we've been taking across the company. At the same time, the industry outlook continues to improve, especially in markets where NOV is particularly well-positioned, while years of limited investment have left relatively little excess capacity across important parts of the service and equipment supply chain. Let me start with the Middle East. As we discussed on our last call, activity in the region has settled into what appeared to be a new operating normal following the disruptions earlier in the year. While takeaway capacity and operating conditions generally improved through most of the third quarter, Maritime security continued to deteriorate, creating logistical disruptions and higher costs that affected deliveries of equipment and spare parts and delayed certain tenders. Despite these challenges, our team in the Middle East delivered sequential and year over year growth of over 20% during the quarter. We remain focused first and foremost on the safety of our people and on serving the needs of our customers. I want to thank our employees and our customers in the region who continue doing critical work to maintain the essential flow of energy to the world in an extraordinarily difficult environment. As tensions escalated late in the quarter, we began to see some moderation in regional activity, which we expect will continue through at least year end. While these challenges will likely persist over the medium term, we remain focused on the importance of the region to the global energy markets over the long term. The disruption of Middle East supply has required significant draws on global inventories, and experts suggest that replenishing those inventories while also meeting ongoing demand could take up to two years after flows out of the region normalize. Rebuilding global inventories will require increased investment, some of which is beginning to take place in other regions as countries and producers seek to strengthen energy security and diversify sources of supply. But there are limits to how far supply can diversify. The Middle East holds roughly half of the world's proven oil reserves, and as Amin Nasser recently put it, markets can diversify suppliers, they cannot diversify geology. That's why we continue to view the Middle East as one of the most important and attractive markets for NOV over the long term. Maintaining and ultimately increasing production from the region will require significant investment, particularly as unconventional resources become a larger part of the production mix. Economically developing those resources requires many of the same higher specification drilling completion and production technologies that we perfected to help enable the US shale revolution. We're already seeing increased investment in these technologies as unconventional development expands across the region. A similar pattern is developing across a number of other international land markets. In Argentina, we're capitalizing on attractive growth opportunities as development of the Vaca Muerta continues to scale. Our revenue in the country has now grown double digits year over year for three consecutive quarters as operators move toward increasingly industrialized development programs. We're seeing greater demand for higher performance motors and other drilling technologies, and we're introducing new completion and drill out solutions to help operators improve efficiency as lateral length and completion intensity increase. And importantly, there's still considerable opportunity for us to help operators improve costs and efficiencies with better equipment and technology. We're also benefiting from investment in the infrastructure required to support growing production. During the quarter, we secured orders for production and midstream equipment associated with natural gas infrastructure in the Vaca Morta, illustrating the breadth of NOV's opportunity as development scales. Argentina is just one example, and we're also capitalizing on opportunities developing in other emerging international unconventional resource markets, including Algeria, Australia, Egypt, and Pakistan. Customers in these countries are increasingly incorporating the technologies we've developed and proven in more mature resource plays. In Venezuela, we're also seeing activity and customer engagement increase, with growing inquiries across a range of NOV businesses including production and midstream equipment, artificial lift and pumping technologies, drilling systems, and digital solutions. While still small, our revenue from Venezuela is growing at a high rate, and we see the potential for it to materially increase given the need to reinvest in the country's asset base. More broadly, as international development programs scale and become more technically demanding, they require greater technology content, creating a long runway of opportunity for NOV. North America presents a somewhat different opportunity. Activity continued to improve during the quarter, led by private operators and the normal seasonal increase in Canada. Public operators remain disciplined with capital, and at least for now, they're not making a broad push to materially increase activity. We're seeing a similar dynamic among service companies and drilling contractors. For the most part, they remain very disciplined and want to see meaningful, sustained improvement in pricing and returns before committing significant capital to their fleets. Importantly, there is little excess high specification equipment capacity available today. As a result, we believe even a modest increase in operator activity could tighten the market fairly quickly, improving utilization, pricing, and ultimately the returns required to support broader fleet reinvestment. Today, we're seeing a few more agile private customers begin investing ahead of what they and we soon believe will be higher utilization and pricing. During the quarter, we booked the sale of two new 2,000 horsepower high spec land rigs A major upgrade to another rig that included a DC to AC conversion and an order for a new TDS 1400 top drive, which provides the higher torque and horsepower required to drill increasingly demanding ultra-long lateral wells. At the other end of the spectrum, major operators are helping support selective investments in leading-edge technologies that can structurally improve safety and efficiency, including robotic systems and fully electric well-servicing rigs. So while capital equipment investment in North America remains constrained, the customers who are investing are generally focused on higher specification solutions that lower total well costs, improve reliability, and enhance safety. Customers' relentless focus on improving efficiency also continues to drive demand for our shorter cycle technologies, tools, and services. For example, our drill bit business delivered a record quarter with particularly strong growth in the Permian, while our downhole tools business generated record motor revenues and continued to gain traction with several differentiated drilling technologies. The performance and reliability of these products are helping us deepen penetration with customers and gain share. Digital is becoming an increasingly important part of that same efficiency equation. During the quarter, we were awarded a contract to provide digital services across more than 30 rigs for a large U.S. operator, combining electronic drilling recorders and remote monitoring to standardize data capture, improve operational visibility, and support more consistent decision-making across the fleet. North America remains one of the most important technology markets in the world and an extraordinary proving ground for NOV as customers continue pushing the limits of lateral length, drilling speed, automation, and capital efficiency. That creates opportunities for us to provide more technology and value on each active rig, and many of the solutions proven in North America will ultimately help us drive growth in the international unconventional markets we just discussed. Finally, turning to offshore, where we continue to see some of the strongest industry momentum and some of the most attractive opportunities for NOV. In offshore drilling, contracting activity has accelerated meaningfully this year. Floater contract days awarded year to date have more than doubled compared to the same period last year. Utilization remains high and leading edge day rates for high specification rigs are approaching $500,000 per day, levels that support greater investment in upgrading the existing fleet. These improving conditions are translating into stronger demand across our drilling equipment and aftermarket businesses. As rigs prepare for new contracts and return to work, customers need spare parts, recertifications, and equipment upgrades, and increasingly they are investing in automation and robotics. Our offshore aftermarket business strengthened again during the quarter, with spare parts backlog increasing for the fifth consecutive quarter. We also secured additional upgrade opportunities, including an award to increase a drill ship's hook load capacity to over 1,400 tons and add multi-machine control functionality. We continue to see growing customer adoption of our automation robotic systems as operators and drilling contractors look to improve safety, consistency, and efficiency. The longer-term outlook is increasingly promising. The offshore fleet is aging at the same time it is being asked to drill more efficiently in deeper water and increasingly challenging operating environments. We believe that combination will continue to create attractive aftermarket and equipment upgrade opportunities and over time should increase the need for new high-specification rigs. The outlook on the production side of the offshore market is, in many respects, even more compelling. As shown on slide seven of the earnings slide deck we posted on our website this morning, offshore investment is expected to remain at very strong levels through the end of the decade. South America will remain a significant market led by Brazil, Guyana, and Suriname, while investment is expected to increase meaningfully across Africa, Asia, Australia, and Europe. Much of that incremental activity is also moving into deeper water, harsher operating environments, and more gas-intensive developments, creating a particularly favorable mix of opportunities for NOV. As slide 8 illustrates, the median water depth for FPSOs in the development pipeline is approximately 1,400 meters, compared with roughly 420 meters for the active fleet today. They're also increasingly gas-intensive. Average gas handling capacity for the development pipeline is approximately 336 million cubic feet per day compared with 189 million cubic feet per day for the existing fleet. Deeper water, greater gas processing requirements, and increasingly harsh operating environments translate into larger and more sophisticated production systems. That plays very well to NOV's capabilities that are illustrated on slide 9. When we look at both the breadth of the market and the increasingly demanding technical requirements of the projects being developed, we feel very good about the offshore production opportunity over the next several years. If you look at slide 10, you can see that there's an important lag between when an offshore development reaches FID and when NOV ultimately receives orders for much of the equipment we supply. As projects move through engineering, contracting, and procurement, all orders generally follow FIDs by a few quarters, with the exact timing varying by project and equipment package. You can see that higher FPSO FIDs in 2022 and 2023 contributed to elevated NOFE offshore bookings in the periods that followed. The moderation in FIDs during 24 and 25 is reflected in the slightly muted pace of production equipment bookings we're experiencing in 2026. Importantly, the investment cycle is turning higher. FPSO project sanctioning is accelerating meaningfully in 2026 and the pipeline for 2027 remains very strong. Consistent with the historical lag shown on slide 10, we expect those projects to increasingly move into equipment procurement as we progress through 2027 and into 2028. We're already seeing that development in our sales pipeline with a growing number of projects moving through engineering, tendering, and commercial discussions across our businesses. Large offshore awards are inherently lumpy and their timing can move between quarters. But the more important point is that today's bookings largely reflect yesterday's project sanctioning environment, while the acceleration in FIDs we are seeing today represent a broader opportunity set developing in front of us. Given the strength of the project pipeline, the increasingly attractive technical requirements of future developments, and NOV's strong positions across many of the critical technologies those projects require, We have growing confidence in a robust offshore production equipment opportunity over the next several years. That brings me back to the earnings potential we discussed last quarter. As a reminder, we looked at the strongest quarterly performance each of our businesses had delivered over the past several years, excluding the seasonally strong fourth quarters, annualized those results, and concluded that NOV's portfolio has demonstrated the capacity to generate $1.5 billion of annual EBITDA. This was not a forecast with a defined timeline. The point was that none of our businesses needed to achieve performance they had not recently demonstrated. What is needed is a reasonably constructive, broad-based market environment that allows more of them to perform near their potential at the same time. Our confidence in our ability to achieve and exceed this level is increasing and we see three things moving in our favor. First, we're beginning to see broader improvement across global energy markets. We expect a disproportionate share of supply growth to come from areas where NOV is particularly well positioned, including deep water offshore and international unconventionals. And third, we continue to drive operational efficiencies. We're simplifying how we operate, improving manufacturing productivity, better leveraging our global infrastructure and supply chain, and reducing duplication across the company. Importantly, our path to $1.5 billion of EBITDA can be supported by the capacity we already have in place, creating the opportunity to drive attractive incremental earnings, cash flow, and return on capital employed. The timing will depend on how customer investment develops, and the path will not be perfectly linear. But the improving performance within NOV and the market opportunities we discuss today give us increasing confidence in our ability to demonstrate materially greater earnings power over the coming years. We've been positioning the company for the market conditions we anticipate ahead, and we're committed to delivering stronger margins, greater cash flow, and higher returns. To the NOV employees listening today, thank you for everything you do to serve our customers, keep one another safe, and make NOV better every day. Rodney?