Sign in

You're signed outSign in or to get full access.

NI

NOV Inc. (NOV)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $2.10B (-2% y/y), diluted EPS $0.19, and adjusted EBITDA $252M (12.0% margin), with operating profit $152M (7.2% of sales) .
  • Versus Wall Street consensus, NOV slightly beat revenue ($2.103B vs $2.096B*), delivered an adjusted EBITDA above consensus ($252M vs $247M*), and missed EPS ($0.19 vs $0.255*). The miss was driven by mix shift and lower shorter-cycle capital equipment demand in Energy Products & Services (EPS), plus unfavorable discrete tax items and lower equity income .
  • Energy Equipment (EE) execution and pricing drove 430 bps y/y margin improvement (14.4% EBITDA margin), while EPS margins compressed on mix; backlog ended at $4.41B and orders were $437M (book-to-bill 80%) .
  • Q2 2025 guidance: consolidated revenue down 1–4% y/y and adjusted EBITDA $250–$280M (EPS down 5–8% y/y, EE flat to +1% y/y); management flagged tariff headwinds ($8–$10M in Q2, ~$15M/quarter thereafter) and a weaker H2 activity backdrop .

What Went Well and What Went Wrong

What Went Well

  • Energy Equipment profitability: adjusted EBITDA up $46M y/y to $165M (14.4% margin), supported by higher-margin backlog and strong execution; EE operating profit rose to $134M and backlog reached $4.41B .
  • Cash generation and capital returns: $135M CFO and $51M FCF; returned $109M via $81M buybacks and $28M dividends; board later declared an additional $0.21/share supplemental dividend for 2024 true-up .
  • Strategic technology wins: agreement with Petrobras to address CO₂ stress corrosion in flexibles; integrated cable-lay award for offshore wind; record downhole runs and broader AI-driven DBA adoption across 20M feet .
    • “We executed well on our large backlog of offshore production technologies... and continued to drive accelerating adoption of our new, differentiated technologies” — Clay Williams, CEO .

What Went Wrong

  • EPS segment pressure: revenue down 2% y/y to $992M; adjusted EBITDA down $29M y/y to $145M (14.6% margin) on lower shorter-cycle capital equipment demand and less favorable mix .
  • Tariff exposure and macro: management expects $8–$10M tariff expense in Q2 and ~$15M/quarter thereafter; H2 activity likely softer given trade tensions, weakening outlook, and incremental OPEC+ supply .
  • Discrete items: $13M “Other Items” (severance, Russia deconsolidation) and unfavorable discrete tax items impacted net income and EPS .

Financial Results

Consolidated Performance (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$2.19 $2.31 $2.10
Diluted EPS ($USD)$0.33 $0.41 $0.19
Gross Profit Margin %21.4% 21.4% 21.3%
Operating Profit ($USD Millions)$194 $207 $152
Operating Margin %8.9% 9.0% 7.2%
Adjusted EBITDA ($USD Millions)$286 $302 $252
Adjusted EBITDA Margin %13.1% 13.1% 12.0%

Segment Breakdown and EBITDA (oldest → newest)

SegmentQ3 2024 Revenue ($MM)Q4 2024 Revenue ($MM)Q1 2025 Revenue ($MM)Q3 2024 Adj EBITDA ($MM)Q4 2024 Adj EBITDA ($MM)Q1 2025 Adj EBITDA ($MM)
Energy Products & Services$1,003 $1,060 $992 $172 $173 $145
Energy Equipment$1,219 $1,287 $1,146 $159 $185 $165
Eliminations$(31) $(39) $(35) $(45) $(56) $(58)
Total NOV$2,191 $2,308 $2,103 $286 $302 $252

KPIs and Balance Sheet (oldest → newest)

KPIQ3 2024Q4 2024Q1 2025
EE Orders ($MM)$627 $757 $437
EE Book-to-Bill (%)111% 121% 80%
EE Backlog ($B)$4.478 $4.43 $4.41
Cash From Operations ($MM)$359 $591 $135
Free Cash Flow ($MM)$277 $473 $51
Share Repurchases ($MM)$80 $112 $81
Dividends Paid ($MM)$29 $29 $28
Cash & Equivalents ($MM)$985 $1,230 $1,157
Total Debt ($B)$1.75 $1.74 $1.74

Estimate Comparison (Q1 2025)

MetricConsensusActual
Revenue ($USD Billions)$2.096*$2.103
Adjusted EBITDA ($USD Millions)$247*$252
Diluted EPS ($USD)$0.255*$0.19

Values with asterisk (*) retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated Revenue YoYQ2 2025—Down 1–4% New
Consolidated Adjusted EBITDAQ2 2025—$250–$280M New
EPS Segment Revenue YoYQ2 2025—Down 5–8% New
EPS Segment Adjusted EBITDAQ2 2025—$140–$160M New
EE Segment Revenue YoYQ2 2025—Flat to +1% New
EE Segment Adjusted EBITDAQ2 2025—$155–$175M New
Eliminations & Corporate CostsQ2 2025—$45–$55M Clarified
Effective Tax RateFY 2025—26%–28% Maintained
Regular DividendQ2 2025—$0.075/share payable Jun 27, 2025 Declared
Supplemental Dividend (2024 true-up)Q2 2025~$80M indicated $0.21/share payable Jun 13, 2025 Confirmed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Tariffs/supply chainGrowing caution into 2025; strong cash/working capital improvement Tariff mitigation in-flight; Q2 expense $8–$10M; ~$15M/quarter thereafter Worsening near term
Offshore deepwaterFPSO orders/book-to-bill strong; EE backlog growth EE margins +430 bps y/y; following 14 potential FPSO opportunities; tech upgrades (20k psi BOP, automation, robotics) Strengthening structurally
North America activityLower drilling activity pressure in EPS NA seen most at risk in H2; EPS down y/y Softening
AI/digital & technologyMax Completions and automation traction DBA AI across 20M feet; geothermal pilots; automation upgrades in process Broadening adoption
Regional mixInternational/offshore resilience highlighted International expected to hold up better; offshore robust; NA likely double-digit down y/y Diverging
Regulatory/sanctionsNew revolver and financial policies; no specific sanction event Russia subsidiaries deconsolidated; $13M “Other Items” One-off impact

Management Commentary

  • “Strong demand for deepwater production equipment and cost reductions enabled our Energy Equipment segment to achieve significant improvement, increasing margins by 430 basis points compared to the first quarter of 2024.” — Clay Williams .
  • “We expect macroeconomic and geopolitical uncertainties to persist causing incrementally lower activity in the second half of the year... nevertheless we expect modest sequential revenue improvement in Q2 2025.” — Clay Williams .
  • “Our best estimate is that NOV’s consolidated results in the second quarter will include $8–$10 million in tariff expense… beyond the second quarter… approximately $15 million per quarter.” — Jose Bayardo .
  • CFO on capital returns and tax: “We repurchased 5.4 million shares for $81 million and paid $28 million in dividends… full-year tax rate 26–28%.” — Rodney Reed .

Q&A Highlights

  • Margin trajectory: Management expects H2 2025 EBITDA margins “about flattish” versus H1, with EPS growing 3–5% H2 vs H1 and EE roughly flat; macro uncertainty remains high .
  • Mix and geography: International and offshore to hold up better; North America outlook shifted from low/mid-single digit down to likely double-digit down y/y .
  • Capital equipment orders/FPSO pipeline: Line of sight to book-to-bill ~1 for 2025; up to 12 FPSO awards possible in 2025, some may slip right but not disappear .
  • Tariff mitigation and CapEx: Playbook relies on reshoring, USMCA, international plant routing, vendor discounts; mitigation largely not CapEx-intensive .
  • Cash flow: Despite tariffs, NOV continues to target ~50% EBITDA-to-FCF conversion for 2025 .

Estimates Context

  • Q1 2025 actuals vs consensus: Revenue $2.103B vs $2.096B* (slight beat), adjusted EBITDA $252M vs $247M* (beat), EPS $0.19 vs $0.255* (miss) .
  • Estimate implications: EPS segment mix and lower shorter-cycle equipment demand plus discrete tax and lower equity income suggest near-term EPS estimate compression; EE margin resilience may support EBITDA estimates despite softer revenue trajectory .

Values marked with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

  • EE strength and backlog quality are offsetting EPS headwinds; NOV’s deepwater exposure and technology stack underpin margin durability into macro softness .
  • Near-term tariff headwinds ($8–$10M in Q2, ~$15M/quarter thereafter) and weaker H2 activity warrant caution on H2 EPS/FCF trajectories despite robust execution .
  • Capital return discipline intact: supplemental $0.21/share declared; ongoing buybacks and base dividend likely continue under 50% Excess FCF framework .
  • Watch FPSO award cadence and drilling automation upgrades as catalysts for EE orders/margins; NOV is tracking 14 FPSO opportunities for 2025 .
  • Mix shift away from shorter-cycle NA equipment is pressuring EPS margins; international/offshore resilience should stabilize consolidated margins near H1 levels .
  • For trading: EPS miss vs consensus may cap near-term upside; strength in EE margins/backlog and dividend supplements provide downside support; monitor tariff mitigation progress and Q2 delivery vs guidance .
  • Medium-term thesis: Structural rotation to offshore/deepwater and international gas supports NOV’s portfolio; technology (DBA, automation, 20k psi BOP, robotics) is a competitive lever to sustain margin expansion .