NOV Q4 2025 NOV Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 NOV Inc Earnings Call
Speaker #1: 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 will need to press star 11 on your message advising you hand is raised.
Speaker #1: telephone. You will then hear an automated today's conference is being recorded. I will now hand the conference over to speaker host for today, Amie D'Ambrosio, Director of Investor Relations.
Speaker #1: Amie, please go
Speaker #1: ahead.
Speaker #2: Welcome, everyone, to NOV's fourth
Speaker #2: quarter and full year 2025 earnings conference call. With me today are Jose Bayardo, our Chairman, President, and CEO, and Rodney Reed, our Senior Vice President and like to remind you that some of today's comments of the Federal Securities Laws.
Speaker #2: 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.
Speaker #2: For a more detailed discussion of the major risk factors affecting our business, please refer are forward-looking statements within the meaning to our latest forums 10-K and 10-Q filed with the Securities and comments also include non-GAAP CFO.
Speaker #2: measures. Reconciliations to the earnings release available on our Before we begin, I would website. On a U.S. Exchange Commission. GAAP basis for the fourth quarter of Our 2025, NOV reported revenues of $2.28 billion and a net loss of $78 million, or 21 cents per fully diluted share.
Speaker #2: For the full year 2025, revenues nearest corresponding GAAP measures are in our were $8.74 $145 million, or 39 billion, and net income was cents per fully diluted share.
Speaker #2: 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.
Speaker #2: Please limit yourself to one question and one follow-up to permit more participation. Now, let me turn the call over to Jose.
Speaker #3: Thank you, Amie, and thank you, everyone, for joining us this morning. I want to Williams for his leadership and his lasting impact on NOV.
Speaker #1: NOV Reported Revenues of $2.28 billion and a net loss of $78 million, or 21 cents per fully diluted share. For the full year 2025, revenues were $8.74 billion and net income was $145 million, or 39 cents per fully diluted share.
Amie D'Ambrosio: NOV reported revenues of $2.28 billion and a net loss of $78.21 per fully diluted share. For the full year 2025, revenues were $8.74 billion and net income was $145.39 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.
Amie D'Ambrosio: NOV reported revenues of $2.28 billion and a net loss of $78.21 per fully diluted share. For the full year 2025, revenues were $8.74 billion and net income was $145.39 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.
Speaker #3: Clay served as NOV's CEO for over 10 years, but he helped build and shape this great organization and its incredible culture over nearly 30 years.
Speaker #3: As CEO, he led this company through some of the most challenging industry cycles while setting a high standard and commitment to all of NOV's for integrity, perseverance, stakeholders.
Speaker #1: 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.
Speaker #3: NOV is the great company it is today, due to his exceptional leadership and all of us wish him the very results, NOV delivered an outstanding fourth quarter to cap off a solid year, executing well on what continued to be a turbulent market environment.
Speaker #1: Please limit yourself to one question and one follow-up to permit more participation. Now, let me turn the call over to Jose.
Speaker #3: Turning to our
Speaker #2: Thank you, Amie, and thank you, everyone, for joining us this morning. I want to start by recognizing and thanking Clay Williams for his leadership and his lasting impact on NOV.
Jose Bayardo: Thank you, Amie, and thank you everyone for joining us this morning. I want to start by recognizing and thanking Clay Williams for his leadership and his lasting impact on NOV. Clay served as NOV's CEO for over 10 years, but he helped build and shape this great organization and its incredible culture over nearly 30 years. As CEO, he led this company through some of the most challenging industry cycles while setting a high standard for integrity, perseverance, and commitment to all of NOV's stakeholders. NOV is the great company it is today due to his exceptional leadership and all of us wish him the very best in retirement. Turning to our results, NOV delivered an outstanding Q4 to cap off a solid year, executing well in what continued to be a turbulent market environment.
Jose Bayardo: Thank you, Amie, and thank you everyone for joining us this morning. I want to start by recognizing and thanking Clay Williams for his leadership and his lasting impact on NOV. Clay served as NOV's CEO for over 10 years, but he helped build and shape this great organization and its incredible culture over nearly 30 years. As CEO, he led this company through some of the most challenging industry cycles while setting a high standard for integrity, perseverance, and commitment to all of NOV's stakeholders. NOV is the great company it is today due to his exceptional leadership and all of us wish him the very best in retirement. Turning to our results, NOV delivered an outstanding Q4 to cap off a solid year, executing well in what continued to be a turbulent market environment.
Speaker #3: sequentially, but decreased 1% year over year against a global drilling activity decline of 6%. EBITDA was $267 Fourth quarter revenue improved 5% million, up $9 million sequentially.
Speaker #2: Clay served as NOV's CEO for over 10 years, but he helped build and shape this great organization and its incredible culture over nearly 30 years.
Speaker #3: For the full year, revenue decreased 1% to $8.74 billion, and EBITDA exceeded $1 billion for the third straight year, despite a challenging market environment.
Speaker #2: As CEO, he led industry cycles while setting a high standard for integrity, perseverance, and commitment to all of NOV's stakeholders. NOV is the great company it is today, due to his exceptional leadership and all of us wish him the very best in retirement.
Speaker #3: performed, and pleased by the demonstrated start by recognizing and thanking Clay I'm proud of the way our team resilience of our diverse portfolio of best in retirement.
Speaker #1: technologies . We achieved a full year book to bill of approximately 91% on a 15% increase in revenue , out of backlog , and we year with a total backlog of 4.34 billion .
Speaker #2: Turning to our results, NOV delivered an outstanding fourth quarter to cap off a solid year, executing well on what continued to be a turbulent market environment.
Speaker #2: Fourth quarter revenue improved 5% sequentially, but decreased 1% year over year against a global drilling activity decline of 6%. EBITDA was $267 million, up $9 million sequentially.
Jose Bayardo: Fourth quarter revenue improved 5% sequentially but decreased 1% year-over-year against a global drilling activity decline of 6%. EBITDA was $267 million, up $9 million sequentially. For the full year, revenue decreased 1% to $8.74 billion, and EBITDA exceeded $1 billion for the third straight year despite a challenging market environment. I'm proud of the way our team performed and pleased by the demonstrated resilience of our diverse portfolio of market-leading technologies. We achieved a full year book-to-bill of approximately 91% on a 15% increase in revenue out of backlog, and we ended the year with a total backlog of $4.34 billion. 2025 orders were led by demand for offshore production technologies, resulting in our offshore-related backlog growing more than 10% during the year, supported by demand for subsea flexible pipe, offshore construction equipment, and processing modules.
Jose Bayardo: Fourth quarter revenue improved 5% sequentially but decreased 1% year-over-year against a global drilling activity decline of 6%. EBITDA was $267 million, up $9 million sequentially. For the full year, revenue decreased 1% to $8.74 billion, and EBITDA exceeded $1 billion for the third straight year despite a challenging market environment. I'm proud of the way our team performed and pleased by the demonstrated resilience of our diverse portfolio of market-leading technologies. We achieved a full year book-to-bill of approximately 91% on a 15% increase in revenue out of backlog, and we ended the year with a total backlog of $4.34 billion. 2025 orders were led by demand for offshore production technologies, resulting in our offshore-related backlog growing more than 10% during the year, supported by demand for subsea flexible pipe, offshore construction equipment, and processing modules.
Speaker #1: 2025 orders were led , in revenue out of backlog . And we ended the year with a total of 4.34 billion . 2025 orders were led by demand for offshore production technologies , related resulting in our more backlog growing than 10% during the supported year , by leading demand for subsea flexible pipe offshore construction equipment and processing Strong demand for modules .
Speaker #2: For the full year, revenue decreased 1% to $8.74 billion, and EBITDA exceeded $1 billion for the third straight year, despite a challenging market environment.
Speaker #1: offshore ended the and solid execution on backlog . More than demand aftermarket offset for services parts from our offshore contractor customers , our energy equipment segment to post margin 18% increase .
Speaker #2: I'm proud of the way our team performed and pleased by the demonstrated resilience of our diverse portfolio of market-leading technologies. We achieved a full year book-to-bill of approximately $91% on a 15% increase in revenue out of backlog, and we ended the year with a total backlog of $4.34 billion.
Speaker #1: Energy revenue strong performance , offset a mostly 4% decrease in revenue from our shorter cycle . North America land weighted and Services offshore More segment .
Speaker #2: 2025 orders were led by demand for offshore production technologies, resulting in our offshore-related backlog growing more than 10% during the year, supported by demand for subsea flexible pipe offshore construction equipment and processing modules.
Speaker #1: provide more color its on operating unit performance , but both products of Rodney performed well in a growth and challenging segments market due to continued efforts to drive additional efficiencies and process Those enabled improvements .
Speaker #2: Strong demand for offshore equipment and solid execution on our backlog more than offset lower demand for aftermarket parts and services from our offshore drilling contractor customers, leading our energy equipment segment to post its fourth straight year of revenue growth and margin improvement.
Jose Bayardo: Strong demand for offshore equipment and solid execution on our backlog more than offset lower demand for aftermarket parts and services from our offshore drilling contractor customers, leading our energy equipment segment to post its fourth straight year of revenue growth and margin improvement. Energy equipment's strong performance mostly offset a 4% decrease in revenue from our shorter cycle, more North America land-weighted energy products and services segment. Rodney will provide more color on operating unit performance, but both segments performed well in a challenging market due to continued efforts to drive additional efficiencies and process improvements. Those efforts enabled us to reach our second consecutive year of converting over 85% of our EBITDA to cash, resulting in $876 million in free cash flow in 2025 and $1.8 billion in free cash flow over the last two years. Today, NOV is entering 2026 in a position of strength.
Jose Bayardo: Strong demand for offshore equipment and solid execution on our backlog more than offset lower demand for aftermarket parts and services from our offshore drilling contractor customers, leading our energy equipment segment to post its fourth straight year of revenue growth and margin improvement. Energy equipment's strong performance mostly offset a 4% decrease in revenue from our shorter cycle, more North America land-weighted energy products and services segment. Rodney will provide more color on operating unit performance, but both segments performed well in a challenging market due to continued efforts to drive additional efficiencies and process improvements. Those efforts enabled us to reach our second consecutive year of converting over 85% of our EBITDA to cash, resulting in $876 million in free cash flow in 2025 and $1.8 billion in free cash flow over the last two years. Today, NOV is entering 2026 in a position of strength.
Speaker #1: in efforts $876 million in free cash in . 2025 1.8 billion in free drilling flow over last two Today , years . Nov is 2026 , in a of strength .
Speaker #2: Energy equipment's strong performance mostly offset a 4% decrease in revenue from our shorter cycle more North America land-weighted energy products and services segment. Rodney will provide more color on operating unit performance, but both segments performed well in a challenging market due to continued efforts to drive additional efficiencies and process improvements.
Speaker #1: We leading market positions in everything we balance entering sheet cash position believe have what I best team of people in the and industry .
Speaker #1: believe in our mission to cost lower the of energy the production and and we affordable world . They do . also take A help great reliable , energy customers and to the coming to continuous for our providing pride in service marginal will energy is the Nov is in mindset to drive a strong opportunities forward .
Speaker #2: Those efforts enabled us to reach our second consecutive year of converting over 85% of our EBITDA to cash, resulting in $876 million in free cash flow in 2025 and $1.8 billion in free cash flow over the last two years.
Speaker #1: years the coming we look . emphasis . operational As on which we overarching One continue efficiencies and the many growth avenues of us two lean into .
Speaker #2: Today, NOV is entering 2026 in a position of strength. We have strong market positions in almost everything we do, a fortress balance sheet, and we have what I believe is the best team of people in the industry.
Jose Bayardo: We have strong market positions in almost everything we do, a fortress balance sheet, and we have what I believe is the best team of people in the industry. They believe in our mission to lower the marginal cost of energy production and help deliver reliable, affordable energy to the world. They also take great pride in providing exceptional service for our customers and come into work every day with a continuous improvement mindset. While NOV is in a strong position, we see additional opportunities to drive value for our shareholders over the coming years. As we look forward, there are two simple overarching areas of emphasis on which we are focused: one, continue to drive operational efficiencies; and two, lean into the many growth avenues we have in front of us.
Jose Bayardo: We have strong market positions in almost everything we do, a fortress balance sheet, and we have what I believe is the best team of people in the industry. They believe in our mission to lower the marginal cost of energy production and help deliver reliable, affordable energy to the world. They also take great pride in providing exceptional service for our customers and come into work every day with a continuous improvement mindset. While NOV is in a strong position, we see additional opportunities to drive value for our shareholders over the coming years. As we look forward, there are two simple overarching areas of emphasis on which we are focused: one, continue to drive operational efficiencies; and two, lean into the many growth avenues we have in front of us.
Speaker #2: They believe in our mission to lower the marginal cost of energy production and help deliver reliable, affordable energy to the world. They also take great pride in providing exceptional service for our customers, and come into work every day with a continuous improvement mindset.
Speaker #1: Nov has significant amount of heavy the last ten years . work Actions that were needed to focused navigate through the repercussions of the position , we see flow war , the pandemic and the dramatic shift from areas of offshore November 2014 oil price global activity U.S.
Speaker #1: shale . Our work included consolidating , repositioning and in front our done a in improving operational and back office efficiencies . business lifting over and continues today ongoing with our $100 million cost out program .
Speaker #2: While NOV is in a strong position, we see additional opportunities to drive value for our shareholders over the coming years. As we look forward, there are two simple overarching areas focused.
Speaker #1: Multiple facility exiting and underperforming product lines and markets . we are well hanging fruit , we still have simplifying opportunities to drive While efficiencies , grow margins increase return on capital , and we are consolidations , increasing the efficiency and productivity pace and gains .
Speaker #2: One, continue to drive operational efficiencies and two, lean into the many growth avenues we have in front of us. NOV has done a significant amount of heavy lifting over the last 10 years.
Jose Bayardo: NOV has done a significant amount of heavy lifting over the last 10 years, actions that were needed to navigate through the repercussions of the November 2014 oil price war, the global pandemic, and the dramatic shift from investments in offshore activity to U.S. shale. Our work included consolidating, repositioning, and simplifying our business and improving operational and back-office efficiencies. This work continues today with our ongoing $100 million cost-out program, multiple facility consolidations, and exiting underperforming product lines in geographic markets. While we are well beyond the low-hanging fruit, we still have opportunities to drive efficiencies, grow margins, and increase return on capital, and we are accelerating the pace and increasing the scope of our efforts. As we drive efficiency and productivity gains, they are being offset by lower activity levels, tariffs, and inflation.
Jose Bayardo: NOV has done a significant amount of heavy lifting over the last 10 years, actions that were needed to navigate through the repercussions of the November 2014 oil price war, the global pandemic, and the dramatic shift from investments in offshore activity to U.S. shale. Our work included consolidating, repositioning, and simplifying our business and improving operational and back-office efficiencies. This work continues today with our ongoing $100 million cost-out program, multiple facility consolidations, and exiting underperforming product lines in geographic markets. While we are well beyond the low-hanging fruit, we still have opportunities to drive efficiencies, grow margins, and increase return on capital, and we are accelerating the pace and increasing the scope of our efforts. As we drive efficiency and productivity gains, they are being offset by lower activity levels, tariffs, and inflation.
Speaker #2: Actions that were needed to navigate through the repercussions of the November 2014 oil price war, the global pandemic, and the dramatic shift from investments in offshore activity to US shale.
Speaker #1: They being offset by activity levels , tariffs and inflation efforts Still , we are driving more change to make the better every day .
Speaker #2: Our work included consolidating, repositioning, and simplifying and back-office efficiencies. This our business and improving operational work continues today with our ongoing $100 million cost-out program, multiple facility consolidations, and exiting underperforming product lines and geographic markets.
Speaker #1: work is positioning organization outperform And our over the drive long run . as we indications of the . progress we are making with a number of our operations record performance , some of Rodney will which highlight progress in numerous KPIs .
Speaker #2: While we are well beyond the low-hanging fruit, we still have opportunities to drive efficiencies, grow margins, and increase return on capital and we are accelerating the pace and increasing the scope of our efforts.
Speaker #1: also see performance only against equipment benchmark , not oilfield companies , in this but also leading rates . We We've scrap manufacturing peers .
Speaker #1: We measure and businesses , including cost quality , There are many measures warranty , in our and rework seen significant improvement area over few years , and achieving today operations are well top .
Speaker #2: As we drive efficiency and productivity gains, they are being offset by lower activity levels, tariffs, and inflation. Still, we are driving more change to make the organization better every day and our work is positioning NOV to outperform over of our operations achieving record performance, some of which Rodney will highlight.
Jose Bayardo: Still, we are driving more change to make the organization better every day, and our work is positioning NOV to outperform over the long run. There are many indications of the progress we are making, with a number of our operations achieving record performance, some of which Rodney will highlight. We also see progress in numerous KPIs we measure and benchmark in our businesses, including cost of quality, which measures warranty, scrap, and rework rates. We've seen significant improvement in this area over the last few years, and today, most of our operations are well within the top quartile of performance, benchmarked not only against oilfield equipment companies but also leading industrial manufacturing peers. This also shows up in recognition from our customers, such as our subsea flexible pipe business receiving their Top Customers' Best Supplier of the Year award for the third consecutive year.
Jose Bayardo: Still, we are driving more change to make the organization better every day, and our work is positioning NOV to outperform over the long run. There are many indications of the progress we are making, with a number of our operations achieving record performance, some of which Rodney will highlight. We also see progress in numerous KPIs we measure and benchmark in our businesses, including cost of quality, which measures warranty, scrap, and rework rates. We've seen significant improvement in this area over the last few years, and today, most of our operations are well within the top quartile of performance, benchmarked not only against oilfield equipment companies but also leading industrial manufacturing peers. This also shows up in recognition from our customers, such as our subsea flexible pipe business receiving their Top Customers' Best Supplier of the Year award for the third consecutive year.
Speaker #1: also shows up in from our customers such subsea business , pipe the last their top within the customers , best supplier of the year award most of our third consecutive for the We've also driven improvements in such as Total Recordable safety Incident and Lost Incident Time industrial few years rate .
Speaker #2: We also see progress in numerous KPIs we measure and benchmark in our businesses, including cost of quality, which measures warranty, scrap, and rework rates.
Speaker #2: We've seen significant improvement in this area over the last few years, and today most of our operations are well within the top quartile of performance, benchmarked not only against oil field equipment companies, but also leading industrial manufacturing peers.
Speaker #1: employees return safely good health . are convinced that strong HSC performance reflects a culture that has work Over pride , in its operations , which translates into higher quality , reduced better as our downtime and our sign of Another process benchmark customers operational and accountability and efficiency is our cash cycle , which benefited we've done to ownership improve all .
Speaker #1: employees return safely good health . are convinced that strong HSC performance reflects a culture that has work Over pride , in its operations , which translates into higher quality , reduced better as our downtime and our sign of Another process benchmark customers operational and accountability and efficiency is our cash cycle , which benefited we've done to ownership improve all . conversion facets of our operational processes .
Speaker #2: This also shows up in recognition from our customers, such as our subsea flexible pipe business receiving their top customers' best supplier of the year award for the third consecutive year.
Speaker #2: We've also driven improvements in health and safety KPIs, such as total recordable incident rate and lost time incident rate, over the last few years.
Jose Bayardo: We've also driven improvements in health and safety KPIs, such as total recordable incident rate and lost time incident rate, over the last few years. Better HSE performance means our employees return home from work safely and in good health. Additionally, we are convinced that strong HSE performance reflects a culture that has pride, accountability, and ownership in its operations, which translates into higher quality, reduced downtime, and better service for our customers. Another sign of operational and process efficiency is our cash conversion cycle, which has benefited from the work we've done to improve all facets of our operational processes. We exited 2025 with a cash conversion cycle of 119 days and a working capital to revenue run rate of less than 22%, down from 143 days and 28.8% respectively in 2023, freeing up around $630 million of cash.
Jose Bayardo: We've also driven improvements in health and safety KPIs, such as total recordable incident rate and lost time incident rate, over the last few years. Better HSE performance means our employees return home from work safely and in good health. Additionally, we are convinced that strong HSE performance reflects a culture that has pride, accountability, and ownership in its operations, which translates into higher quality, reduced downtime, and better service for our customers. Another sign of operational and process efficiency is our cash conversion cycle, which has benefited from the work we've done to improve all facets of our operational processes. We exited 2025 with a cash conversion cycle of 119 days and a working capital to revenue run rate of less than 22%, down from 143 days and 28.8% respectively in 2023, freeing up around $630 million of cash.
Speaker #1: exited work conversion cycle of days and a revenue to run rate of less than working capital service for down from 143 days and 28.8% , respectively , Freeing up around $630 million of to focus we will optimizing our portfolio , lowering improving driving 22% , which has increase from the on costs , , the return 2025 with a cash actions we are taking ability to lean more 119 aggressively into both organic and M&A cash . opportunities .
Speaker #1: exited work conversion cycle of days and a revenue to run rate of less than working capital service for down from 143 days and 28.8% , respectively , Freeing up around $630 million of to focus we will optimizing our portfolio , lowering improving driving 22% , which has increase from the on costs , , the return 2025 with a cash actions we are taking ability to lean more 119 aggressively into both organic and M&A cash .
Speaker #2: Better HSE performance means our employees return home from work safely and in good health. Additionally, we are convinced that strong HSE performance reflects a culture that has pride, accountability, and ownership in its operations, which translates into higher quality, reduced downtime, and better service for our customers.
Speaker #1: margins and 2025 , criteria for not complete a single In raised the we're no longer interested in pursuing It's not that acquisitions . We've acquisition .
Speaker #2: Another sign of operational and process efficiency is our cash conversion cycle, which has benefited from the work we've done to improve all facets of our operational processes.
Speaker #1: also Two direct on bolt opportunities and three larger acquisitions that already have scale competitive advantage and compelling growth prospects . Any acquisition always been accretive to must also our Earnings , flow and return on capital cash margins . .
Speaker #1: also Two direct on bolt opportunities and three larger acquisitions that already have scale competitive advantage and compelling growth prospects . Any acquisition always been accretive to must also our Earnings , flow and return on capital cash margins .
Speaker #1: disciplined in our allocation of While over the past few enhance our years , we in 2023 . capital , but significantly hurdle We've related to our acquisitions .
Speaker #2: We exited 2025 with a cash conversion cycle of 119 days and a working capital-to-revenue run rate of less than 22%, down from 143 days and 28.8%, respectively, in 2023.
Speaker #2: Freeing up around $630 million of cash. While we will continue to focus on optimizing our portfolio, lowering costs, improving margins, and driving efficiencies to increase return on capital, the actions we are taking also enhance our ability to lean more aggressively into both organic and M&A growth opportunities.
Speaker #1: standard for them . For us to pursue an business , three within one of technology , should on , meaning one core a a business or technology replaces or that continue supplements a fit current core offering .
Jose Bayardo: While we will continue to focus on optimizing our portfolio, lowering costs, improving margins, and driving efficiencies to increase return on capital, the actions we are taking also enhance our ability to lean more aggressively into both organic and M&A growth opportunities. We've always been disciplined in our allocation of capital, but over the past few years, we significantly raised the hurdle related to our criteria for acquisitions. In 2025, we did not complete a single acquisition. It's not that we're no longer interested in pursuing acquisitions. We've just set a much higher standard for them. For us to pursue an acquisition, it should fit within one of three categories: one, core business technology bolt-on, meaning a business or a technology that replaces or supplements a current core offering; two, direct consolidation opportunities; and three, larger acquisitions that already have scale, competitive advantage, and compelling growth prospects.
Jose Bayardo: While we will continue to focus on optimizing our portfolio, lowering costs, improving margins, and driving efficiencies to increase return on capital, the actions we are taking also enhance our ability to lean more aggressively into both organic and M&A growth opportunities. We've always been disciplined in our allocation of capital, but over the past few years, we significantly raised the hurdle related to our criteria for acquisitions. In 2025, we did not complete a single acquisition. It's not that we're no longer interested in pursuing acquisitions. We've just set a much higher standard for them. For us to pursue an acquisition, it should fit within one of three categories: one, core business technology bolt-on, meaning a business or a technology that replaces or supplements a current core offering; two, direct consolidation opportunities; and three, larger acquisitions that already have scale, competitive advantage, and compelling growth prospects.
Speaker #2: We've always been disciplined in our allocation of capital, but over the past few years, we significantly raised the hurdle related to our criteria for acquisitions.
Speaker #2: In 2025, we did not complete a single acquisition. It's not that we're no longer interested in pursuing acquisitions. We've just set a much higher standard for them.
Speaker #1: Also , efficient the more or processes internal are , better we leverage the are able to global acquisition . It supply chain manufacturing and other functions profitability to and grow the acquired improve Making our case for more business .
Speaker #2: For us to pursue an acquisition, it should fit within one of three categories: one, core business technology bolt-on, meaning a business or a technology that replaces or supplements a current core offering; two, direct consolidation opportunities; and three, larger acquisitions that already have scale, competitive advantage, and compelling growth prospects.
Speaker #1: expect capital all of our to be leaders in what they do . We must either be a top three player market in the or have a compelling path for strategy and .
Speaker #1: how we get there . If we have an path , we will plan to exit the line of businesses today . We We are a top three player in most everything we do .
Speaker #2: Any acquisition must also be accretive to our margins, earnings, cash flow, and return on capital. Also, the more efficient our internal processes are, the better we are able to leverage NOV's global manufacturing, supply chain, marketing, and other functions to improve profitability and grow the acquired business, making our case for investment more compelling.
Jose Bayardo: Any acquisition must also be accretive to our margins, earnings, cash flow, and return on capital. Also, the more efficient our internal processes are, the better we are able to leverage NOV's global manufacturing, supply chain, marketing, and other functions to improve profitability and grow the acquired business, making our case for investment more compelling. We expect all of our businesses to be leaders in what they do. We must either be a top three player in the market or have a compelling strategy and path for how we get there. If we do not have an achievable path, we will plan to exit the line of business. Today, we are a top three player in most everything we do. The combination of technology leadership, exceptional service, and scale can be self-perpetuating, driving market leadership and additional growth opportunities.
Jose Bayardo: Any acquisition must also be accretive to our margins, earnings, cash flow, and return on capital. Also, the more efficient our internal processes are, the better we are able to leverage NOV's global manufacturing, supply chain, marketing, and other functions to improve profitability and grow the acquired business, making our case for investment more compelling. We expect all of our businesses to be leaders in what they do. We must either be a top three player in the market or have a compelling strategy and path for how we get there. If we do not have an achievable path, we will plan to exit the line of business. Today, we are a top three player in most everything we do. The combination of technology leadership, exceptional service, and scale can be self-perpetuating, driving market leadership and additional growth opportunities.
Speaker #1: combination of technology , achievable , exceptional service and scale can be self-perpetuating . Driving additional growth market opportunities . will not Complacency and we kills lose sight of the invest continuous in need to development and leadership innovation .
Speaker #1: The with our new and is increases driving market share and additional growth do not opportunities to become success we are compelling with having the type of more we see market emerging in late 26 and The into our 2027 , objective not growth for leadership and It is value about creation .
Speaker #2: We expect all of our businesses to be leaders in what they do. We must either be a top three player in the market or have a compelling strategy and path for how we get there.
Speaker #2: If we do not have an achievable path, we will plan to exit the line of business. Today, we are a top three player in most everything we do.
Speaker #1: We will invest in we have clear competitive advantages , high products barriers to entry technology differentiation product high outsized market growth . likelihood of technologies of which would be result expected to in investments that are accretive to is margins and on capital return and value for our shareholders drive .
Speaker #2: The combination of technology leadership, exceptional service, and scale can be self-perpetuating. Driving market leadership and additional growth opportunities. Complacency kills, and we will not lose sight of the continuous need to invest in product development and innovation.
Jose Bayardo: Complacency kills, and we will not lose sight of the continuous need to invest in product development and innovation. The success we are having with our new products and technologies is driving increases in market share and additional growth opportunities to become even more compelling with the type of market we see emerging in late 2026 and into 2027. Our objective is not growth for growth's sake. It is about value creation. We will invest in areas where we have clear competitive advantages, high barriers to entry, technology differentiation, and a high likelihood of outsized market growth, all of which would be expected to result in investments that are accretive to margins and return on capital and drive value for our shareholders. Our market outlook naturally informs how we think about deploying capital, and 2026 will likely continue to provide a challenging market environment.
Jose Bayardo: Complacency kills, and we will not lose sight of the continuous need to invest in product development and innovation. The success we are having with our new products and technologies is driving increases in market share and additional growth opportunities to become even more compelling with the type of market we see emerging in late 2026 and into 2027. Our objective is not growth for growth's sake. It is about value creation. We will invest in areas where we have clear competitive advantages, high barriers to entry, technology differentiation, and a high likelihood of outsized market growth, all of which would be expected to result in investments that are accretive to margins and return on capital and drive value for our shareholders. Our market outlook naturally informs how we think about deploying capital, and 2026 will likely continue to provide a challenging market environment.
Speaker #2: The success we are having with our new products and technologies is driving increases in market share and additional growth of market we see emerging in late opportunities to become even more compelling with the type 2027.
Speaker #1: Our naturally informs how we market think about capital , and areas where 2026 will likely continue deploying to provide challenging market environment . even However , our mid to longer term outlook is The compelling .
Speaker #1: consensus that the market is currently a oversupplied by current and a between 2 to 3 million barrels a This is due oil supply wave oil coming from outlook of unwinding production from era pandemic non-OPEC FIDs that coming online day . .
Speaker #1: consensus that the market is currently a oversupplied by current and a between 2 to 3 million barrels a This is due oil supply wave oil coming from outlook of unwinding production from era pandemic non-OPEC FIDs that coming online day .
Speaker #2: Our objective is not growth for growth's sake. It is about value creation. We will invest in areas where we have clear competitive advantages, high barriers to entry, technology differentiation, and a high likelihood of outsized market growth.
Speaker #2: All of which would be expected to result in investments that are accretive to margins and return on capital and drive value for our shareholders.
Speaker #1: supply , oil to an are due to and storage increased Asia geopolitical . the high end of their at five year range and total view is cuts and risk inventories levels since downside risk to global prices result , we are a seeing cautious approach to start we expect oil markets to be at customers coming the balance in the year .
Speaker #2: Our market outlook naturally informs how we think about deploying capital. In 2026, we'll likely continue to provide a challenging market environment; however, our mid- to longer-term outlook is compelling.
Jose Bayardo: However, our mid to longer-term outlook is compelling. The current consensus view is that the oil market is currently oversupplied by between 2 to 3 million barrels a day. This is due to an oil supply wave coming from OPEC's unwinding of production cuts and from pandemic-era non-OPEC FIDs that are now coming online. Despite the excess supply, oil prices are holding up reasonably well due to geopolitical risk and increased storage capacity in Asia. However, with OECD inventories at the high end of their five-year range and total global inventories that appear to be at their highest levels since 2021, there's downside risk to commodity prices.
Jose Bayardo: However, our mid to longer-term outlook is compelling. The current consensus view is that the oil market is currently oversupplied by between 2 to 3 million barrels a day. This is due to an oil supply wave coming from OPEC's unwinding of production cuts and from pandemic-era non-OPEC FIDs that are now coming online. Despite the excess supply, oil prices are holding up reasonably well due to geopolitical risk and increased storage capacity in Asia. However, with OECD inventories at the high end of their five-year range and total global inventories that appear to be at their highest levels since 2021, there's downside risk to commodity prices.
Speaker #2: The current consensus view is that the oil market is currently oversupplied by between 2 to 3 million barrels a day. This is due to an oil supply wave coming from OPEC's unwinding of production cuts and from pandemic-era non-OPEC FIDs that are now coming online.
Speaker #1: Driving prices OPEC's levels of spend customer growth's sake . healthier much second half of the market in 2027 and beyond there's Overall , we expect global industry spend and higher activity to slightly year over year well commodity in the US , we expect activity to be down digits mid-single year the low activity exit rate from primarily to directed inventories activity that will be offset by that appear higher year , due activity in basins 2021 , .
Speaker #2: Despite the excess supply, oil prices are holding up reasonably well due to geopolitical risk and increased storage capacity in Asia. However, with OECD inventories at the high end of their five-year range and total global inventories that appear to be at their highest levels since 2021, there's downside risk to commodity prices.
Speaker #1: over depth and quality declines of drilling , inventories and 2025 and further service late asset in oil base , constrain will activity moved growth attrition tear of capacity has equipment operating from the overseas and seven has taken 24 over increase in its levels activity will likely require a demand for capital , us state of the disproportionate gas the up a creating a market opportunity for .
Speaker #2: As a result, we are seeing customers take a cautious approach to the start of 2026, but we expect oil markets will start coming back into balance in the second half of the year driving higher levels of customer spend and setting up a much healthier market in 2027 and beyond.
Jose Bayardo: As a result, we are seeing customers take a cautious approach to the start of 2026, but we expect oil markets will start coming back into balance in the second half of the year, driving higher levels of customer spend and setting up a much healthier market in 2027 and beyond. Overall, we expect global industry spend and drilling activity to decline slightly year-over-year. In the US, we expect activity to be down mid-single digits year-over-year, due primarily to the low activity exit rate from 2025 and further declines in oil-directed activity that will be offset by higher activity in gas basins. Slightly longer term, we expect US short-cycle activity to remain sensitive to price signals, resulting in a modest recovery in activity by late 2026 and early 2027.
Jose Bayardo: As a result, we are seeing customers take a cautious approach to the start of 2026, but we expect oil markets will start coming back into balance in the second half of the year, driving higher levels of customer spend and setting up a much healthier market in 2027 and beyond. Overall, we expect global industry spend and drilling activity to decline slightly year-over-year. In the US, we expect activity to be down mid-single digits year-over-year, due primarily to the low activity exit rate from 2025 and further declines in oil-directed activity that will be offset by higher activity in gas basins. Slightly longer term, we expect US short-cycle activity to remain sensitive to price signals, resulting in a modest recovery in activity by late 2026 and early 2027.
Speaker #1: Slightly longer term , we 2026 , but expect short cycle activity to remain sensitive to price signals , resulting in a modest recovery in by activity 2026 of and back into early 2027 , we believe fiscal part to concerns .
Speaker #2: Overall, we expect global industry spend and drilling activity to decline slightly year over year. In the US, we expect activity to be down mid-single digits year over year due primarily to the low activity exit rate from 2025 and further declines in oil-directed activity that will be offset by higher activity in gas basins.
Speaker #2: Slightly longer term, we expect US short-cycle activity to remain sensitive to price signals, resulting in a modest recovery in activity by late 2026 and early 2027.
Speaker #1: Longer expect US activity amount of to realize modest but consistent a long production plateau unconventional basins maintain continue to mature in as international markets , we compelling expect to up decline activity will in 2026 , slightly driven work in back to Arabia and by the expansion rigs going of term , we activity in international markets .
Speaker #2: We believe fiscal discipline among operators, due in part to concerns related to depth and quality of drilling inventories, and the state of the service complex's asset base, will constrain activity growth.
Jose Bayardo: We believe fiscal discipline among operators, due in part to concerns related to depth and quality of drilling inventories and the state of the service complex's asset base, will constrain activity growth. Capacity has moved overseas, and attrition from the wear and tear of equipment operating 24/7 has taken its toll. Any increase in activity levels will likely require a disproportionate amount of demand for capital equipment, creating a compelling market opportunity for NOV. Longer term, we expect US activity to realize modest but consistent growth to maintain a long production plateau as unconventional basins continue to mature. In international markets, we expect activity will be flat to up slightly in 2026, driven by rigs going back to work in Saudi Arabia and by the expansion of unconventional activity in international markets.
Jose Bayardo: We believe fiscal discipline among operators, due in part to concerns related to depth and quality of drilling inventories and the state of the service complex's asset base, will constrain activity growth. Capacity has moved overseas, and attrition from the wear and tear of equipment operating 24/7 has taken its toll. Any increase in activity levels will likely require a disproportionate amount of demand for capital equipment, creating a compelling market opportunity for NOV. Longer term, we expect US activity to realize modest but consistent growth to maintain a long production plateau as unconventional basins continue to mature. In international markets, we expect activity will be flat to up slightly in 2026, driven by rigs going back to work in Saudi Arabia and by the expansion of unconventional activity in international markets.
Speaker #2: Capacity has moved overseas in attrition from the wear and tear of equipment operating 24/7 has taken its toll. Any increase in activity levels will likely require a disproportionate amount of demand for capital equipment, creating a compelling market opportunity for NOV.
Speaker #1: This increase in by activity unconventional throughout unconventional East , America the Middle Latin and Australia drive investments in the high discipline spec among drilling needed these NOV Inc. efficiently .
Speaker #1: This increase in by activity unconventional throughout unconventional East , America the Middle Latin and Australia drive investments in the high discipline spec among drilling needed these NOV Inc. efficiently production meaningful Almost all of growth to resources .
Speaker #2: Longer term, we expect US activity to realize modest but consistent growth to maintain a long production plateau as unconventional basins continue to mature. In international markets, we expect activity will be flat to up slightly in 2026, driven by rigs going back to work in Saudi Arabia and by the expansion of unconventional activity in international markets.
Speaker #1: potential in help get the , completion and its feet over the equipment require This will longer significant investments capital , equipment . Additionally , Nof long and proud history in the country began back we see Venezuela to in 1949 .
Speaker #1: We before we 450 people there for us to shut down our be flat operations . have Since then , we develop continued to in and spare parts which support a major to IOCs , Venezuelan operations .
Speaker #2: This increase in unconventional activity throughout the Middle East, Latin America, and Australia will continue to drive investments in high-spec drilling, completion, and production equipment needed to efficiently develop these resources.
Jose Bayardo: This increase in unconventional activity throughout the Middle East, Latin America, and Australia will continue to drive investments in the high-spec drilling, completion, and production equipment needed to efficiently develop these resources, almost all of which NOV provides. Additionally, we see meaningful potential in Venezuela for us to help get the industry back on its feet over the longer term. This will require significant investments in capital equipment. NOV has a long and proud history in the country that began back in 1949. We employed over 450 people there before we had to shut down our operations. Since then, we have continued to sell equipment and spare parts to support major IOC's Venezuelan operations. Just over the past several weeks, we've received new orders with a value that exceeds the total amount of revenue we've generated during the past several years while supporting this operator's activity in the country.
Jose Bayardo: This increase in unconventional activity throughout the Middle East, Latin America, and Australia will continue to drive investments in the high-spec drilling, completion, and production equipment needed to efficiently develop these resources, almost all of which NOV provides. Additionally, we see meaningful potential in Venezuela for us to help get the industry back on its feet over the longer term. This will require significant investments in capital equipment. NOV has a long and proud history in the country that began back in 1949. We employed over 450 people there before we had to shut down our operations. Since then, we have continued to sell equipment and spare parts to support major IOC's Venezuelan operations. Just over the past several weeks, we've received new orders with a value that exceeds the total amount of revenue we've generated during the past several years while supporting this operator's activity in the country.
Speaker #1: And just over the past several weeks , we've received new that exceeds orders with total amount of revenue a value generated that during the past several years , while supporting this operator's .
Speaker #2: Almost all of which NOV provides. Additionally, we see meaningful potential in Venezuela. For us to help get the industry back on its require significant investments in capital feet over the longer term.
Speaker #1: Given our the the country , over we will quickly ramp up support for our customers when it becomes appropriate to so . Moving to the offshore markets .
Speaker #2: equipment. NOV has a long This will and proud history in the country that began back in 1949. We employed over 450 people there before we had to shut down our operations.
Speaker #1: briefly about history what we see in the construction space , equipment then cover and production drilling . Nov is a leading provider of critical cranes and back on deck machinery for drilling country rigs support vessels , offshore , or SVS and pipe cable vessels , do operating in turbine installation vessels WTI .
Speaker #2: Since then, we have continued to sell equipment and spare parts to support major IOCs' Venezuelan operations. And just over the past several weeks, we've received new orders with a value that exceeds the total amount of revenue we've generated during the past several years, while supporting this operator's activity in the country.
Speaker #1: and wind While we booked one order the in 2025 , outlook for offshore wind has latest capacity forecast for through over 35% since this time last As a result , offshore contractors are cautious and there activity in the is poor visibility into future orders .
Speaker #1: , or demand for These new lives has been impacted by cost inflation , supply chain pressures and higher markets borrowing costs for developers .
Speaker #2: Given our history operating in the country, we will quickly ramp up support for our customers when it becomes appropriate to do so. Moving to the offshore markets.
Jose Bayardo: Given our history operating in the country, we will quickly ramp up support for our customers when it becomes appropriate to do so. Moving to the offshore markets, first, I'll talk briefly about what we see in the construction space, then cover production and drilling markets. NOV is a leading provider of critical cranes and deck machinery for drilling rigs, offshore support vessels or OSVs, cable and pipe lay vessels, and wind turbine installation vessels or WTIVs. Demand for new WTIVs has been soft, impacted by cost inflation, supply chain pressures, and higher borrowing costs for developers. While we booked one order in 2025, the outlook for offshore wind has deteriorated, with the latest forecast for turbine capacity additions through 2030 down over 35% since this time last year. As a result, offshore wind contractors are cautious, and there's poor visibility into future orders.
Jose Bayardo: Given our history operating in the country, we will quickly ramp up support for our customers when it becomes appropriate to do so. Moving to the offshore markets, first, I'll talk briefly about what we see in the construction space, then cover production and drilling markets. NOV is a leading provider of critical cranes and deck machinery for drilling rigs, offshore support vessels or OSVs, cable and pipe lay vessels, and wind turbine installation vessels or WTIVs. Demand for new WTIVs has been soft, impacted by cost inflation, supply chain pressures, and higher borrowing costs for developers. While we booked one order in 2025, the outlook for offshore wind has deteriorated, with the latest forecast for turbine capacity additions through 2030 down over 35% since this time last year. As a result, offshore wind contractors are cautious, and there's poor visibility into future orders.
Speaker #2: First, I'll talk briefly about what we see in the construction space, then cover production and drilling markets. NOV is a leading provider of critical cranes and deck machinery for drilling rigs, offshore support vessels, or OSVs, capable in pipe-lay vessels, and wind turbine installation vessels, or WTIVs.
Speaker #1: However , demand for vessels cable lay needed to with the from the still growing number of turbines 2030 , down to shore employed has remained solid , with in 2025 , including one in the year . fourth quarter .
Speaker #1: However , demand for vessels cable lay needed to with the from the still growing number of turbines 2030 , down to shore employed has remained solid , with in 2025 , including one in the year .
Speaker #2: Demand for new WTIVs has been soft, impacted by cost inflation, supply chain pressures, and higher borrowing costs for developers. While we booked one order in 2025, the outlook for offshore wind has deteriorated, with the latest forecast for turbine capacity additions through 2030 down over 35% since this time last year.
Speaker #1: level of two to orders continue We demand soft 2026 , with longer term demand on the ultimate pace of through offshore development . We're seeing strong demand offshore cranes with our connect operation reaching its of years .
Speaker #1: This demand has been led highest level by age of the where the fleet is contingent almost Approaching . A 20 years . deteriorated 25 year life us that remain solid over the confidence years and giving for .
Speaker #2: As a result, offshore wind contractors are cautious, and there is poor visibility into future orders. However, demand for cable lay vessels needed to connect power from the still growing number of offshore turbines to shore has remained solid, with two orders in 2025, including one in the fourth quarter.
Jose Bayardo: However, demand for cable lay vessels needed to connect power from the still-growing number of offshore turbines to shore has remained solid, with 2 orders in 2025, including one in Q4. We expect this level of demand to continue through 2026, with longer-term demand contingent on the ultimate pace of offshore wind development. We're seeing strong demand for offshore cranes, with our operation reaching its highest level of revenue in over 10 years. This demand has been led by operators of OSVs, where the average age of the global fleet is now almost 20 years, approaching a typical 25-year life and giving us confidence that demand will remain solid over the coming years. Turning to offshore production and drilling equipment, industry forecasts suggest 2026 will be another year of lower spending, down low to mid-single digits.
Jose Bayardo: However, demand for cable lay vessels needed to connect power from the still-growing number of offshore turbines to shore has remained solid, with 2 orders in 2025, including one in Q4. We expect this level of demand to continue through 2026, with longer-term demand contingent on the ultimate pace of offshore wind development. We're seeing strong demand for offshore cranes, with our operation reaching its highest level of revenue in over 10 years. This demand has been led by operators of OSVs, where the average age of the global fleet is now almost 20 years, approaching a typical 25-year life and giving us confidence that demand will remain solid over the coming years. Turning to offshore production and drilling equipment, industry forecasts suggest 2026 will be another year of lower spending, down low to mid-single digits.
Speaker #1: Turning to offshore turbine production and drilling equipment industry forecasts suggest of lower average spending , down low to mid single wind digits . While we do wind disagree with this view , the market is nuanced and we believe operators of not the offshore market is rapidly nearing the beginning of a extended upcycle the .
Speaker #2: We expect this level of demand to continue through 2026, with longer-term demand contingent on the ultimate pace of offshore wind development. We're seeing strong demand for offshore cranes.
Speaker #2: With our operation reaching its highest level of revenue in over 10 years, this demand has been led by operators of OSVs, where the average age of the global fleet is typical 25-year life and giving us now almost 20 years, approaching a coming years.
Speaker #1: decade , the another year strong Over industry offshore has changed , improved project execution , greater standardization fundamentally , industrialization of infrastructure , and better technology have materially lowered breakeven Of drilling and production technologies have contributed to this emerging renaissance .
Speaker #2: Offshore production and drilling equipment. Industry turning to forecasts suggest 2026 will be another year of lower spending, down low to mid-single digits. While we do not disagree with this view, the market is nuanced, and we believe the offshore market is rapidly nearing the beginning of a strong, extended upcycle.
Speaker #1: Our automation digital packages , and other equipment expect this have improved drilling costs . efficiencies , and the industrialization we've applied to building gas and fluid processing modules for Fpsos has helped lower costs .
Jose Bayardo: While we do not disagree with this view, the market is nuanced, and we believe the offshore market is rapidly nearing the beginning of a strong, extended upcycle. Over the past decade, the offshore industry has fundamentally changed. Improved project execution, greater standardization, industrialization of infrastructure, and better technology have materially lowered breakeven costs. NOV's drilling and production technologies have contributed to this emerging renaissance. Our automation packages, digital solutions, and other equipment have improved drilling efficiencies, and the industrialization we've applied to building gas and fluid processing modules for FPSOs has helped lower costs. Additionally, operators are now benefiting from artificial intelligence using the latest processor chips that enable quicker iterations and better subsurface interpretations to reduce time, risk, and costs associated with deepwater exploration. All of this has meaningfully improved offshore economics, with breakevens in many areas now falling below $40 per barrel.
Jose Bayardo: While we do not disagree with this view, the market is nuanced, and we believe the offshore market is rapidly nearing the beginning of a strong, extended upcycle. Over the past decade, the offshore industry has fundamentally changed. Improved project execution, greater standardization, industrialization of infrastructure, and better technology have materially lowered breakeven costs. NOV's drilling and production technologies have contributed to this emerging renaissance. Our automation packages, digital solutions, and other equipment have improved drilling efficiencies, and the industrialization we've applied to building gas and fluid processing modules for FPSOs has helped lower costs. Additionally, operators are now benefiting from artificial intelligence using the latest processor chips that enable quicker iterations and better subsurface interpretations to reduce time, risk, and costs associated with deepwater exploration. All of this has meaningfully improved offshore economics, with breakevens in many areas now falling below $40 per barrel.
Speaker #1: Additionally , operators are now benefiting from artificial intelligence using the latest processor chips that enable quicker and better iterations time reduce interpretations to , risk and deep exploration revenue in over ten has meaningfully offshore improved economics , with break evens in many .
Speaker #2: Over the past decade, the offshore industry has fundamentally changed. Improved project execution, greater standardization, industrialization of infrastructure, and better technology have materially lowered break-even costs.
Speaker #2: NOV's drilling and production technologies have contributed to this emerging renaissance. Our automation packages, digital solutions, and other equipment have improved drilling efficiencies, and the industrialization we've applied to building gas and fluid processing modules for FPSOs has helped lower costs.
Speaker #1: falling areas below $40 per barrel . Lower costs , along with a growing subsurface need to production cost associated with are water All positioning long of this cycle offshore barrels to supplant cycle declines , North America of incremental supply needed to that is world's growing demand for source increasingly offshore supply exploration .
Speaker #2: Additionally, operators are now benefiting from artificial intelligence using the latest processor chips that enable quicker iterations and better subsurface interpretations to reduce time, risk, and costs associated with deep-water exploration.
Speaker #1: We're shale already many IOCs planning to significantly increase which will their AUVs , feed the budgets in the coming years , some short much as 50% , and the offshore production deepwater space .
Speaker #2: All of economics, with break-evens in many areas now falling below $40 per barrel. Lower costs, along with a growing need to offset structural production declines, are increasingly this has meaningfully improved offshore positioning long-cycle offshore barrels to supplant short-cycle North America shale as a source of incremental supply.
Speaker #1: We are leaders in providing most of the global components outside of power and energy , and compression for Fpsos and mobile offshore production reinvigorate units .
Jose Bayardo: Lower costs, along with a growing need to offset structural production declines, are increasingly positioning long-cycle offshore barrels to supplant short-cycle North America shale as a source of incremental supply, supply that is needed to feed the world's growing demand for energy and which will reinvigorate offshore exploration. We're already seeing many IOCs planning to significantly increase their deepwater exploration budgets in the coming years, some by as much as 50%. In the offshore production space, we are leaders in providing most of the critical components outside of power and compression for FPSOs and mobile offshore production units. We also provide mooring and fluid transfer systems, and other equipment for FLNG projects. 2025 was a massive year for deliveries of FPSOs, with 15 vessels starting operations, many for projects sanctioned before the pandemic.
Jose Bayardo: Lower costs, along with a growing need to offset structural production declines, are increasingly positioning long-cycle offshore barrels to supplant short-cycle North America shale as a source of incremental supply, supply that is needed to feed the world's growing demand for energy and which will reinvigorate offshore exploration. We're already seeing many IOCs planning to significantly increase their deepwater exploration budgets in the coming years, some by as much as 50%. In the offshore production space, we are leaders in providing most of the critical components outside of power and compression for FPSOs and mobile offshore production units. We also provide mooring and fluid transfer systems, and other equipment for FLNG projects. 2025 was a massive year for deliveries of FPSOs, with 15 vessels starting operations, many for projects sanctioned before the pandemic.
Speaker #1: We also provide critical mooring seeing and fluid transfer systems and other equipment for flng exploration projects . 2025 was a massive year for deliveries of Fpsos , with 15 vessels starting operations , for sanctioned many before the pandemic Only five new now FPSo FIDs advanced during the projects year , while others were postponed due to higher costs .
Speaker #2: Supply that is needed to feed the world's growing demand for energy and which will reinvigorate offshore exploration. We're already seeing many IOCs planning to significantly increase their deep-water exploration budgets in the coming years, some by as much as 50%.
Speaker #1: Supply . constraints and macroeconomic uncertainties . Over the last year , operators and have been working together to lower upfront capital costs by evolving suppliers designs of large fpsos mid-sized average optimized for anticipated fuel production rather than maximum demand will The projects smaller to are now starting to units forward in throughput .
Speaker #2: In the offshore production space, we are leaders in providing most of the critical components outside of power and compression for FPSOs and mobile offshore production units.
Speaker #2: We also provide mooring and fluid transfer systems and other equipment for FLNG projects. 2025 was a massive year for deliveries of FPSOs, with 15 vessels starting operations, many for projects sanctioned before the pandemic.
Speaker #1: for up and move demand to strong , with 2026 . We average of eight see the ten FPSo , to through 2030 . FIDs expect Notably , an expect the average size of remain decrease , we year proportion of destined for gas .
Speaker #2: Only five new FPSO FIDs advanced during the year, while others were postponed due to higher costs, supply constraints, and macroeconomic uncertainties. Over the last year, operators and suppliers have been working together to lower upfront capital costs by evolving designs of large FPSOs to smaller to mid-size units, optimized for average anticipated field production, rather than maximum throughput.
Jose Bayardo: Only 5 new FPSO FIDs advanced during the year, while others were postponed due to higher costs, supply constraints, and macroeconomic uncertainties. Over the last year, operators and suppliers have been working together to lower upfront capital costs by evolving designs of large FPSOs to smaller to midsize units optimized for average anticipated field production rather than maximum throughput. The projects are now starting to move forward. In 2026, we see the potential for up to 10 FPSO FIDs and expect demand to remain strong, with an average of 8 FIDs per year through 2030. Notably, while we expect the average size of FPSOs to decrease, we see a higher proportion of FPSOs destined for gassier markets and harsher environments, which plays into NOV's strengths in gas and condensate processing and in quick disconnect turret mooring systems.
Jose Bayardo: Only 5 new FPSO FIDs advanced during the year, while others were postponed due to higher costs, supply constraints, and macroeconomic uncertainties. Over the last year, operators and suppliers have been working together to lower upfront capital costs by evolving designs of large FPSOs to smaller to midsize units optimized for average anticipated field production rather than maximum throughput. The projects are now starting to move forward. In 2026, we see the potential for up to 10 FPSO FIDs and expect demand to remain strong, with an average of 8 FIDs per year through 2030. Notably, while we expect the average size of FPSOs to decrease, we see a higher proportion of FPSOs destined for gassier markets and harsher environments, which plays into NOV's strengths in gas and condensate processing and in quick disconnect turret mooring systems.
Speaker #1: markets and harsher higher Fpsos Fpsos to environments , which plays Your strengths in gas and condensate processing and in quick disconnect turret mooring drilling markets , in offshore we are seeing green shoots with growing indications that the white space for offshore drilling is beginning shrink .
Speaker #1: systems . From September 2025 through January 2026 , there have been 59 floater contracts awarded . In comparison to last year 33 during the same Additionally , of year end 2025 , public open tenders offshore rigs period reflected 30% more only by as rig open days tenders .
Speaker #2: The projects are now starting to move forward. In 2026, we see the potential for up to 10 FPSO FIDs and expect demand to remain strong with an average of eight FIDs per year through 2030.
Speaker #1: contractors customers while we are seeing see a the pace of as the , and the average of new duration contracts is Lastly , which we believe reflects building momentum for long an term offshore .
Speaker #1: increasing This drives demand significantly , relative to repairs . Spare parts , recertifications developments and capital equipment upgrades . We've now realized two straight contracts are quarters of part increased improve bookings and further in expect year .
Speaker #2: Notably, while we expect the average size of FPSOs to decrease, we see a higher proportion of FPSOs destined for gasier markets and harsher environments, which plays into NOV's strengths in gas and condensate processing and in quick disconnect turret mooring systems.
Speaker #2: Lastly, in offshore drilling markets, we are seeing green shoots with growing indications that the white space for our offshore drilling contractors is beginning to shrink.
Jose Bayardo: Lastly, in offshore drilling markets, we are seeing green shoots, with growing indications that the white space for our offshore drilling contractors is beginning to shrink. Our customers are seeing an increase in the pace of contracting, and the average duration of new contracts is increasing significantly, which we believe reflects building momentum for long-term offshore developments. From September 2025 through January 2026, there have been 59 floater contracts awarded in comparison to only 33 during the same period last year. Additionally, as of year-end 2025, public open tenders for all offshore rigs reflected approximately 30% more minimum rig days relative to open tenders at year-end 2024. That number increases to over 100% if you consider only open tenders for floating rigs.
Jose Bayardo: Lastly, in offshore drilling markets, we are seeing green shoots, with growing indications that the white space for our offshore drilling contractors is beginning to shrink. Our customers are seeing an increase in the pace of contracting, and the average duration of new contracts is increasing significantly, which we believe reflects building momentum for long-term offshore developments. From September 2025 through January 2026, there have been 59 floater contracts awarded in comparison to only 33 during the same period last year. Additionally, as of year-end 2025, public open tenders for all offshore rigs reflected approximately 30% more minimum rig days relative to open tenders at year-end 2024. That number increases to over 100% if you consider only open tenders for floating rigs.
Speaker #1: At year end 2024 . That number as increases to over 100% . If you consider for all tenders for only open rigs . approximately .
Speaker #2: Our customers are seeing an increase in the pace of contracting, and the average duration of new contracts is increasing momentum for long-term offshore developments.
Speaker #1: contracts are scheduled to begin in 2027 , our offshore drilling most new customers typically call us signed to begin preparing rigs to go back to increase in work as soon as .
Speaker #2: From September 2025 through January 2026, there have been 59 floater contracts awarded in comparison to only 33 during the same period last year. Additionally, as of year-end 2025, public open tenders for all offshore rigs reflected approximately 30% more minimum rig days relative to open tenders at year-end 2024.
Speaker #1: We also believe the stage is service and set for an extended recovery , as the colon production from deepwater orders to the second half of the industry to get back to work .
Speaker #2: That number increases to over 100% if you consider only open tenders for floating rigs. While most new contracts are scheduled to begin in 2027, our offshore contract drilling customers typically call us as soon as contracts are signed to begin preparing rigs to go back to work.
Jose Bayardo: While most new contracts are scheduled to begin in 2027, our offshore contract drilling customers typically call us as soon as contracts are signed to begin preparing rigs to go back to work. This drives demand for service and repairs, spare parts, recertifications, and capital equipment upgrades. We've now realized two straight quarters of increased spare part bookings and expect orders to improve further in the second half of the year. We also believe the stage is set for an extended recovery, as the call on production from deepwater increases is driving the industry to get back to work. We're extremely excited about NOV's future and the market environment we see unfolding over the next several years. We performed well in 2025, reflecting the strength of the diversity in our portfolio and the great work our team is doing to execute well in a tough environment. Rodney. Thank you, Jose.
Jose Bayardo: While most new contracts are scheduled to begin in 2027, our offshore contract drilling customers typically call us as soon as contracts are signed to begin preparing rigs to go back to work. This drives demand for service and repairs, spare parts, recertifications, and capital equipment upgrades. We've now realized two straight quarters of increased spare part bookings and expect orders to improve further in the second half of the year. We also believe the stage is set for an extended recovery, as the call on production from deepwater increases is driving the industry to get back to work. We're extremely excited about NOV's future and the market environment we see unfolding over the next several years. We performed well in 2025, reflecting the strength of the diversity in our portfolio and the great work our team is doing to execute well in a tough environment. Rodney.
Speaker #1: about excited these increases , future and the environment . We see unfolding over the several contract years . driving the We well in 2025 , reflecting the strength of the diversity in our portfolio and market the great work our team is performed execute doing to .
Speaker #2: This drives demand for service and repairs, spare parts, recertifications, and capital equipment upgrades. We've now realized two straight quarters of increased spare part bookings and expect orders to improve further in the second half of the year.
Speaker #1: Rodney environment .
Speaker #2: Thank you Jose . Consolidated revenue for the quarter
Speaker #2: was $2.28 billion , an increase of 5% sequentially and down year . Net loss was $78 million , well in or $0.21 per diluted share higher effective tax rate from
Speaker #2: We also believe the stage is set for an extended recovery as the call on production from deep-water increases driving the industry to get back to work.
Speaker #2: We're extremely excited about NOV's future and the market environment we see unfolding over the next several years. We performed well in 2025, reflecting the strength of the diversity in our portfolio and the great work our team is doing to execute well in a tough environment.
Speaker #2: assets and a higher mix of earnings . The company allowances also foreign recorded $86 million within other items , a tough primarily related to the impairment of goodwill and long lived 1% year over assets .
Speaker #2: operating Adjusted profit $177 million , was or 7.8% of sales , adjusted totaled representing 11.7% of sales and from strong operational execution , offset by mix of EBITDA .
Speaker #2: Rodney: Thank you, Jose. Consolidated revenue for the quarter was $2.28 billion, an increase of 5% sequentially and down 1% year over year. Net loss was $78 million, or $0.21 per fully diluted share, impacted by a higher effective tax rate from valuation allowances on deferred tax assets and a higher mix of foreign earnings.
Rodney Reed: Thank you, Jose.
Jose Bayardo: Consolidated revenue for the quarter was $2.28 billion, an increase of 5% sequentially and down 1% year-over-year. Net loss was $78 million or $0.21 per fully diluted share, impacted by a higher effective tax rate from valuation allowances on deferred tax assets and a higher mix of foreign earnings. The company also recorded $86 million within other items, primarily related to the impairment of goodwill and long-lived assets. Adjusted operating profit was $177 million or 7.8% of sales, and Adjusted EBITDA totaled $267 million, representing 11.7% of sales. Sequentially, margins benefited from strong operational execution offset by a less favorable mix of business and higher tariff expense. Our team delivered another strong quarter of free cash flow generation, totaling $472 million in the quarter.
Rodney Reed: Consolidated revenue for the quarter was $2.28 billion, an increase of 5% sequentially and down 1% year-over-year. Net loss was $78 million or $0.21 per fully diluted share, impacted by a higher effective tax rate from valuation allowances on deferred tax assets and a higher mix of foreign earnings. The company also recorded $86 million within other items, primarily related to the impairment of goodwill and long-lived assets. Adjusted operating profit was $177 million or 7.8% of sales, and Adjusted EBITDA totaled $267 million, representing 11.7% of sales. Sequentially, margins benefited from strong operational execution offset by a less favorable mix of business and higher tariff expense. Our team delivered another strong quarter of free cash flow generation, totaling $472 million in the quarter.
Speaker #2: team Our delivered another higher tariff expense strong quarter of favorable free cash flow generation , totaling $472 million in the quarter . As Jose mentioned , free a less cash flow was $876 million for the full year .
Speaker #2: The company also recorded $86 million within other items, primarily related to the impairment of goodwill and long-lived assets. Adjusted operating profit was $177 million, or totaled $267 million, representing 11.7% of sales.
Speaker #2: Our second consecutive year with to free conversion cash flow of over 85% . our best two year free cash flow in ten years .
Speaker #2: Working as a percentage of revenue run rate decreased to Our lowest level in 22% . ten years . We continue to execute on our return of capital capital program Margins during the quarter .
Speaker #2: Sequentially, margins benefited from strong operational execution offset by a less favorable mix of business and higher tariff expense. Our team delivered another strong quarter of free cash flow generation, totaling $472 million in the $876 million, for the full year, our second consecutive year with an EBITDA to free cash flow conversion rate of over 85%, representing our best two-year free cash flow in 10 years.
Speaker #2: We repurchased 5.7 million for $85 million dividends of $27 million , bringing total return to capital shareholders date . Year to This to $505 million .
Jose Bayardo: As José mentioned, free cash flow was $876 million for the full year, our second consecutive year with an EBITDA to free cash flow conversion rate of over 85%, representing our best two-year free cash flow in 10 years. Working capital, as a percentage of revenue run rate, decreased to 22%, our lowest level in 10 years. We continue to execute on our return of capital program. During the quarter, we repurchased 5.7 million shares for $85 million and paid dividends of $27 million, bringing total capital return to shareholders to $505 million year to date. This includes a supplemental dividend of approximately $78 million paid in the second quarter. In the past two years, we've returned $842 million to our shareholders while increasing our cash balance by $736 million. Through our disciplined share repurchase program, our current shares outstanding are at their lowest level in 18 years.
Rodney Reed: As José mentioned, free cash flow was $876 million for the full year, our second consecutive year with an EBITDA to free cash flow conversion rate of over 85%, representing our best two-year free cash flow in 10 years. Working capital, as a percentage of revenue run rate, decreased to 22%, our lowest level in 10 years. We continue to execute on our return of capital program. During the quarter, we repurchased 5.7 million shares for $85 million and paid dividends of $27 million, bringing total capital return to shareholders to $505 million year to date. This includes a supplemental dividend of approximately $78 million paid in the second quarter. In the past two years, we've returned $842 million to our shareholders while increasing our cash balance by $736 million. Through our disciplined share repurchase program, our current shares outstanding are at their lowest level in 18 years.
Speaker #2: includes a supplemental dividend of shares $78 million paid in the second quarter . years , we've In the past two returned shareholders while increasing our cash $842 million to our balance by disciplined share repurchase program .
Speaker #2: includes a supplemental dividend of shares $78 million paid in the second quarter . years , we've In the past two returned shareholders while increasing our cash $842 million to our balance by disciplined share repurchase $736 million through our current shares outstanding are at their lowest level Our remains in debt to net EBITDA balance sheet at and we remain 0.2 times , committed to strong , with our return of framework capital quarter for the .
Speaker #2: Working capital as a percentage of revenue run rate decreased to 22%, our lowest level in 10 years. We continue to execute on our return of capital program.
Speaker #2: During the quarter, we repurchased $5.7 million shares for $85 million, and paid dividends of $27 million, bringing total capital return to shareholders to $505 million, year to date.
Speaker #2: Tariff expense was $25 million , increasing around 8 million . Dollars regulatory environment , we expect our tariff expense to the first quarter , leveling off at a similar amount for increase in the remainder of 2026 .
Speaker #2: Dividend of approximately $78 million. This includes a supplemental paid in the second quarter. In the past two years, we've returned $842 million to our shareholders, while increasing our cash balance by $736 million.
Speaker #2: We're seeing an increased cost in our supply chains from secondary impacts from tariffs , including sizable increases for items like tungsten carbide . We focus on supply chain execute strategic initiatives to our sourcing reduce tariff impacts .
Speaker #2: Through our disciplined share repurchase program, our current shares outstanding are at their lowest level in 18 years. Our balance sheet remains strong, with net debt to EBITDA at $0.2 times, and we remain committed to our return of capital framework.
Jose Bayardo: Our balance sheet remains strong, with net debt to EBITDA at 0.2 times, and we remain committed to our return of capital framework. For the quarter, tariff expense was $25 million, increasing around $8 million sequentially. In the current regulatory environment, we expect our tariff expense to slightly increase in the first quarter, leveling off at a similar amount for the remainder of 2026. We're seeing an increased cost in our supply chains from secondary impacts from tariffs, including sizable increases for items like tungsten carbide. We continue to focus on our supply chain and execute strategic sourcing initiatives to reduce tariff impacts. Our efforts to reduce structural costs, standardize and simplify processes, and upgrade systems to improve productivity are progressing as planned. These programs are on track to deliver over $100 million in annualized cost savings by the end of 2026, although tariffs and other inflationary impacts remain headwinds.
Rodney Reed: Our balance sheet remains strong, with net debt to EBITDA at 0.2 times, and we remain committed to our return of capital framework. For the quarter, tariff expense was $25 million, increasing around $8 million sequentially. In the current regulatory environment, we expect our tariff expense to slightly increase in the first quarter, leveling off at a similar amount for the remainder of 2026. We're seeing an increased cost in our supply chains from secondary impacts from tariffs, including sizable increases for items like tungsten carbide. We continue to focus on our supply chain and execute strategic sourcing initiatives to reduce tariff impacts. Our efforts to reduce structural costs, standardize and simplify processes, and upgrade systems to improve productivity are progressing as planned. These programs are on track to deliver over $100 million in annualized cost savings by the end of 2026, although tariffs and other inflationary impacts remain headwinds.
Speaker #2: efforts to Our continue to structural reduce and standardized costs , systems processes , to upgrade and improve and productivity are planned . These programs are progressing as to over $100 million in annualized cost simplify savings by the end on track although deliver tariffs and inflationary 2026 , impacts of .
Speaker #2: For the quarter, tariff expense was $25 million, increasing around $8 million sequentially. In the current regulatory environment, we saw an increase in the first quarter, leveling off at a similar amount for the remainder of 2026.
Speaker #2: As Jose mentioned , we expect headwinds spending contract to slightly from remain , 2025 levels , with reductions in North America upstream being greater than international and offshore markets .
Speaker #2: We're seeing an increased cost in our supply chains from secondary impacts from tariffs, including sizable increases for items like tungsten carbide. We continue to focus on our supply chain and execute strategic sourcing initiatives to reduce tariff impacts.
Speaker #2: expect this will lead slightly lower in being more other weighted to the second half of the and in line to slightly overall than 2025 .
Speaker #2: revenue results , our segment Turning to equipment segment energy fourth revenue was $1.33 billion , around up 7% and 4% year over . Adjusted sequentially EBITDA for the fourth quarter was $180 million , or 13.5% of sales , driven by solid year execution on a higher between quality backlog further strength in our offshore and production oriented businesses and .
Speaker #2: Our efforts to reduce structural costs, standardized and simplified processes, and upgrade systems to improve productivity are progressing as planned. These programs are on track to deliver over $100 million in annualized cost savings by the end of 2026, although tariffs and other inflationary impacts remain headwinds.
Speaker #2: Given lower strong fourth quarter collections and anticipated timing of progress , projects , we billings on expect EBITDA to free flow , conversion to decrease to cash 2026 , with results 40% to 50% for 2026 .
Speaker #2: As Jose mentioned, we expect overall upstream spending to contract slightly from 2025 levels, with a reduction in North America being greater than in international and offshore markets.
Jose Bayardo: As Jose mentioned, we expect overall upstream spending to contract slightly from 2025 levels, with reductions in North America being greater than international and offshore markets. We expect this will lead to slightly lower revenue in 2026, with the results being more weighted to the second half of the year and full-year EBITDA in line to slightly lower than 2025. Given the strong fourth-quarter collections and anticipated timing of progress billings on projects, we expect EBITDA to free cash flow conversion to decrease to between 40% to 50% for 2026. Capital expenditures for the year should be between $315 million and $345 million. Higher expected foreign earnings will likely lead to a higher effective tax rate of around 34% to 36%. Turning to segment results, our energy equipment segment fourth-quarter revenue was $1.33 billion, up 7% sequentially, and 4% year over year.
Rodney Reed: As Jose mentioned, we expect overall upstream spending to contract slightly from 2025 levels, with reductions in North America being greater than international and offshore markets. We expect this will lead to slightly lower revenue in 2026, with the results being more weighted to the second half of the year and full-year EBITDA in line to slightly lower than 2025. Given the strong fourth-quarter collections and anticipated timing of progress billings on projects, we expect EBITDA to free cash flow conversion to decrease to between 40% to 50% for 2026. Capital expenditures for the year should be between $315 million and $345 million. Higher expected foreign earnings will likely lead to a higher effective tax rate of around 34% to 36%. Turning to segment results, our energy equipment segment fourth-quarter revenue was $1.33 billion, up 7% sequentially, and 4% year over year.
Speaker #2: Capital expenditures for the year year should full year between 300 and $15 million EBITDA be earnings We will likely lead to a Expected higher effective foreign tax rate of 34% to 36% .
Speaker #2: We expect this will lead to slightly lower revenue in 2026, with results being more weighted to the second half of the year, and full-year EBITDA in line with, or slightly lower than, 2025.
Speaker #2: Given the strong fourth-quarter collections and anticipated timing of progress billings on projects, we expect EBITDA to free cash flow conversion to decrease to between 40% to 50% for 2026.
Speaker #2: between $315 million and Capital expenditures for the year should be $345 million. Higher expected foreign earnings will likely lead to a higher effective tax rate of around 34% to 36%.
Speaker #2: As Jose the this represents consecutive mentioned , revenue and margin growth , with annual revenue increasing almost 60% over that four years of time .
Speaker #2: Turning the segment results, our energy equipment segment, fourth-quarter revenue was $1.33 billion, up 7% sequentially and 4% year over year. Adjusted EBITDA for the fourth quarter was $180 million, or $13.5% of sales, driven by solid backlog and further strength in our offshore and production-oriented businesses.
Speaker #2: Capital equipment sales accounted for 63% of the segment's revenues in the quarter of 2025 , increasing 8% sequentially and fourth year . LED by growth subsea flexible pipe process systems and marine and construction units .
Jose Bayardo: Adjusted EBITDA for the fourth quarter was $180 million or 13.5% of sales, driven by solid execution on a higher quality backlog and further strength in our offshore and production-oriented businesses. As Jose mentioned, this represents four years of consecutive revenue and margin growth, with annual revenue increasing almost 60% over that time. Capital equipment sales accounted for 63% of the segment's revenues in the fourth quarter of 2025, increasing 8% sequentially and 15% year-over-year, led by growth in our subsea flexible pipe, process systems, and marine and construction business units. Aftermarket sales and services accounted for the remaining 37% of revenue, growing 6% sequentially but declining 12% year-over-year, which I will discuss momentarily.
Rodney Reed: Adjusted EBITDA for the fourth quarter was $180 million or 13.5% of sales, driven by solid execution on a higher quality backlog and further strength in our offshore and production-oriented businesses. As Jose mentioned, this represents four years of consecutive revenue and margin growth, with annual revenue increasing almost 60% over that time. Capital equipment sales accounted for 63% of the segment's revenues in the fourth quarter of 2025, increasing 8% sequentially and 15% year-over-year, led by growth in our subsea flexible pipe, process systems, and marine and construction business units. Aftermarket sales and services accounted for the remaining 37% of revenue, growing 6% sequentially but declining 12% year-over-year, which I will discuss momentarily.
Speaker #2: Aftermarket sales and services in our the 37% of revenue , growing 6% sequentially . But declining 12% year over will discuss momentarily . $345 million higher .
Speaker #2: As Jose mentioned, this represents four years of execution on higher quality, consecutive revenue and margin growth, with annual revenue increasing almost 60% over that time.
Speaker #2: Capital equipment orders for the business quarter $532 million and $2.34 billion for the full year , a book resulting in to of bill 91% for 2025 and backlog at the end of the year remaining 4.34 billion orders .
Speaker #2: Capital equipment sales accounted for 63% of the segment's revenues in the fourth quarter of 2025, increasing 8% sequentially and 15% year over year. Led by growth in our subsea flexible pipe, process systems, and marine construction business units.
Speaker #2: During the quarter of were led new build offshore Jackup rig equipment package . Additional scope on offshore production projects , subsea flexible pipe .
Speaker #2: Aftermarket sales and services accounted for the remaining 37% of revenue, growing 6% sequentially but declining 12% year over year, which I will discuss momentarily.
Speaker #2: a cable lay These Subsea diversity of which I bookings end use reflect the vessel markets where Nov . has leading positions in technologies our critical to We have a outlook on constructive 2026 book to bill to be near 100% .
Speaker #2: Capital equipment orders for the quarter were $532 million, and $2.34 billion for the full year, resulting in a book-to-bill of $91% for 2025, and backlog at $4.34 billion.
Jose Bayardo: Capital equipment orders for the quarter were $532 million and $2.34 billion for the full year, resulting in a book-to-bill of 91% for 2025 and backlog at the end of the year of $4.34 billion. Orders during the quarter were led by a new-build offshore jackup rig equipment package, additional scope on offshore production projects, subsea flexible pipe, subsea cranes, and a cable lay vessel. These bookings reflect the diversity of end-use markets where NOV has leading positions and technologies critical to our customers. We continue to have a constructive outlook on bookings and expect the full-year 2026 book-to-bill to be near 100%. Our subsea flexible pipe business delivered another exceptional quarter, achieving its highest quarterly revenue and EBITDA on record for the second consecutive quarter. Backlog since the end of 2023 has doubled, while annual shipments have increased around 50%.
Rodney Reed: Capital equipment orders for the quarter were $532 million and $2.34 billion for the full year, resulting in a book-to-bill of 91% for 2025 and backlog at the end of the year of $4.34 billion. Orders during the quarter were led by a new-build offshore jackup rig equipment package, additional scope on offshore production projects, subsea flexible pipe, subsea cranes, and a cable lay vessel. These bookings reflect the diversity of end-use markets where NOV has leading positions and technologies critical to our customers. We continue to have a constructive outlook on bookings and expect the full-year 2026 book-to-bill to be near 100%. Our subsea flexible pipe business delivered another exceptional quarter, achieving its highest quarterly revenue and EBITDA on record for the second consecutive quarter. Backlog since the end of 2023 has doubled, while annual shipments have increased around 50%.
Speaker #2: Our subsea , flexible pipe year delivered customers . another exceptional revenue and EBITDA quarter , record business for the second consecutive quarter backlog since on the end of 2023 has doubled , while annual shipments bookings and increased Margins around 50% .
Speaker #2: Orders during the quarter were led by a new-build offshore jackup rig equipment package, additional scope on offshore production projects, subsea flexible pipe, subsea cranes, and a cable lay vessel.
Speaker #2: robust , driven by better quality backlog and operational execution continue to new records . levels set Production as the team continues to produce high quality full on time deliveries , earning further recognition from customers for reliability , quality and consistent execution .
Speaker #2: These bookings reflect the diversity of end-use markets where NOV has leading positions in technologies critical to our customers. We continue to have a constructive outlook on bookings and expect the full-year 2026 book-to-bill to be near 100%.
Speaker #2: Another sizable project was expect strong bookings in the of 2026 , given the highest growth quarter , and we in greenfield achieving its projects , first quarter Tiebacks and quarterly increased need an to aging replace pipes , the outlook for this remains .
Speaker #2: Our subsea flexible pipe business delivered another exceptional quarter, achieving its highest quarterly revenue and EBITDA on record for the second consecutive quarter. Backlogs since the end of 2023 have doubled, while annual shipments have increased around 50%.
Speaker #2: Our marine and bright business achieved an upper single digit increase sequentially , and a in increase compared fourth quarter to the booked in the fourth by higher driven revenue from as pipe and cable systems cranes as well during the business business is booked orders for critical cable , equipment a FPSo , offshore supply and wind turbine installation vessels construction .
Speaker #2: Margins remained robust, driven by better quality backlog and operational execution. Production levels set new records as the team continues to produce high-quality, on-time deliveries, earning further recognition from customers for reliability, quality, and consistent execution.
Jose Bayardo: Margins remained robust, driven by better quality backlog and operational execution. Production levels set new records as the team continues to produce high-quality, on-time deliveries, earning further recognition from customers for reliability, quality, and consistent execution. Another sizable project was booked in the fourth quarter, and we expect strong bookings in the first quarter of 2026. Given the expectations for growth in greenfield projects, tie-backs, and an increased need to replace aging pipes, the outlook for this business remains bright. Our marine and construction business achieved an upper single-digit increase in revenue sequentially and a sizable increase compared to the fourth quarter of 2024, driven by higher revenue from cranes as well as pipe and cable lay systems. During the year, this business has booked orders for critical equipment supporting cable lay, FLNG, FPSO, offshore supply, and wind turbine installation vessels.
Rodney Reed: Margins remained robust, driven by better quality backlog and operational execution. Production levels set new records as the team continues to produce high-quality, on-time deliveries, earning further recognition from customers for reliability, quality, and consistent execution. Another sizable project was booked in the fourth quarter, and we expect strong bookings in the first quarter of 2026. Given the expectations for growth in greenfield projects, tie-backs, and an increased need to replace aging pipes, the outlook for this business remains bright. Our marine and construction business achieved an upper single-digit increase in revenue sequentially and a sizable increase compared to the fourth quarter of 2024, driven by higher revenue from cranes as well as pipe and cable lay systems. During the year, this business has booked orders for critical equipment supporting cable lay, FLNG, FPSO, offshore supply, and wind turbine installation vessels.
Speaker #2: Another sizable project was booked in the fourth quarter, and we expect strong bookings in the first quarter of 2026. Given the expectations for growth in greenfield projects, tiebacks, and an increased need to replace aging pipes, the outlook for this business remains bright.
Speaker #2: mentioned , As Jose we expect an increase FPSo and related flange should drive incremental demand for our gas and liquids processing and our mooring sizable and fluid transfer Over the awards , which several years systems .
Speaker #2: Our marine and construction business achieved an upper single-digit increase in revenue sequentially, and a sizable increase compared to the fourth quarter of 2024, driven by higher revenue from cranes as well as pipe and cable lay systems.
Speaker #2: process , our systems next of 2024 , business solid year . delivered during the fourth with performance supporting This quarter's record revenue compared to the fourth quarter flange of 2024 .
Speaker #2: Revenue was up more last by across offshore slightly onshore production and gas Middle markets , the full outpacing the East . delivered more reaching in ever and EBITDA bookings systems particularly in the for the its highest year revenue doubled compared year , continued quarter , the business During the revenue awards for a 30% growth , gas dehydration unit in Saudi activity Arabia and an expansion of existing North , representing 40% of 2025 business business to 2024 .
Speaker #2: During the year, this business has booked orders for critical equipment supporting cable lay FLNG, FPSO, offshore supply, and wind turbine installation vessels. As Jose mentioned, we expect an increase in FPSO and FLNG-related awards, which should drive incremental demand for our gas and liquids processing systems and our mooring and fluid transfer systems over the next several years.
Jose Bayardo: As José mentioned, we expect an increase in FPSO and FLNG-related awards, which should drive incremental demand for our gas and liquids processing systems and our mooring and fluid transfer systems over the next several years. Our process systems business delivered solid performance during Q4, with revenue slightly outpacing last quarter's record revenue. Compared to Q4 2024, revenue was up more than 40%, supported by continued strong activity across offshore production and onshore gas markets, particularly in the Middle East. For the full year, the business delivered more than 30% growth, reaching its highest-ever revenue and EBITDA. Bookings for the year doubled compared to 2024. During the quarter, the business secured key awards for a gas dehydration unit in Saudi Arabia, and an expansion of scope in an existing North Sea project.
Rodney Reed: As José mentioned, we expect an increase in FPSO and FLNG-related awards, which should drive incremental demand for our gas and liquids processing systems and our mooring and fluid transfer systems over the next several years. Our process systems business delivered solid performance during Q4, with revenue slightly outpacing last quarter's record revenue. Compared to Q4 2024, revenue was up more than 40%, supported by continued strong activity across offshore production and onshore gas markets, particularly in the Middle East. For the full year, the business delivered more than 30% growth, reaching its highest-ever revenue and EBITDA. Bookings for the year doubled compared to 2024. During the quarter, the business secured key awards for a gas dehydration unit in Saudi Arabia, and an expansion of scope in an existing North Sea project.
Speaker #2: Our process systems business delivered solid performance during the fourth quarter, with revenue slightly outpacing last quarter's record revenue. Compared to the fourth quarter of 2024, revenue was up more than 40%, supported by continued strong activity across offshore production and onshore gas markets, particularly in the Middle East.
Speaker #2: bookings . Demand for mech systems remains strong , driven by project offshore projects and onshore gas unit field expansions . Also , the business is over seeing opportunities for brownfield applications and our produced water technologies strong than book to bill the past three years in subsea flexible pipe over processed systems and marine construction has exceeded 120% , with backlog growing 40% .
Speaker #2: For the full year, the business delivered more than 30% growth, reaching its highest-ever revenue and EBITDA. Bookings for the year doubled compared to 2024.
Speaker #2: During the quarter, the business secured key awards for a gas dehydration unit in Saudi Arabia and an expansion of scope in existing North Sea project.
Speaker #2: These businesses nearly over energy 70% of total equipment bookings for 2025 , and we anticipate strong continued demand as momentum builds in secured key FIDs in offshore markets increase .
Speaker #2: Representing over 40% of 2025 business unit bookings, demand for MEC systems remained strong, driven by offshore projects and large onshore gas field expansions. Also, the business is seeing increased opportunities for brownfield applications and our produced water technologies.
Jose Bayardo: Representing over 40% of 2025 business unit bookings, demand for MEC systems remains strong, driven by offshore projects and large onshore gas field expansions. Also, the business is seeing increased opportunities for brownfield applications in our produced water technologies. Our book-to-bill over the past three years in subsea flexible pipe, process systems, and marine construction has exceeded 120%, with backlog growing nearly 40%. These businesses represented over 70% of total energy equipment bookings for 2025, and we anticipate continued strong demand as momentum builds and FIDs increase in offshore markets. Revenue from our drilling capital equipment business during Q4 experienced a year-over-year decline in the low-teens percentage range but notably increased nearly 10% sequentially. We're encouraged by recent contracting activity among our offshore drilling customers, which helped capital equipment orders improve sequentially.
Rodney Reed: Representing over 40% of 2025 business unit bookings, demand for MEC systems remains strong, driven by offshore projects and large onshore gas field expansions. Also, the business is seeing increased opportunities for brownfield applications in our produced water technologies. Our book-to-bill over the past three years in subsea flexible pipe, process systems, and marine construction has exceeded 120%, with backlog growing nearly 40%. These businesses represented over 70% of total energy equipment bookings for 2025, and we anticipate continued strong demand as momentum builds and FIDs increase in offshore markets. Revenue from our drilling capital equipment business during Q4 experienced a year-over-year decline in the low-teens percentage range but notably increased nearly 10% sequentially. We're encouraged by recent contracting activity among our offshore drilling customers, which helped capital equipment orders improve sequentially.
Speaker #2: Revenue from our capital equipment drilling business during experienced a year over year . decline in the low teens Our percentage range , notably increased nearly 10% sequentially .
Speaker #2: but We are encouraged by recent contracting among our offshore drilling customers , helped capital equipment . We delivered our orders improve specification drilling rig which manufactured land 14th high Arabia in Saudi sequentially cadence of rig deliveries 2026 and the fourth quarter beyond .
Speaker #2: Our book-to-bill over the past three years in subsea flexible pipe process systems and marine construction has exceeded 120%, with backlog growing nearly 40%. These businesses represented over 70% of total energy equipment bookings for 2025, and we anticipate continued strong demand as momentum builds and FIDs increase in offshore markets.
Speaker #2: And as mentioned , , and drilling expect a equipment rig . we Saudi build , continued in engagement with Arabia customers is offshore .
Speaker #2: jackup Revenue for intervention , stimulation , capital constructive equipment declined over year , but increased substantially compared to the prior quarter , driven by solid demand for coiled tubing equipment and wireline equipment .
Speaker #2: Revenue from our drilling capital equipment business during the fourth quarter experienced a year-over-year decline in the low teens percentage range, but notably increased nearly 10% sequentially.
Speaker #2: Tendering remains Being active as leading to an increase in demand for package select for a including Bop related pressure drilling and and automation , systems .
Speaker #2: upgrade During the quarter , we new coal tubing equipment to managed the North Slope U.K. and the and equipment throughout wireline . New orders two dual trailer , large diameter CPU units with 50,000 foot reels and injectors .
Speaker #2: We're encouraged by recent contracting activity among our offshore drilling customers, which helped capital equipment orders improve sequentially. We delivered our 14th high-specification land drilling rig manufactured in Saudi Arabia, and expect a solid cadence of rig deliveries in 2026 and beyond.
Speaker #2: We're having more dialogue around future opportunities , positioning the business to benefit new offshore drilling as activity should improve later this year and into 2027 .
Jose Bayardo: We delivered our 14th high-specification land drilling rig manufactured in Saudi Arabia and expect a solid cadence of rig deliveries in 2026 and beyond. As previously mentioned, we secured a drilling equipment package for a new-build jackup rig being constructed in Saudi Arabia. Continued engagement with customers as offshore tendering remains active is leading to an increase in demand for select upgrade opportunities, including BOP-related equipment, managed pressure drilling, and automation or robotic systems. We're having more constructive dialogue around future opportunities, positioning the business to benefit as offshore drilling activity should improve later this year and into 2027. Revenue for intervention stimulation capital equipment declined 10% year-over-year but increased substantially compared to the prior quarter, driven by solid demand for coiled tubing equipment and wireline equipment.
Rodney Reed: We delivered our 14th high-specification land drilling rig manufactured in Saudi Arabia and expect a solid cadence of rig deliveries in 2026 and beyond. As previously mentioned, we secured a drilling equipment package for a new-build jackup rig being constructed in Saudi Arabia. Continued engagement with customers as offshore tendering remains active is leading to an increase in demand for select upgrade opportunities, including BOP-related equipment, managed pressure drilling, and automation or robotic systems. We're having more constructive dialogue around future opportunities, positioning the business to benefit as offshore drilling activity should improve later this year and into 2027. Revenue for intervention stimulation capital equipment declined 10% year-over-year but increased substantially compared to the prior quarter, driven by solid demand for coiled tubing equipment and wireline equipment.
Speaker #2: And as previously mentioned, we secured a drilling equipment package for a new-build jackup rig being constructed in Saudi Arabia. Continued engagement with customers, as offshore tendering remains active, is leading to an increase in demand for select upgrade opportunities, including BOP-related equipment, managed pressure drilling, and automation and robotics systems.
Speaker #2: the Middle Even with East budgets for North America , customer base . Book the year was 94% , primarily supporting international markets , which more recently represents about 50% of the business's total included revenue .
Speaker #2: the Middle Even with East budgets for North America , customer base . Book the year was 94% , primarily supporting international markets , which more recently represents about 50% of the business's total included revenue . to portion of the energy Turning equipment our equipment fourth quarter revenue aftermarket constrained for services was mid-teens .
Speaker #2: We're having more constructive dialogue around future opportunities, positioning the business to benefit as offshore drilling activity should improve later this year and into 2027.
Speaker #2: Revenue for intervention and stimulation capital equipment declined 10% year-over-year, but increased substantially compared to the prior quarter. Driven by solid demand for coal tubing equipment and wireline equipment.
Speaker #2: During the quarter, we shipped new coal tubing equipment to the North Slope and the UK, and wireline equipment throughout the Middle East. New orders included two dual-trailer large-diameter CTU units with 50,000-foot reels and injectors.
Jose Bayardo: During the quarter, we shipped new coiled tubing equipment to the North Slope, the UK, and wireline equipment throughout the Middle East. New orders included two dual-trailer large-diameter CTU units with 50,000-foot reels and injectors. Even with constrained budgets for our North America customer base, book-to-bill for the year was 94%, primarily supporting international markets, which more recently represents about 50% of the business's total revenue. Turning to the aftermarket portion of the energy equipment segment, in our drilling equipment business, Q4 revenue for aftermarket parts and services was down in the mid-teens percentage range year over year but increased nearly 10% sequentially. Spare parts bookings for the Q4 were above their trailing eight-quarter average, reaching their second-highest level in the past six quarters. Aftermarket revenue for our intervention stimulation equipment business was down mid-single-digit percentage sequentially and low double-digit percentage year over year.
Rodney Reed: During the quarter, we shipped new coiled tubing equipment to the North Slope, the UK, and wireline equipment throughout the Middle East. New orders included two dual-trailer large-diameter CTU units with 50,000-foot reels and injectors. Even with constrained budgets for our North America customer base, book-to-bill for the year was 94%, primarily supporting international markets, which more recently represents about 50% of the business's total revenue. Turning to the aftermarket portion of the energy equipment segment, in our drilling equipment business, Q4 revenue for aftermarket parts and services was down in the mid-teens percentage range year over year but increased nearly 10% sequentially. Spare parts bookings for the Q4 were above their trailing eight-quarter average, reaching their second-highest level in the past six quarters. Aftermarket revenue for our intervention stimulation equipment business was down mid-single-digit percentage sequentially and low double-digit percentage year over year.
Speaker #2: Percentage down in the but year , over year nearly 10% sequentially . Spare to bill for parts bookings for the were above their fourth quarter trailing eight quarter average , reaching their second highest level in the past six quarters .
Speaker #2: Even with constrained budgets for our North America customer base, book-to-bill for the year was 94%, primarily supporting international markets, which more recently represents about 50% of the business's total revenue.
Speaker #2: Aftermarket revenue for our intervention stimulation business was down mid-single digit percentage equipment and low sequentially double digit percentage year over year . The year over year change was due to lower sales of spare a rentals , resulting from reduced activities in partially America , decrease in parts and offset by higher coal drilling tubing repair service activity .
Speaker #2: Turning to the aftermarket portion of the Energy Equipment segment, in our Drilling Equipment business, fourth quarter revenue for aftermarket parts and services was down in the mid-teens percentage range year-over-year, but increased nearly 10% sequentially.
Speaker #2: For the first expect equipment segment revenue completion North increase with quarter , range 3% to 5% year over energy of we $145 million $165 million .
Speaker #2: Spare parts bookings for the fourth quarter were above their trailing eight-quarter average, reaching their second-highest level in the past six quarters. Aftermarket revenue for our intervention and stimulation equipment business was down mid-single-digit percentage sequentially and low double-digit percentage year-over-year.
Speaker #2: EBITDA Moving to the energy products and Services segment , year , energy Products and Services segment aftermarket generated revenue of $989 million during the quarter , representing a sequential segment in higher increase of segment's composite business , .
Speaker #2: our sales of downhole and stabilizing activity in the US and the East Middle . products Compared to the quarter of 2020 . For segment parts revenue fourth 7% and adjusted EBITDA decreased driven by to $140 million , or 14.2% of sales .
Speaker #2: The year-over-year change was due to lower sales rentals, resulting from reduced completion activities in North America, partially offset by higher coal tubing repair and service activity.
Jose Bayardo: The year-over-year change was due to lower sales of spare parts and a decrease in rentals resulting from reduced completion activities in North America, partially offset by higher coiled tubing repair and service activity. For the first quarter, we expect energy equipment segment revenue to increase 3% to 5% year-over-year, with EBITDA in the range of $145 million to 165 million. Moving to the energy products and services segment, our energy products and services segment generated revenue of $989 million during the quarter, representing a sequential increase of 2% driven by higher sales of the segment's composite solutions, seasonal bulk sales of downhole products, and stabilizing activity in the US and the Middle East. Compared to the fourth quarter of 2024, segment revenue declined 7% and adjusted EBITDA decreased to $140 million or 14.2% of sales.
Rodney Reed: The year-over-year change was due to lower sales of spare parts and a decrease in rentals resulting from reduced completion activities in North America, partially offset by higher coiled tubing repair and service activity. For the first quarter, we expect energy equipment segment revenue to increase 3% to 5% year-over-year, with EBITDA in the range of $145 million to 165 million. Moving to the energy products and services segment, our energy products and services segment generated revenue of $989 million during the quarter, representing a sequential increase of 2% driven by higher sales of the segment's composite solutions, seasonal bulk sales of downhole products, and stabilizing activity in the US and the Middle East. Compared to the fourth quarter of 2024, segment revenue declined 7% and adjusted EBITDA decreased to $140 million or 14.2% of sales.
Speaker #2: For the first quarter, we expect Energy Equipment segment revenue to increase 3% to 5% year-over-year, with EBITDA in the range of $145 million to $165 million.
Speaker #2: The in the year year over decline was driven by lower drilling activity in US , the to Saudi Arabia and Argentina . Lower volumes increased tariff expense and inflationary other pressures more than offset cost control efforts and efficiency normal 2% , over year in North the segment EBITDA continued to outperform underlying activity solutions .
Speaker #2: Moving to the Energy Products and Services segment, our Energy Products and Services segment generated revenue of $989 million during the quarter, representing a sequential increase of 2%, driven by higher sales of the segment's composite solutions.
Speaker #2: Seasonal bulk sales of downhole products and stabilizing activity in the US and the Middle East. Compared to the fourth quarter of 2024, segment revenue declined 7%, and adjusted EBITDA decreased to $140 million, or 14.2% of sales.
Speaker #2: Market share and increased adoption of new gains contributed modest increase in revenue year over year . Despite 6% decline in a recount strong market Saudi Arabia and .
Speaker #2: The year-over-year decline was driven by lower drilling activity in the US, Saudi Arabia, and Argentina. Lower volumes, increased tariff expense, and other inflationary pressures more than offset cost control efforts and efficiency improvements resulting in larger-than-normal EBITDA decrementals year-over-year.
Jose Bayardo: The year-over-year decline was driven by lower drilling activity in the US, Saudi Arabia, and Argentina. Lower volumes, increased tariff expense, and other inflationary pressures more than offset cost control efforts and efficiency improvements, resulting in larger-than-normal EBITDA decrementals year-over-year. In North America, the segment continued to outperform underlying activity levels. Market share gains and increased adoption of new technologies contributed to modest increase in revenue year-over-year, despite a 6% decline in rig count. Our strong market positions in Saudi Arabia and Argentina hurt our performance in 2025 as drilling activity declined. However, we expect meaningful activity improvements in those markets progressing through 2026. For the fourth quarter, the sales mix within energy products and services was 49% service and rental, 33% capital equipment, and 18% product sales. Revenue from services and rentals declined 7% year-over-year, driven primarily by softer global activity levels.
Rodney Reed: The year-over-year decline was driven by lower drilling activity in the US, Saudi Arabia, and Argentina. Lower volumes, increased tariff expense, and other inflationary pressures more than offset cost control efforts and efficiency improvements, resulting in larger-than-normal EBITDA decrementals year-over-year. In North America, the segment continued to outperform underlying activity levels. Market share gains and increased adoption of new technologies contributed to modest increase in revenue year-over-year, despite a 6% decline in rig count. Our strong market positions in Saudi Arabia and Argentina hurt our performance in 2025 as drilling activity declined. However, we expect meaningful activity improvements in those markets progressing through 2026. For the fourth quarter, the sales mix within energy products and services was 49% service and rental, 33% capital equipment, and 18% product sales. Revenue from services and rentals declined 7% year-over-year, driven primarily by softer global activity levels.
Speaker #2: Argentina hurt our decrementals year performance in 2025 , as drilling activity However , we Our expect declined . improvements in those through 2026 .
Speaker #2: For the fourth within energy products and services was 49% . Service and capital equipment and mix levels 18% product sales from services and rentals declined 7% year over year , driven primarily by softer global activity levels .
Speaker #2: In North America, the segment continued to outperform underlying activity levels. Market share gains and increased adoption of new technologies contributed to modest increase in revenue year-over-year, despite a 6% decline in rig count.
Speaker #2: This decline was partially offset by increased adoption of novel water pipe enabled downhole broadband services . technologies and DBS continued gains several offerings .
Speaker #2: Our strong market positions in Saudi Arabia and Argentina hurt our performance in 2025, as drilling activity declined. However, we expect meaningful activity improvements in those markets progressing through 2026.
Speaker #2: Revenue from across doubled compared to the market share year , DBS by driven increased activity in the North Sea , where services , more than technology is enabling enhanced geosteering and faster complex long lateral wells .
Speaker #2: For the fourth quarter, the sales mix within Energy Products and Services was 49% service and rental, 33% capital equipment, and 18% product sales. Revenue from services and rentals declined 7% year-over-year, driven primarily by softer global activity levels.
Speaker #2: quarter , a North Sea operator highlighted the value of high downhole data and positions in enabling faster and more confident decision making , drilling and crediting the technology with enabling the drilling of a reservoir section achievable likely would not have time data real During the transmission involves drill bit rental business also frequency year strong .
Speaker #2: This decline was partially offset by increased adoption of NOV's wired pipe-enabled downhole broadband services, DBS, and continued market share gains across several offerings. Revenue from NOV's DBS services more than doubled compared to the prior year, driven Sea, where technology is enabling enhanced geo-steering and faster drilling in complex long lateral wells.
Jose Bayardo: This decline was partially offset by increased adoption of NOV's wired pipe-enabled downhole broadband services, DBS, and continued market share gains across several offerings. Revenue from NOV's DBS services more than doubled compared to the prior year, driven by increased activity in the North Sea, where technology is enabling enhanced geosteering and faster drilling in complex long-lateral wells. During the quarter, a North Sea operator highlighted the value of high-frequency downhole data in enabling faster and more confident decision-making, crediting the technology with enabling the drilling of a reservoir section that likely would not have been achievable without real-time data transmission. NOV's drill bit rental business also finished the year strong, capturing additional market share across US land markets and driving a revenue increase of about 20% in the region for the full year, compared to a 6% decline in US rig count.
Rodney Reed: This decline was partially offset by increased adoption of NOV's wired pipe-enabled downhole broadband services, DBS, and continued market share gains across several offerings. Revenue from NOV's DBS services more than doubled compared to the prior year, driven by increased activity in the North Sea, where technology is enabling enhanced geosteering and faster drilling in complex long-lateral wells. During the quarter, a North Sea operator highlighted the value of high-frequency downhole data in enabling faster and more confident decision-making, crediting the technology with enabling the drilling of a reservoir section that likely would not have been achievable without real-time data transmission. NOV's drill bit rental business also finished the year strong, capturing additional market share across US land markets and driving a revenue increase of about 20% in the region for the full year, compared to a 6% decline in US rig count.
Speaker #2: Capturing additional across US land market driving share markets revenue a increase of about 20% in the the full region for year , compared to 6% decline in US rig across the broader count services Software portfolio .
Speaker #2: During the quarter, a North Sea operator highlighted the value of high-frequency downhole data and enabling faster and more confident decision-making, crediting the technology with enabling the drilling of a reservoir section that likely would not have been achievable without real-time data transmission.
Speaker #2: activity in Saudi Arabia , North America and Latin America reduced meaningful demand for rentals of downhole tools , control tubular inspection operations . declines were partially offset by growing advanced into new our markets and higher technologies activity solids UAE equipment low digit levels in the percentage year over single but digit rate capital a year , driven by composite declined in the The increased solutions .
Speaker #2: NOV's drill bit rental business also finished the year strong, capturing additional market share across US land markets and driving a revenue increase of about 20% in the region for the full year, compared to 6% decline in US rig count.
Speaker #2: Across the broader services portfolio, software activity in Saudi Arabia, North America, and Latin America reduced demand for rentals of downhole tools, solids control services, and tubular inspection operations.
Jose Bayardo: Across the broader services portfolio, slow activity in Saudi Arabia, North America, and Latin America reduced demand for rentals of downhole tools, solids control services, and tubular inspection operations. These declines were partially offset by growing adoption of our advanced technologies into new markets and higher activity levels in the UAE. Sales of capital equipment declined in the low single-digit percentage range year-over-year but increased at a high single-digit rate sequentially, driven by a recovery in shipments of composite solutions. The year-over-year decline reflected strong shipments of composite pipe for the Middle East and FPSO vessels in the prior year that did not repeat, partially offset by continued strength and demand for fuel handling tanks and large-diameter composite pipe supporting produced water takeaway capacities in North America.
Rodney Reed: Across the broader services portfolio, slow activity in Saudi Arabia, North America, and Latin America reduced demand for rentals of downhole tools, solids control services, and tubular inspection operations. These declines were partially offset by growing adoption of our advanced technologies into new markets and higher activity levels in the UAE. Sales of capital equipment declined in the low single-digit percentage range year-over-year but increased at a high single-digit rate sequentially, driven by a recovery in shipments of composite solutions. The year-over-year decline reflected strong shipments of composite pipe for the Middle East and FPSO vessels in the prior year that did not repeat, partially offset by continued strength and demand for fuel handling tanks and large-diameter composite pipe supporting produced water takeaway capacities in North America.
Speaker #2: These declines were partially offset by growing adoption of our advanced technologies into new markets and higher activity levels in the UAE. Sales of capital equipment declined in the low single-digit percentage range year-over-year, but increased at a high single-digit rate sequentially, driven by a recovery in shipments of composite solutions.
Speaker #2: strong for markets , fourth quarter multiple end were including fuel handling , orders doubled from 2024 . expect to see While typical we first quarter , demand supported by sequentially , ongoing investments remains infrastructure and of developments offshore .
Speaker #2: The year-over-year decline reflected strong shipments of composite pipe for the Middle East and FPSO vessels in the prior year that did not repeat, partially offset by continued strength in demand for fuel handling tanks and large-diameter composite pipe supporting produced water takeaway capacities in North America.
Speaker #2: Our tubular seasonality products business , which drill pipe and large diameter saw orders conductor for drill , sales of second half Significantly of 2025 .
Speaker #2: outpaced the to a leading high single digit revenue over However , timing of our large conductor pipe led to a year over year decline in revenue for this line , which will a effect for the first quarter of 2026 .
Speaker #2: Our composite business experienced its highest annual revenue in history during 2025, with fourth quarter bookings reaching their highest level in three years, with strong demand from multiple end markets, including fuel handling, where orders doubled from 2024.
Jose Bayardo: Our composite business experienced its highest annual revenue in history during 2025, with Q4 bookings reaching their highest level in three years. With strong demand from multiple end markets, including fuel handling, where orders doubled from 2024. While we expect to see typical Q1 seasonality, demand remains supported by ongoing investments in infrastructure and offshore developments. Our tubular products business, which includes drill pipe and large-diameter conductor pipe, saw orders for drill pipe in the second half of 2025 significantly outpace the first half, leading to a high single-digit revenue increase year over year. However, timing of orders for our large-diameter conductor pipe led to a year-over-year decline in revenue for this product line, which will also have a negative effect for Q1 2026. Revenue from product sales increased modestly sequentially during the quarter but declined in the mid-teens percentage range year over year.
Rodney Reed: Our composite business experienced its highest annual revenue in history during 2025, with Q4 bookings reaching their highest level in three years. With strong demand from multiple end markets, including fuel handling, where orders doubled from 2024. While we expect to see typical Q1 seasonality, demand remains supported by ongoing investments in infrastructure and offshore developments. Our tubular products business, which includes drill pipe and large-diameter conductor pipe, saw orders for drill pipe in the second half of 2025 significantly outpace the first half, leading to a high single-digit revenue increase year over year. However, timing of orders for our large-diameter conductor pipe led to a year-over-year decline in revenue for this product line, which will also have a negative effect for Q1 2026. Revenue from product sales increased modestly sequentially during the quarter but declined in the mid-teens percentage range year over year.
Speaker #2: While we expect to see typical first quarter seasonality, demand remains supported by ongoing investments in infrastructure and offshore developments. Our tubular products business, which includes drill pipe and large-diameter conductor pipe, saw orders for drill pipe in the second half of 2025 significantly outpace the first half, leading to a high single-digit revenue increase year-over-year.
Speaker #2: Revenue from product increased at a high modestly sequentially during the quarter , but in the declined mid-teens year over year . The year over decline lower industry levels , activity typical year particularly impacting end bulk in the Eastern purchasing hemisphere downhole drilling drill bits strong .
Speaker #2: shipments Sequentially , of completion tools to customers East , in the Middle Argentina and by lower offset Europe were fishing tools and shipments of drilling tools to Asia for the first quarter of 2026 , we expect our services products and segment to seasonal experience a decline consistent with years prior , translating into revenue that down is 6 to 8% year over year , with EBITDA That sums up our between 105 million and $125 million .
Speaker #2: However, timing of orders for our large-diameter conductor pipe led to a year-over-year decline in revenue for this product line, which will also have a negative effect for the first quarter of 2026.
Speaker #2: Revenue from product sales increased modestly sequentially during the quarter, but declined in the mid-teens percentage range year-over-year. The year-over-year decline reflected lower industry activity levels, particularly impacting typical year-end bulk purchasing in the Eastern Hemisphere, of our downhole drilling tools and drill bits.
Jose Bayardo: The year-over-year decline reflected lower industry activity levels, particularly impacting typical year-end bulk purchasing in the Eastern Hemisphere of our downhole drilling tools and drill bits. Sequentially, strong shipments of completion tools to customers in the Middle East, Argentina, and Europe were offset by lower shipments of fishing tools and drilling tools to Asia. For Q1 2026, we expect our energy products and services segment to experience a seasonal decline consistent with prior years, translating into revenue that is down 6% to 8% year-over-year with EBITDA between $105 million and $125 million. That sums up our financial results for the quarter and for the full year. If we take a step back, our adjusted EBITDA for 2023 was $1 billion, with 2025 improving about 3% to $1.03 billion, despite significant market headwinds.
Rodney Reed: The year-over-year decline reflected lower industry activity levels, particularly impacting typical year-end bulk purchasing in the Eastern Hemisphere of our downhole drilling tools and drill bits. Sequentially, strong shipments of completion tools to customers in the Middle East, Argentina, and Europe were offset by lower shipments of fishing tools and drilling tools to Asia. For Q1 2026, we expect our energy products and services segment to experience a seasonal decline consistent with prior years, translating into revenue that is down 6% to 8% year-over-year with EBITDA between $105 million and $125 million. That sums up our financial results for the quarter and for the full year. If we take a step back, our adjusted EBITDA for 2023 was $1 billion, with 2025 improving about 3% to $1.03 billion, despite significant market headwinds.
Speaker #2: the quarter and for the financial full year . we take a If step back , our EBITDA for 2023 was $1 billion , with about 3% to $1.3 billion , despite headwinds over improving that time , market North Saudi declined 15% .
Speaker #2: Sequentially, strong shipments of completion tools to customers in the Middle East, Argentina, and Europe were offset by lower shipments of fishing tools and drilling tools to Asia.
Speaker #2: For the first quarter of 2026, we expect our energy products and services segment to experience a seasonal decline consistent with prior years, translating into revenue that is down 6% to 8% year-over-year, with EBITDA between $105 million and $125 million.
Speaker #2: Arabia America significant and the offshore declined 4% . Additionally , trade over policies resulted over expense of $50 million in 2025 . Nov , in tariff generated $1.8 billion in free cash flow changes in period , demonstrating the during that two year and resilience of portfolio .
Speaker #2: That sums up our financial results for the quarter and for the full year. If we take a step back, our adjusted EBITDA for 2023 was $1 billion, with 2025 improving about 3% to $1.03 billion, despite significant market headwinds.
Speaker #2: With our to Jose rig count diversity .
Speaker #1: Thanks , Rodney we go forward , Nov is in a strong
Speaker #1: position . The near As environment may
Speaker #1: position . The near As environment may
Speaker #2: Over that time, North America rig count declined 15%, Saudi Arabia rig count declined over 10%, and the offshore floater count declined 4%. Additionally, changes in trade policies resulted in tariff expense of over $50 million in 2025.
Jose Bayardo: Over that time, North America rig count declined 15%, Saudi Arabia rig count declined over 10%, and the offshore floater count declined 4%. Additionally, changes in trade policies resulted in tariff expense of over $50 million in 2025. Nevertheless, NOV generated $1.8 billion in free cash flow during that two-year period, demonstrating the diversity and resilience of our portfolio. With that, I'll turn the call back over to Jose. Thanks, Rodney. As we go forward, NOV is in a very strong position. The near-term market environment may become more difficult, but we will further improve our operational efficiencies. We also intend to lean harder into growth opportunities that will generate value for our shareholders and that will be supported by a much more favorable market setup that we expect to emerge later in the year.
Rodney Reed: Over that time, North America rig count declined 15%, Saudi Arabia rig count declined over 10%, and the offshore floater count declined 4%. Additionally, changes in trade policies resulted in tariff expense of over $50 million in 2025. Nevertheless, NOV generated $1.8 billion in free cash flow during that two-year period, demonstrating the diversity and resilience of our portfolio. With that, I'll turn the call back over to Jose.
Speaker #1: difficult , but we will further operational back over efficiencies . also We lean intend to
Speaker #1: growth opportunities that generate value for our that , I'll improve our very 10% , and that will supported much more market setup that we expect to emerge later in the will year .
Speaker #2: Nevertheless, NOV generated $1.8 billion in free cash flow during that two-year period, demonstrating the diversity and resilience of our portfolio. With that, I'll turn the call back over to Jose.
Speaker #1: I'd be by saying market thank employees for favorable delivering shareholders , another solid year and for the have to our customers and to our fellow employees .
Speaker #1: like to end appreciate your focus on you to all making Nov better day every . Our outlook our is bright everything that thanks to you do .
Speaker #2: Thanks, Rodney. As we go forward, NOV is in a very strong position. The near-term market environment may become more difficult, but we will further improve our operational efficiencies.
Jose Bayardo: Thanks, Rodney. As we go forward, NOV is in a very strong position. The near-term market environment may become more difficult, but we will further improve our operational efficiencies. We also intend to lean harder into growth opportunities that will generate value for our shareholders and that will be supported by a much more favorable market setup that we expect to emerge later in the year.
Speaker #1: With that , we'll open the call to questions dedication you .
Speaker #3: you . Ladies and Thank question ask a gentlemen , to time , you At this one on your press one telephone and wait name to be for your .
Speaker #2: We also intend to lean harder into growth opportunities that will generate value for our shareholders and that will be supported by a much more favorable market setup that we expect to emerge later in the year.
Speaker #3: question , simply To withdraw your one again . please limit announced yourself to reminder , one press per question and one follow up stand .
Speaker #2: I'd like to end by saying thank you to all our employees for delivering another solid year and for the dedication you have to our customers and to our fellow employees.
Jose Bayardo: I'd like to end by saying thank you to all our employees for delivering another solid year and for the dedication you have to our customers and to our fellow employees. I appreciate your focus on making NOV better every day. Our outlook is bright thanks to everything that you do. With that, we'll open the call to questions.
Jose Bayardo: I'd like to end by saying thank you to all our employees for delivering another solid year and for the dedication you have to our customers and to our fellow employees. I appreciate your focus on making NOV better every day. Our outlook is bright thanks to everything that you do. With that, we'll open the call to questions.
Speaker #3: by for our first question Please . Now , first question will come from the line of Jim Rollyson Raymond James . Line is now .
Speaker #2: focus on making NOV better every I appreciate your day. Our outlook is bright thanks to everything that you do. With that, we'll open the call to questions.
Speaker #2: focus on making NOV better every I appreciate your day. Our outlook is bright thanks to everything that you do. With that, we'll open the call to questions.
Speaker #4: Good morning and thanks for the with detail that you guys always . Jose provide all on offshore rig expected morning ramp late this year going kind of into 27 .
Speaker #4: everyone ,
Speaker #3: Thank you. Please, and gentlemen, to ask a question at this time, you will need to press star 11 on your telephone and wait for your name to be simply press star 11 announced.
Operator: Thank you. Ladies and gentlemen, to ask a question at this time, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, simply press star 11 again. As a reminder, please limit yourself to one question and one follow-up per person. Please stand by for our first question. Now, first question will come from the line of Jim Rollyson with Raymond James. The line is now open.
Operator: Thank you. Ladies and gentlemen, to ask a question at this time, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, simply press star 11 again. As a reminder, please limit yourself to one question and one follow-up per person. Please stand by for our first question. Now, first question will come from the line of Jim Rollyson with Raymond James. The line is now open.
Speaker #4: have interesting job of kind of You guys laying done an out maybe FSO for you , which is a the pretty wide You know , from a range .
Speaker #3: Again, as a reminder, please limit yourself to one question and one follow-up per person. Please stand by for our first question. To withdraw your question, press *1.
Speaker #4: you could just kind opportunity set us order of Maybe if magnitude , how thinking about order you're set opportunity for , spares and all upgrades the different the of give components that you're in discussions with on folks as up , to ramp back they hopefully , you know into couple of years
Speaker #3: Now, our first question will come from the line of Jim Wilson with Raymond James. The line is now open.
Speaker #4: Hey, good morning, everyone, and thanks for all the detail that you guys always provide.
Jim Rollyson: Hey, good morning, everyone, and thanks for all the detail that you guys always provide. Jose.
Jim Rollyson: Hey, good morning, everyone, and thanks for all the detail that you guys always provide. Jose.
Speaker #4: Jose: Morning, Jim. Maybe morning, maybe on the offshore rig. Kind of expected ramp late this year going into '27. You guys have done an interesting job of kind of laying out the FPSO opportunity set for you, which is a pretty wide range from a revenue standpoint.
Jose Bayardo: Morning, Jim.
Jose Bayardo: Morning, Jim.
Jim Rollyson: Maybe on the offshore rig kind of expected ramp late this year going into 2027, you guys have done an interesting job of kind of laying out the FPSO opportunity set for you, which is a pretty wide range from a revenue standpoint. Maybe if you could just kind of give us order of magnitude how you're thinking about the order opportunity set for spares, upgrades, and all the different components that you're in discussions with on folks as they look to ramp back up, hopefully, into the next couple of years.
Jim Rollyson: Maybe on the offshore rig kind of expected ramp late this year going into 2027, you guys have done an interesting job of kind of laying out the FPSO opportunity set for you, which is a pretty wide range from a revenue standpoint. Maybe if you could just kind of give us order of magnitude how you're thinking about the order opportunity set for spares, upgrades, and all the different components that you're in discussions with on folks as they look to ramp back up, hopefully, into the next couple of years.
Speaker #5: question , thanks for So , you can tell , we're pretty yeah , as optimistic about
Speaker #5: question , thanks for So , you can tell , we're pretty yeah , as optimistic about Yeah . the lay the . land in terms of what we expect
Speaker #5: happen in the offshore space , both from an production Thanks for equipment standpoint as well the next as in the environment . And so , you know , the last few drilling Rodney laid really as we've out , tremendous offshore production equipment .
Speaker #4: Maybe if you could just kind of give us order of magnitude how you're thinking about the order opportunity set for spares and upgrades and all the different components that you're in discussions with on folks as they look to ramp back up, hopefully, into the next couple of
Speaker #5: we have And really business well years positioned the to capitalize increase in that of the . Set mentioned And you know , it was just a demand huge year in deliveries seen a FPSo in opportunity .
Speaker #4: years. Yeah,
Jose Bayardo: Yeah, thanks for the question, Jim. So yeah, as you can tell, we're pretty optimistic about the lay of the land in terms of what we expect to happen in the offshore space, both from an offshore production equipment standpoint as well as in the drilling environment. And so the last few years, as Rodney really laid out, we've seen a tremendous increase in terms of demand for offshore production-related equipment, and we had really positioned the business well to capitalize on that opportunity set. And as I mentioned, it was just a huge year in terms of FPSO deliveries in 2025, really a wave that kind of came about from FIDs that are around the time of the pandemic. Some of those were pushed out later than anticipated because of all the dysfunction that occurred in the marketplace during the pandemic era, and they're finally coming online.
Jose Bayardo: Yeah, thanks for the question, Jim. So yeah, as you can tell, we're pretty optimistic about the lay of the land in terms of what we expect to happen in the offshore space, both from an offshore production equipment standpoint as well as in the drilling environment. And so the last few years, as Rodney really laid out, we've seen a tremendous increase in terms of demand for offshore production-related equipment, and we had really positioned the business well to capitalize on that opportunity set. And as I mentioned, it was just a huge year in terms of FPSO deliveries in 2025, really a wave that kind of came about from FIDs that are around the time of the pandemic. Some of those were pushed out later than anticipated because of all the dysfunction that occurred in the marketplace during the pandemic era, and they're finally coming online.
Speaker #5: thanks for the question, Jim. So yeah, as you can tell, we're pretty optimistic about the lay of the land in terms of what we expect to happen.
Speaker #5: terms of that kind of a wave , you know , that are around from time of the pandemic as I . Some of those were pushed came about on anticipated because of all the dysfunction that the marketplace during occurred in the the they're finally coming and recall pandemic that part of the a big driver for the reason drilling market reason because the yet in white those rigs back to work .
Speaker #5: In the offshore space, both from an offshore production equipment standpoint as well as in the drilling environment. And so the last few years, as Rodney really laid out, we've seen a tremendous increase in terms of demand for offshore production related equipment, and we had really positioned the business well to capitalize on that opportunity set.
Speaker #5: And as I mentioned, it was just a huge year in terms of FPSO deliveries in 2025, really a wave that kind of came out from FIDs that are around the time of the pandemic.
Speaker #5: was we've been equipment while now that , hey , do you really going to think the world build all this production not drill a equipment and bunch of space and the feed wells to into those a offshore assets ?
Speaker #5: And that's what we expect happen . to Those a lot of those vessels just recently set sail and connecting we're . And starting also now see to , really are significant impact or improvement rig tendering .
Speaker #5: Some of those were pushed out later than anticipated because of all the dysfunction that occurred in the marketplace during the pandemic era. And they're finally coming online, and recall that part of the reason or really a big driver for the reason of the white space in the offshore drilling market was because the production equipment wasn't yet in place to put those rigs back to work.
Jose Bayardo: And recall that part of the reason, or really a big driver for the reason, of the white space in the offshore drilling market was because the production equipment wasn't yet in place to put those rigs back to work. And so we've been saying for a while now that, "Hey, do you really think the world's going to build all this production equipment and not drill a bunch of wells to feed into those assets?" And that's what we continue to expect to happen. A lot of those vessels just recently set sail and are connecting. And we're also now starting to see, unsurprisingly, really significant impact or improvement in terms of offshore rig tendering. And we provided those stats with comparable period contracts increasing from 33 contracts a year ago to 59 over the most recent period.
Jose Bayardo: And recall that part of the reason, or really a big driver for the reason, of the white space in the offshore drilling market was because the production equipment wasn't yet in place to put those rigs back to work. And so we've been saying for a while now that, "Hey, do you really think the world's going to build all this production equipment and not drill a bunch of wells to feed into those assets?" And that's what we continue to expect to happen. A lot of those vessels just recently set sail and are connecting. And we're also now starting to see, unsurprisingly, really significant impact or improvement in terms of offshore rig tendering. And we provided those stats with comparable period contracts increasing from 33 contracts a year ago to 59 over the most recent period.
Speaker #5: provided continue to And those offshore , you stats know , comparable with in terms of contracts period we increasing 33 contracts a year ago from to 59 over the most period .
Speaker #5: And so we've been saying for a while now that, hey, do you really think the world is going to build all this production equipment and not drill a bunch of wells to feed into those assets?
Speaker #5: recent really importantly , the duration average contracts that are being of these tendered is And significantly they were longer than before that , hey , we're , indicating moving from an era here where rig contracts have recently short term been nature very basically well or projects .
Speaker #5: And that's what we continue to expect to happen. A lot of those vessels just recently set sail, and are connecting, and we're also now starting to see unsurprisingly really significant impact or improvement in terms of offshore rig tendering.
Speaker #5: for we're shifting true road double well development And now these a single to from or opportunities And we projects . good about offshore feel really field facets of offshore our Still continue to mentioned .
Speaker #5: And we provided those stats with comparable period contracts increasing from 33 contracts a year ago to 59 over the most recent period, and really importantly, the average duration of these contracts that are being tendered is significantly longer than they were before indicating that, hey, we're moving from an where rig contracts era here recently have basically been very short-term in nature for single well or double well projects, and now we're shifting to crew development road from a mode from some of these offshore opportunities.
Jose Bayardo: Really importantly, the average duration of these contracts that are being tendered is significantly longer than they were before, indicating that, "Hey, we're moving from an era here recently where rig contracts have basically been very short-term in nature for single well or double well projects, and now we're shifting to true development mode from some of these offshore opportunities or field development projects." So we feel really good about all facets of our offshore business. As we mentioned, we still continue to see a lot of demand for offshore production-related equipment with potentially 10 FIDs this year and averaging 8 or so going forward for the next several years. Additionally, we see a little bit of a different mix in terms of the types of vessels that will be needed.
Jose Bayardo: Really importantly, the average duration of these contracts that are being tendered is significantly longer than they were before, indicating that, "Hey, we're moving from an era here recently where rig contracts have basically been very short-term in nature for single well or double well projects, and now we're shifting to true development mode from some of these offshore opportunities or field development projects." So we feel really good about all facets of our offshore business. As we mentioned, we still continue to see a lot of demand for offshore production-related equipment with potentially 10 FIDs this year and averaging 8 or so going forward for the next several years. Additionally, we see a little bit of a different mix in terms of the types of vessels that will be needed.
Speaker #5: a all lot of production demand for see equipment this year . with potentially averaging eight or so related several And . Additionally , we see a little bit offshore ten FIDs mix in forward for of of a types the next different years needed and those that will of plays .
Speaker #5: into We think that vessels be strength having condensate be which is with terms of the shine , as be more of higher vessels that will harsh environments which content , create for opportunities our those about mix kind that our here is about year with system .
Speaker #5: Or field development projects. And so, we feel really good about all facets of our offshore business. As we mentioned, it still continues to see a lot of demand for offshore production-related equipment, with potentially 10 FIDs this year and averaging 8 or so going forward for the next several years.
Speaker #5: the white that will So excited rig aftermarket on our is down mentioned , was year mid-teens year . And Jim , as you really good business .
Speaker #5: Additionally, we see a little bit of a different mix in terms of the types of vessels that will be needed, and that mix kind of plays, we think, into our strength with having higher gas and condensate content, which is where we really shine, as well as more of those vessels that will be operating in harsh environments, which create larger opportunities for our quick disconnect for mooring systems.
Speaker #5: lot of
Jose Bayardo: And that mix kind of plays, we think, into our strength with having higher gas and condensate content, which is where we really shine, as well as more of those vessels that will be operating in harsh environments, which create larger opportunities for our quick disconnect turret mooring system. So excited about that. But here, as we've talked about over the last year with the white space, there's been a lot of pressure on our rig aftermarket business, which, as Rodney mentioned, was down mid-teens percent year-over-year. And Jim, as you know, that's a really good business, where we really have a really good position as the original OEM of a lot of this equipment that's out there. And so we're going to benefit from just a higher pace of activity offshore that's going to command a higher level of aftermarket parts.
Jose Bayardo: And that mix kind of plays, we think, into our strength with having higher gas and condensate content, which is where we really shine, as well as more of those vessels that will be operating in harsh environments, which create larger opportunities for our quick disconnect turret mooring system. So excited about that. But here, as we've talked about over the last year with the white space, there's been a lot of pressure on our rig aftermarket business, which, as Rodney mentioned, was down mid-teens percent year-over-year. And Jim, as you know, that's a really good business, where we really have a really good position as the original OEM of a lot of this equipment that's out there. And so we're going to benefit from just a higher pace of activity offshore that's going to command a higher level of aftermarket parts.
Speaker #5: know , Where we're the really good we really of a lot of this position out original percent have a . And so we're as the where we from going to pace of offshore .
Speaker #5: that's imagine , it is a
Speaker #5: That's activity a higher level of command higher as these benefit rigs back to where service and repair also work work that be aftermarket , there's OEM done .
Speaker #5: So excited about that. But here as we've talked about over the last year with the white space, that's been a lot of pressure on our rig aftermarket business, which, as Rodney mentioned, was down mid-teens percent year over year and Jim as you know, that's a really good business worthy where we really have a really good position as the original OEM of a lot of this equipment that's out there.
Speaker #5: , but recertifications parts all that
Speaker #5: there's etc. . And so like the needs to There's really .
Speaker #4: Appreciate
Speaker #4: Appreciate
Speaker #4: just one quick
Speaker #4: Rodney That's been a up about impact . And you And couple of quarters or so .
Speaker #5: And so we're going to benefit from just a higher pace of activity offshore that's going to command a higher level of aftermarket parts but also as these rigs go back to work, there's service and repair work that needs to be done, there's recertifications, there's upgrades, etc.
Speaker #4: . And I seem to recall started
Speaker #4: ago , maybe a
Speaker #4: , certain
Jose Bayardo: But also, as these rigs go back to work, there's service and repair work that needs to be done. There's recertifications. There's upgrades, etc. And so we feel like the outlook here is really bright.
Jose Bayardo: But also, as these rigs go back to work, there's service and repair work that needs to be done. There's recertifications. There's upgrades, etc. And so we feel like the outlook here is really bright.
Speaker #4: was conferences ago kind of talked that . longer program to help color . term , I think But that pass some of this calls Rodney higher hope pricing .
Speaker #5: And so we feel like the outlook here is really bright.
Speaker #4: And I'm curious , like through the of of maybe the cost the still soft enough that you status market you need you need change that to .
Speaker #4: Appreciate all that color and then just one quick follow-up. Rodney talked about the tariff impact and you guys have talked about this over the last couple of quarters or so really since it all started.
Jim Rollyson: Appreciate all that color. Then just one quick follow-up. Rodney talked about the tariff impact, and you guys have talked about this over the last couple of quarters or so, really, since it all started. I seem to recall maybe a couple of quarter conferences ago, conference calls ago, that one of the plans was the $100 million cost-out program to help kind of offset that. But longer term, I think the hope was you pass some of this tariff cost through higher pricing. I'm just curious where we are in the status of maybe that actually happening. Is the market still soft enough that you can't quite get there, and you need that to change, or maybe where we are in that process?
Jim Rollyson: Appreciate all that color. Then just one quick follow-up. Rodney talked about the tariff impact, and you guys have talked about this over the last couple of quarters or so, really, since it all started. I seem to recall maybe a couple of quarter conferences ago, conference calls ago, that one of the plans was the $100 million cost-out program to help kind of offset that. But longer term, I think the hope was you pass some of this tariff cost through higher pricing. I'm just curious where we are in the status of maybe that actually happening. Is the market still soft enough that you can't quite get there, and you need that to change, or maybe where we are in that process?
Speaker #4: quite get
Speaker #4: Or maybe where we process are in
Speaker #4: Or maybe where we process are in
Speaker #5: certainly having Jim
Speaker #4: And I seem to recall maybe a couple of quarter conferences ago conference calls ago that one of the plans was the $100 million cost out program to help kind of offset that.
Speaker #5: those
Speaker #5: costs
Speaker #5: market environment where we as you can to are in that pass along those difficult You know , some costs . Right . we've steady this over the decline we've been industry seen a activity over the couple of years at a last during a time time period when , you in only are we seeing from heightened tariffs from
Speaker #4: But longer-term, I think the hope was you pass some of this tariff cost through higher pricing. And I'm just curious where we are in the status of maybe that actually happening.
Speaker #4: Is the market still soft enough that you can't quite get there and you need that to change or maybe where we are in that process?
Speaker #4: Is the market still soft enough that you can't quite get there and you need that to change or maybe where we are in that process?
Speaker #5: costs also in , know , not inflationary hitting , but And so other in in number of areas
Speaker #5: Yeah, Jim, we're certainly having some success costs. But as you can imagine, it is a difficult market environment to pass along those passing on those costs, right?
Jose Bayardo: Yeah, Jim, we're certainly having some success passing on those costs. But as you can imagine, it is a difficult market environment to pass along those costs, right? We've seen a steady decline in industry activity over the last couple of years at a time during a time period when not only are we seeing heightened costs from tariffs, but also inflationary costs hitting in other areas. And so while, in general, the number of areas that are experiencing large increases related to inflation, the number of areas has decreased a little bit, we're still seeing certain areas where there are really significant increases. Rodney highlighted the tungsten carbide. That's going to be a bit of a shock to the system, really important in the manufacturing of matrix body bits as well as for hard-facing steel body bits.
Jose Bayardo: Yeah, Jim, we're certainly having some success passing on those costs. But as you can imagine, it is a difficult market environment to pass along those costs, right? We've seen a steady decline in industry activity over the last couple of years at a time during a time period when not only are we seeing heightened costs from tariffs, but also inflationary costs hitting in other areas. And so while, in general, the number of areas that are experiencing large increases related to inflation, the number of areas has decreased a little bit, we're still seeing certain areas where there are really significant increases. Rodney highlighted the tungsten carbide. That's going to be a bit of a shock to the system, really important in the manufacturing of matrix body bits as well as for hard-facing steel body bits.
Speaker #5: related know , the that are the
Speaker #5: decreased guys have a little
Speaker #5: bit . You know , We're really of a
Speaker #5: seeing there are still really increases . highlighted You tungsten carbide couple increases the conference
Speaker #5: We've seen a steady decline in industry activity over the last couple of years, at a time when not only are we seeing heightened costs from tariffs, but also inflationary costs hitting in other areas.
Speaker #5: in the shock to the matrix body significant know , Rodney facing steel body bits bits know , we've
Speaker #5: gone up percent important and a
Speaker #5: And so, while in general the number of areas that are experiencing large increases related to inflation has decreased a little bit, we're still seeing certain areas where there are really significant increases.
Speaker #5: period due to all the couple talked about in a supply manufacturing constraints there of coming out And you as for
Speaker #5: period due to all the couple talked about in a supply manufacturing constraints there of coming out And you as for areas where of out of China .
Speaker #5: just really And that's $100 million cost out offset Also
Speaker #5: with hard
Speaker #5: not to
Speaker #5: pressure since volatile . since it , you hundred just quarters and been a real , costs tariff a fact of life . on and
Speaker #5: pressure since volatile . since it , you hundred just quarters and been a real , costs tariff a fact of life . on and business our , sometimes one month time and we're managing through volatile it challenge .
Speaker #5: pressure since volatile . since it , you hundred just quarters and been a real , costs tariff a fact of life . on and business our , sometimes one month time and we're managing through volatile it
Speaker #5: Rodney highlighted the tungsten carbide—that's going to be a bit of a shock to the system. Really important in the manufacturing of matrix body bits as well as for hard-facing steel body bits.
Speaker #5: in in technologies that we mentioned We than our continue to would organization fully . that We've over the improve efficiencies few happen quarters costs .
Speaker #5: some good these things underway others . And labor And we're But look , we get appropriate making sure that bring to paid in actually
Speaker #5: And we've gone up a couple of hundred percent in a one-month time period due to all the supply constraints that are coming out of China, and that's just really volatile.
Jose Bayardo: We've gone up a couple hundred percent in a one-month time period due to all the supply constraints. They're coming out of China, and that's just really volatile. Also, costs associated with electronics and memory, and then, not to mention, continued pressure on labor and medical has been a real challenge. But look, this is just a fact of life. In our business, sometimes these things are more volatile than others, and we're managing through it. We've got some good efforts underway in terms of making sure that we get paid an appropriate value for the technologies that we bring to bear for our customers. Also have good efforts underway to continue to improve the efficiencies across the organization and offset some of those costs.
Jose Bayardo: We've gone up a couple hundred percent in a one-month time period due to all the supply constraints. They're coming out of China, and that's just really volatile. Also, costs associated with electronics and memory, and then, not to mention, continued pressure on labor and medical has been a real challenge. But look, this is just a fact of life. In our business, sometimes these things are more volatile than others, and we're managing through it. We've got some good efforts underway in terms of making sure that we get paid an appropriate value for the technologies that we bring to bear for our customers. Also have good efforts underway to continue to improve the efficiencies across the organization and offset some of those costs.
Speaker #5: in bear for can't offset across terms those And , you underway some of when we talked and have about value good making progress the on the .
Speaker #5: Also, costs associated with electronics and memory, and then not to mention continued pressure on labor and medical, have been a real challenge. But look, this is just a fact of life.
Speaker #5: And in our business, sometimes these things are more volatile than others, and we're managing through it. We've got some good efforts underway in terms of making sure that we get paid an appropriate value for the technologies that we bring to bear for our customers.
Speaker #5: expected to of expense that for the So initially talked you haven't customers really really good been able to efforts outside in to seeing , etc.
Speaker #5: PNL , doing not internally in some of KPIs related the experiencing looking from . And earlier on the but we're see it offset we progress the through what we .
Speaker #5: Also have good efforts underway to continue to improve the efficiencies across the organization and offset some of those costs. And as when we talked or initially talked about that cost out program, which we're making really good progress on, we mentioned that it would not fully offset what we expected to happen over the next few quarters related to inflation, tariff expense, etc.
Speaker #5: that I second half of the referenced
Speaker #5: that I second half of the referenced
Jose Bayardo: And when we initially talked about that cost-out program, which we're making really good progress on, we mentioned that it would not fully offset what we expected to happen over the next few quarters related to inflation, tariff expense, etc. So you haven't really been able to see it just looking from the outside in on the P&L, but we're certainly seeing the benefits of what we're doing internally in some of the KPIs that I referenced earlier. And then as we progress through 2026, when tariffs will stabilize, assuming no other changes to the regime, and a larger amount of those cost savings come through, I think you'll really start to see more of that in the second half of the year.
Jose Bayardo: And when we initially talked about that cost-out program, which we're making really good progress on, we mentioned that it would not fully offset what we expected to happen over the next few quarters related to inflation, tariff expense, etc. So you haven't really been able to see it just looking from the outside in on the P&L, but we're certainly seeing the benefits of what we're doing internally in some of the KPIs that I referenced earlier. And then as we progress through 2026, when tariffs will stabilize, assuming no other changes to the regime, and a larger amount of those cost savings come through, I think you'll really start to see more of that in the second half of the year.
Speaker #5: tariffs stabilize , the to program , which we're will inflation , to regime the larger amount and savings cost I think you'll really start to in the year
Speaker #5: .
Speaker #4: Got it . come through ,
Speaker #4: .
Speaker #5: So, you haven't really been able to see it just looking from the outside in on the P&L, but we're certainly seeing the benefits of what we're doing internally in some of the KPIs that I referenced earlier.
Speaker #3: question
Speaker #3: question you . Our that . with open
Speaker #3: Marc Bianchi
Speaker #3: securities . 2026 ,
Speaker #3: securities . 2026 ,
Speaker #6: Great .
Speaker #6: Thanks , Jose .
Speaker #6: Thanks , Jose . You
Speaker #5: And then as we progress through 2026, when tariffs will stabilize, assuming no other changes to the regime, and a larger amount of those cost savings come through, I think we would really start to see more of that in the second half of the year.
Speaker #6: about
Speaker #6: I when next inflation , tariff
Speaker #6: company sort of a other respond to new world sounded to is better stuff that you pursue the maybe in a last position to given place over the that that takeaway .
Speaker #6: the and guys have about it put in several me
Speaker #4: Got it. Look forward to that. Thanks.
Jim Rollyson: Got it. Look forward to that. Thanks.
Jim Rollyson: Got it. Look forward to that. Thanks.
Speaker #1: Thank you. Our next question comes from the lineup. Mark Bianchi with TD Securities. If you'll let us, we'll now open.
Operator: Thank you. Our next question comes from the line of Mark Bianchi with TD Securities. Your line is now open.
Operator: Thank you. Our next question comes from the line of Mark Bianchi with TD Securities. Your line is now open.
Speaker #6: And M&A going just forward . intended should how I maybe , maybe frame investors should intentions around
Speaker #6: Great, thanks. Jose, you have some comments in your prepared remarks about M&A, and it sounded to me like the company, given the stuff that you guys have put in place over the last several years to sort of respond to the new world, is maybe in a better position to pursue M&A going forward.
Marc Bianchi: Great. Thanks. Jose, you had some comments in your prepared remarks about M&A. And it sounded to me like the company, given the stuff that you guys have put in place over the last several years to sort of respond to the new world, is maybe in a better position to pursue M&A going forward. And I don't know, maybe that wasn't the intended takeaway, but just maybe frame for us how investors should be thinking about your intentions around M&A now.
Marc Bianchi: Great. Thanks. Jose, you had some comments in your prepared remarks about M&A. And it sounded to me like the company, given the stuff that you guys have put in place over the last several years to sort of respond to the new world, is maybe in a better position to pursue M&A going forward. And I don't know, maybe that wasn't the intended takeaway, but just maybe frame for us how investors should be thinking about your intentions around M&A now.
Speaker #5: Yeah , Now the driving But preparing
Speaker #5: thanks for . Just
Speaker #5: thanks for . Just
Speaker #5: the on the general little be ,
Speaker #5: the on the general little be , mark .
Speaker #5: let me clarify a
Speaker #5: let me
Speaker #5: . ready to You to get wasn't the ourselves mindset for us been a maybe think more of , internal having played
Speaker #5: know , our up on picked you message . has But .
Speaker #5: little bit
Speaker #6: Intended takeaway, but just—and I don't know, maybe that wasn't the—maybe frame for us how we should be, how investors should be thinking about your intentions around M&A.
Speaker #5: Yeah. Thanks for the question,
Jose Bayardo: Yeah, thanks for the question, Mark. I think you picked up on the general message, but let me clarify a little bit. Yeah, certainly, our focus has been a little bit more internal recently, really focused on cost-outs, driving internal efficiencies, and really preparing to get ourselves ready to really capitalize on growth opportunities. It's really a mindset shift to a large degree in terms of having played defense in a very challenging market to really moving into the role of playing offense and having really incredibly efficient processes, whether it's manufacturing, whether it's supply chain, whether it's back-office processes, certainly helps in terms of being able to justify and validate M&A-type transactions. We're very confident.
Jose Bayardo: Yeah, thanks for the question, Mark. I think you picked up on the general message, but let me clarify a little bit. Yeah, certainly, our focus has been a little bit more internal recently, really focused on cost-outs, driving internal efficiencies, and really preparing to get ourselves ready to really capitalize on growth opportunities. It's really a mindset shift to a large degree in terms of having played defense in a very challenging market to really moving into the role of playing offense and having really incredibly efficient processes, whether it's manufacturing, whether it's supply chain, whether it's back-office processes, certainly helps in terms of being able to justify and validate M&A-type transactions. We're very confident.
Speaker #5: very next soon market that very excited presents see growth that have evolving invest in has our years , growth capital that are And couple , and that additional of It's commercialized us we're really huge amounts need for because capital and those it's excited organic , but with the not future and it's we see , avenues lean into those outlook manufacturing we look those is the opportunities and the areas over the opportunities .
Speaker #5: Mark, and I think now you picked up on the general message, but let me clarify a little bit. Yeah, certainly our focus has been a little bit more internal recently, really focused on cost outs and driving internal efficiencies.
Speaker #5: to competencies growth shift And our core leveraging our accelerate their those know , marketing supply chain or efficient those around integrate these acquisitions manufacturing and confident .
Speaker #5: And really preparing to get ourselves ready to really capitalize on growth opportunities. And so it's really a large degree, in terms of a mindset shift, to having played defense in a really challenging market, moving into the role of playing offense.
Speaker #5: that we get when do acquisitions one of the benefits is being able buy transactions to a within are our large core in terms moving areas to make and businesses better .
Speaker #5: expertise or global better we part were trying to get other really But the of the world , through more at that we while we little bit will lean is aggressive , we're M&A a resources and try to incredibly We're still be be a little value .
Speaker #5: And having really incredibly efficient processes, whether it's manufacturing, whether it's supply chain, whether it's back office processes, certainly helps in terms of being able to justify and validate M&A type transactions.
Speaker #5: Very confident. Look, one of the benefits that we get when we do acquisitions is being able to buy businesses that are within our core expertise areas, leveraging our core competencies to make those businesses better and accelerate their growth through leveraging our manufacturing base or global supply chain, or marketing resources around the world, etc.
Jose Bayardo: And look, one of the benefits that we get when we do acquisitions is being able to buy businesses that are within our core expertise areas, leveraging our core competencies to make those businesses better and accelerate their growth through leveraging our manufacturing base or global supply chain or marketing resources around the world, etc. And so the more efficient those are, the better we can integrate these acquisitions and drive more value. But the other part of what we were really trying to get at is that while we will lean into M&A a little bit more and try to be a little bit more aggressive, we're still going to be incredibly disciplined. We're still going to be focused on making sure that that's the best use of our capital, certainly in comparison to buying back our own shares and things of that nature.
Jose Bayardo: And look, one of the benefits that we get when we do acquisitions is being able to buy businesses that are within our core expertise areas, leveraging our core competencies to make those businesses better and accelerate their growth through leveraging our manufacturing base or global supply chain or marketing resources around the world, etc. And so the more efficient those are, the better we can integrate these acquisitions and drive more value. But the other part of what we were really trying to get at is that while we will lean into M&A a little bit more and try to be a little bit more aggressive, we're still going to be incredibly disciplined. We're still going to be focused on making sure that that's the best use of our capital, certainly in comparison to buying back our own shares and things of that nature.
Speaker #5: And so the more efficient those are, the better we can integrate these acquisitions and drive more value. But the other part of what we were really trying to get at is that while we will lean into M&A a little bit more and try to be a little bit more aggressive, we're still going to be incredibly disciplined.
Speaker #5: We're still going to be focused on making sure that that's the best use of our capital, certainly in comparison to buying back our own shares and things of that nature.
Speaker #5: So we will continue to be very, very disciplined. And what we're really excited about is the organic growth opportunity that is in front of us.
Jose Bayardo: So we will continue to be very, very disciplined. What we're really excited about is the organic growth opportunity that is in front of us. Our businesses have developed some fantastic technologies that have recently been commercialized or that are soon to be commercialized. That, combined with the market outlook that we see evolving over the next couple of years, has us extremely excited and presents additional growth avenues and areas where we can invest our capital to lean into those growth opportunities.
Jose Bayardo: So we will continue to be very, very disciplined. What we're really excited about is the organic growth opportunity that is in front of us. Our businesses have developed some fantastic technologies that have recently been commercialized or that are soon to be commercialized. That, combined with the market outlook that we see evolving over the next couple of years, has us extremely excited and presents additional growth avenues and areas where we can invest our capital to lean into those growth opportunities.
Speaker #5: in other getting at .
Speaker #5: Our businesses have developed some fantastic technologies that have recently been commercialized, or that are soon to be commercialized. And that, combined with the market outlook that we see evolving over the next couple of years, has us extremely excited.
Speaker #5: not talking
Speaker #5: seeing opportunities in this doing , and into the area and we and need to from about a where equipment standpoint to be able to hey , we can There are we're going to our for build these areas out .
Speaker #5: really rapid
Speaker #5: to build we need
Speaker #5: to build we need
Speaker #5: out more what we're
Speaker #5: And presents additional growth avenues in areas where we can invest our capital to lean into those growth opportunities. And look, those the need for capital in those opportunities is not we're not talking about huge amounts because it's organic, but there are opportunities where we look into the future and we see, "Hey, we're going to be manufacturing constrained in this area, and we need to build these really rapid adoption of what we're doing, and we areas out." There are other need to build out more capacity from a rental equipment for our customers.
Speaker #5: that's
Speaker #5: that's clarity in terms
Speaker #5: that's
Jose Bayardo: And look, the need for capital in those opportunities, we're not talking about huge amounts because it's organic, but there are opportunities where we look into the future and we see, "Hey, we're going to be manufacturing constrained in this area, and we need to build these areas out." There are other areas where we're seeing really rapid adoption of what we're doing, and we need to build out more capacity from a rental equipment standpoint to be able to effectively deliver for our customers. So hopefully, that helps provide a little bit more clarity in terms of what I was getting at there.
Jose Bayardo: And look, the need for capital in those opportunities, we're not talking about huge amounts because it's organic, but there are opportunities where we look into the future and we see, "Hey, we're going to be manufacturing constrained in this area, and we need to build these areas out." There are other areas where we're seeing really rapid adoption of what we're doing, and we need to build out more capacity from a rental equipment standpoint to be able to effectively deliver for our customers. So hopefully, that helps provide a little bit more clarity in terms of what I was getting at there.
Speaker #5: There
Speaker #6: other one I had
Speaker #6: was on I think , on the
Speaker #6: Rodney , you one book to the Bill mentioned
Speaker #6: within that
Speaker #6: FPSo look If you for
Speaker #6: doubling think fair know , the scenarios . . Does , you also we're adoption of rental range of .
Speaker #6: us
Speaker #5: standpoint, to be able to effectively deliver
Speaker #6: your
Speaker #5: So, hopefully that helps provide a little bit more clarity in terms of what I was getting at.
Speaker #6: one and 11Q shape ten hopefully up how then comfortably
Speaker #5: at there. Yeah.
Speaker #5: Yeah , . well It's
Speaker #5: Yeah , . well It's and
Marc Bianchi: Yeah. Yep, sure does. The other one I had was on the order outlook. I think, Rodney, you mentioned a near-1 book-to-bill. And within that context, you also talked about FPSO, FIDs doubling in 2026. So maybe help us think about the range of scenarios if you were to get your fair share and there are 10 FIDs for FPSOs, should we be comfortably above 1? And then along those lines, how are you seeing Q1 shape up?
Marc Bianchi: Yeah. Yep, sure does. The other one I had was on the order outlook. I think, Rodney, you mentioned a near-1 book-to-bill. And within that context, you also talked about FPSO, FIDs doubling in 2026. So maybe help us think about the range of scenarios if you were to get your fair share and there are 10 FIDs for FPSOs, should we be comfortably above 1? And then along those lines, how are you seeing Q1 shape up?
Speaker #6: Yep, sure does. The other one I had was on the order outlook. I think, Rodney, you mentioned a near one book-to-bill. And within that context, you also talked about FPSO FIDs doubling in '26.
Speaker #5: question ?
Speaker #5: feel really share and to win prospects thanks share But we capacity constrained for that
Speaker #5: good about order outlook . your very our to in in which we leveraging there are our our fair never over are maybe help over . that .
Speaker #5: good about order outlook . your very our to in in which we leveraging there are our our fair never over are maybe help over .
Speaker #5: opportunities that are
Speaker #5: question ,
Speaker #5: opportunities along those that
Speaker #6: The range of scenarios, if you were to get your fair share and there are 10 FIDs for FPSOs, should we be comfortably above one?
Speaker #6: And then along those lines, how are you seeing Q1 shape up?
Speaker #5: Yeah, thanks for that question as well. And look, it's never over until it's over, but we feel really good about our prospects to win our fair share related to the opportunities that are out there.
Jose Bayardo: Yeah. Thanks for that question as well. And look, it's never over until it's over, but we feel really good about our prospects to win our fair share related to the opportunities that are out there. As I touched on earlier with Jim's question, there's some of those opportunities that really are areas in which we should do very well related to leveraging our expertise in high-condensate gas processing and harsh environments. So we're excited about that. And look, if you think about kind of what we've done over the last several years, yes, this year was a 91% book to bill, but each of the preceding four years was greater than 100% book to bill. We've got a very healthy backlog today that has been driven by those offshore production awards, backlog of $34 billion.
Jose Bayardo: Yeah. Thanks for that question as well. And look, it's never over until it's over, but we feel really good about our prospects to win our fair share related to the opportunities that are out there. As I touched on earlier with Jim's question, there's some of those opportunities that really are areas in which we should do very well related to leveraging our expertise in high-condensate gas processing and harsh environments. So we're excited about that. And look, if you think about kind of what we've done over the last several years, yes, this year was a 91% book to bill, but each of the preceding four years was greater than 100% book to bill. We've got a very healthy backlog today that has been driven by those offshore production awards, backlog of $34 billion.
Speaker #5: And look , look areas , if touched on you think about kind
Speaker #5: several years with do
Speaker #5: As I touched on earlier with Jim's question, there are some of those opportunities that really are areas in which we should do very well, related to leveraging our expertise in high-condensate gas processing and our environments.
Speaker #5: bill . related to the But each of book to really than Jim's the four there's out years was preceding some of there . has been As I greater about , you those offshore well bill .
Speaker #5: We've healthy those of should So processing awards . You for expertise coming year 91% for the
Speaker #5: for this guidance is slow and cautious are you start driven by . really we'll be Typically to good below from . Always tough know , .
Speaker #5: So we're excited about that. And look, if you look if you think about kind of what we've done over the last several years, yes, this year was a 91% book to bill, but each of the preceding four years was greater than 100% book to bill.
Speaker #5: they So say this pull push and one time
Speaker #5: We've got a very healthy backlog today. That has been driven by those offshore production awards backlog of $4.34 billion. So, while it was 91% for the year, we're only down $93 million year over year, and the outlook for this coming year is really good.
Speaker #5: quarter . Great know ,
Speaker #5: suggested inevitably
Speaker #5: suggested inevitably
Speaker #5: .
Speaker #5: Here , ? Yeah ,
Jose Bayardo: So while it's 91% for the year, we're only down $93 million year-over-year, and the outlook for this coming year is really good. Always tough to give precise guidance related to future awards. As you know, these are big and chunky, typically, and they can push and pull from quarter to quarter. As we suggested here, we anticipate a relatively slow and cautious start to the year. So I think we'll be below 1x book-to-bill in Q1, but for the year, we think things will even out, and we expect to be around 1x.
Jose Bayardo: So while it's 91% for the year, we're only down $93 million year-over-year, and the outlook for this coming year is really good. Always tough to give precise guidance related to future awards. As you know, these are big and chunky, typically, and they can push and pull from quarter to quarter. As we suggested here, we anticipate a relatively slow and cautious start to the year. So I think we'll be below 1x book-to-bill in Q1, but for the year, we think things will even out, and we expect to be around 1x.
Speaker #5: the
Speaker #5: out and harsh .
Speaker #5: Always tough to give precise guidance related to future awards, as you know, these are big and chunky. Typically, they can push and pull from quarter to quarter.
Speaker #3: comes
Speaker #3: comes
Speaker #3: of
Speaker #3: Stiefel .
Speaker #3: Stiefel .
Speaker #3: Stiefel . that
Speaker #3: Your line
Speaker #3: Your line
Speaker #5: As we suggested, here we anticipate a relatively slow and cautious start to the year. So I think we'll be below one time book to bill in Q1, but for the year we think things will even out and we expect to be around one time.
Speaker #5: As we suggested, here we anticipate a relatively slow and cautious start to the year. So I think we'll be below one time book to bill in Q1, but for the year we think things will even out and we expect to be around one
Speaker #3: .
Speaker #7: Thanks . around
Speaker #7: Thanks . around
Speaker #7: . expect to Morning , serve of minute No , and , you your installed be to
Speaker #7: Clay's
Speaker #7: Clay's
Speaker #7: . book
Speaker #5: lot to morning . we
Speaker #7: commentary is
Speaker #7: commentary is
Speaker #7: great and We think I from from is now
Speaker #7: great and We think I from from is now
Speaker #7: The competitive given ability to
Speaker #6: Great. Thanks for that, Jose.
Marc Bianchi: Great. Thanks for that, Jose.
Marc Bianchi: Great. Thanks for that, Jose.
Speaker #7: overthinking
Speaker #5: Thanks,
Jose Bayardo: Thanks, Mark.
Jose Bayardo: Thanks, Mark.
Speaker #5: Mark.
Speaker #7: business
Speaker #7: have
Speaker #1: Thank you.
Operator: Thank you. And our next question coming from the line of Stephen Gengaro with Stifel. Your line is now open.
Operator: Thank you. And our next question coming from the line of Stephen Gengaro with Stifel. Your line is now open.
Speaker #7: and ways all from a
Speaker #1: And our next question, coming from Will Staple. Will, let us know.
Speaker #7: installed You know of maybe I may your
Speaker #1: Vince. Thanks.
Speaker #7: sense to
Speaker #7: sense to
Speaker #7: for next
Stephen Gengaro: Thanks. Good morning.
Stephen Gengaro: Thanks. Good morning.
Speaker #3: Good
Speaker #3: Good morning, Jose. Good morning, Stephen. I think you got Clay's words for a minute down pretty pat.
Jose Bayardo: Morning, Steven.
Jose Bayardo: Morning, Steven.
Stephen Gengaro: José, I think you got Clay's words for a minute down pretty pat.
Stephen Gengaro: José, I think you got Clay's words for a minute down pretty pat.
Speaker #7: existing you assets be Steven large
Speaker #7: dwindled at
Speaker #2: I don’t know what had a lot to say this morning, Stephen.
Jose Bayardo: I had a lot to say this morning, Stephen.
Jose Bayardo: I had a lot to say this morning, Stephen.
Speaker #3: No, the commentary is great, and there's a lot of detail. I may be overthinking this, but when we think about the aftermarket business that you have and given your large installed base, the amount do you know do you have a sense for the amount that you serve of your installed base?
Stephen Gengaro: No, the commentary is great, and there's a lot of detail. I may be overthinking this, but when we think about the aftermarket business that you have and given your large installed base, do you have a sense for the amount that you serve of your installed base? And maybe more importantly, over the last couple of years, has the third-party ability to service existing assets dwindled at all from a competitive perspective?
Stephen Gengaro: No, the commentary is great, and there's a lot of detail. I may be overthinking this, but when we think about the aftermarket business that you have and given your large installed base, do you have a sense for the amount that you serve of your installed base? And maybe more importantly, over the last couple of years, has the third-party ability to service existing assets dwindled at all from a competitive perspective?
Speaker #5: people efforts share , and the critical and do you have a we're often what we . effectively . And better and to are and that more the sort of look , of times our fair short on not
Speaker #5: want to , do perspective look for And look , it you know , always more efficiently and . at realize But
Speaker #5: more about , every value providing ebbs and focused it's deep for our to it's I delivering there are always drillships , when you bring think customers .
Speaker #3: And maybe more importantly, over the last couple of years, has the service of existing assets dwindled at all from a competitive perspective?
Speaker #5: Yeah, it's a good question, Steve. And look, it always ebbs and flows. And inevitably, people want to look for ways to do things more efficiently and more cost-effectively.
Jose Bayardo: Yeah, it's a good question, Steve. Look, it always ebbs and flows. Inevitably, people want to look for ways to do things more efficiently and more cost-effectively. At times, that leads them to go to the sort of proverbial shade tree mechanic. But more often than not, those efforts are short-lived because they realize the complexity of what it is that we provide and what we do and the critical importance of making sure that you operate incredibly efficiently and reliably. That tends to drive people quickly back to the OEM. Can't precisely tell you exactly where we are, but we feel great about our position and that we're getting our fair share. Look, every day, we're focused on providing better and better service and delivering better value for our customers.
Jose Bayardo: Yeah, it's a good question, Steve. Look, it always ebbs and flows. Inevitably, people want to look for ways to do things more efficiently and more cost-effectively. At times, that leads them to go to the sort of proverbial shade tree mechanic. But more often than not, those efforts are short-lived because they realize the complexity of what it is that we provide and what we do and the critical importance of making sure that you operate incredibly efficiently and reliably. That tends to drive people quickly back to the OEM. Can't precisely tell you exactly where we are, but we feel great about our position and that we're getting our fair share. Look, every day, we're focused on providing better and better service and delivering better value for our customers.
Speaker #5: And at times, that leads them to go to the sort of proverbial shade tree mechanic. But more often than not, those efforts are short-lived.
Speaker #5: Because they realize the complexity of what it is that we provide and what we do, and the critical importance of making sure that you operate incredibly efficiently and drive people quickly back to the OEM.
Speaker #5: better limited . And I'm not going because they the So , those
Speaker #5: better
Speaker #5: single day . question is really around the stuff certainly look , is been for a you
Speaker #7: Okay . basket
Speaker #7: Thank you . deep
Speaker #7: the
Speaker #7: the
Speaker #7: when you look
Speaker #5: So, can't precisely tell you exactly where we are, but we feel great about our position and that we're getting our fair share. And look, every day we're focused on providing better and better service and delivering better value for our customers.
Speaker #7: the easily it's . idle
Speaker #7: of sort the
Speaker #7: stacked was when just follow up opportunity is quick
Speaker #7: small . But
Speaker #7: do you have fairly
Speaker #7: for what
Speaker #7: for what
Speaker #5: So, certainly, the intent is to bring that down more and more every single day. But there are always little ebbs and flows.
Jose Bayardo: So certainly, intent is to bring that down more and more every single day, but there are always little ebbs and flows here.
Jose Bayardo: So certainly, intent is to bring that down more and more every single day, but there are always little ebbs and flows here.
Speaker #5: give talk more every time complexity here
Speaker #5: or specific let
Speaker #5: contractor
Speaker #5: customers And then those what it provide and
Speaker #5: customers And then those what it
Speaker #5: about
Speaker #5: here. Okay.
Stephen Gengaro: Okay. Thank you. And then just the quick follow-up was, when you look at sort of the basket of sort of stacked idle deep-water assets, I think it's fairly small, but do you have a sense for what the market opportunity is there for reactivations?
Stephen Gengaro: Okay. Thank you. And then just the quick follow-up was, when you look at sort of the basket of sort of stacked idle deep-water assets, I think it's fairly small, but do you have a sense for what the market opportunity is there for reactivations?
Speaker #3: Thank you. And then just the quick follow-up was, when you look at sort of the basket of stacked, idle deepwater assets, I think it's fairly small, but do you have a sense for what the market opportunity is there for
Speaker #5: it's , it is tends to we of cycle .
Speaker #5: what's been of .
Speaker #5: here
Speaker #5: in the or
Speaker #5: recent there for assets , really completed , line with rigs
Speaker #5: recent there for assets , really completed , line with rigs
Speaker #5: we could
Speaker #5: probably operated opportunity . more And at
Speaker #5: to
Speaker #5: . a very But then I
Speaker #3: reactivations? Yeah.
Jose Bayardo: Yeah. Look, when you talk about deep-water drillships, it's pretty limited. And I'm not going to give specific numbers. I'll let our contractor customers talk about it. But look, it is limited. I think you can sort of see exactly what's been operated here in the recent past and what those levels are that we could probably more easily get back to. But then I think your question's really around the stuff that's been stacked for a really long time or rigs that were never fully completed that were ordered during the last boom cycle. And I think that opportunity set, lucky to call it, kind of a handful. So it's a limited opportunity. And those opportunities that do exist, they're going to be large opportunities, right? They've been stacked for a very, very long time.
Jose Bayardo: Yeah. Look, when you talk about deep-water drillships, it's pretty limited. And I'm not going to give specific numbers. I'll let our contractor customers talk about it. But look, it is limited. I think you can sort of see exactly what's been operated here in the recent past and what those levels are that we could probably more easily get back to. But then I think your question's really around the stuff that's been stacked for a really long time or rigs that were never fully completed that were ordered during the last boom cycle. And I think that opportunity set, lucky to call it, kind of a handful. So it's a limited opportunity. And those opportunities that do exist, they're going to be large opportunities, right? They've been stacked for a very, very long time.
Speaker #5: It's when you talk about deepwater drillships, it's pretty limited. And I'm not going to give specific numbers; I'll let our contractor customers talk about it.
Speaker #5: that
Speaker #5: that
Speaker #5: were are that that's stacked very , very And when
Speaker #5: were are that that's stacked very , very And when that exist , Your line open
Speaker #5: last kind of do
Speaker #5: But look, it is limited. I think you can sort of see exactly what's been operated here in the recent past, and what those levels are that we, too.
Speaker #5: But then I think your question is really around the stuff that's been stacked for a, could probably more easily get back, really long time, or rigs that were never fully completed that were ordered during the last boom cycle.
Speaker #5: And I think that opportunity set—lucky to call it a handful. So it's a limited opportunity, and those opportunities that do exist, they're going to be large opportunities, right?
Speaker #5: They've been stacked for a very, very long time. And when I say a handful, that's the number that are higher spec and that we think will be in line with what the market currently demands.
Jose Bayardo: And when I say handful, that's the number that are higher spec and that we think will be in line with what the market currently demands. And like I said, they've been stacked or uncompleted for a very long time. There's going to be a big ticket associated with bringing those back. So TBD exactly how that'll play out, but it's a good opportunity for us. And then we see the market, obviously, tightening up very quickly, which means it'll be a very good market for our drilling contractor customers. And that's a good thing for the space.
Jose Bayardo: And when I say handful, that's the number that are higher spec and that we think will be in line with what the market currently demands. And like I said, they've been stacked or uncompleted for a very long time. There's going to be a big ticket associated with bringing those back. So TBD exactly how that'll play out, but it's a good opportunity for us. And then we see the market, obviously, tightening up very quickly, which means it'll be a very good market for our drilling contractor customers. And that's a good thing for the space.
Speaker #3: . Our
Speaker #3: . Our Reactivations
Speaker #3: question ordered I comes
Speaker #3: question ordered I comes
Speaker #5: And like I said, they've been stacked or uncompleted for a very long time. There's going to be a big ticket associated with bringing those back.
Speaker #8: Hey ,
Speaker #5: So, TBD exactly how that'll play out, but it's a good opportunity for us. And then we see the market, obviously, tightening up very quickly, which means it'll be a very good market for our drilling contractor customers, and that's a good thing for the space.
Speaker #8: you guys
Speaker #8: kind And so
Speaker #8: kind And so a active ,
Speaker #8: What
Speaker #8: What is now just
Speaker #8: of
Speaker #8: I think country will be then I or
Speaker #3: Great. Thanks for the details.
Stephen Gengaro: Great. Thanks for the details.
Stephen Gengaro: Great. Thanks for the details.
Speaker #5: Thanks, Stephen.
Jose Bayardo: Thanks, Steven.
Jose Bayardo: Thanks, Steven.
Speaker #1: Thank you. Our next question is coming from the line of Dan Coots with Morgan Stanley. Dan, you'll let us know.
Operator: Thank you. Our next question coming from the line of Dan Coots with Morgan Stanley. Your line is now open.
Operator: Thank you. Our next question coming from the line of Dan Coots with Morgan Stanley. Your line is now open.
Speaker #8: the Dan , really Venezuela , you . helpful .
Speaker #8: the Dan , really Venezuela , you . helpful .
Speaker #1: Vince. Hey, thanks.
Dan Coots: Hey, thanks. Good morning.
[Analyst] (Morgan Stanley): Hey, thanks. Good morning.
Speaker #6: Good morning.
Jose Bayardo: Good morning, Dan.
Jose Bayardo: Good morning, Dan.
Speaker #6: Good morning, Dan. So just going back to Venezuela, I was wondering if you guys could kind of quantify at the level of revenue you were doing back pre-sanctions when you had the, I think you said, 400 employees in country, or kind of what the equipment had been the last couple of years, which you spares revenue streams have all—maybe what the inbound you've gotten is, kind of, as a multiple of the annual revenue stream.
Dan Coots: Good morning. So just going back to Venezuela, I was wondering if you guys could kind of quantify it all, maybe what the level of revenue you were doing back pre-sanctions when you had the, I think you said, 400 employees in country or kind of what the equipment and spares revenue streams have been the last couple of years, which you said the inbound that you've gotten is kind of a multiple of the annual revenue stream. So basically, just driving that. And anything you could help us with as we're trying to kind of quantify the potential opportunity in Venezuela would be really helpful. Thank you.
[Analyst] (Morgan Stanley): Good morning. So just going back to Venezuela, I was wondering if you guys could kind of quantify it all, maybe what the level of revenue you were doing back pre-sanctions when you had the, I think you said, 400 employees in country or kind of what the equipment and spares revenue streams have been the last couple of years, which you said the inbound that you've gotten is kind of a multiple of the annual revenue stream. So basically, just driving that. And anything you could help us with as we're trying to kind of quantify the potential opportunity in Venezuela would be really helpful. Thank you.
Speaker #8: help us Venezuela , I
Speaker #8: as that we quantify the to kind of
Speaker #8: opportunity , kind of going are
Speaker #8: opportunity , kind of going are would be in
Speaker #5: Yeah . I say Thank think what I would they
Speaker #5: Yeah . I say Thank think what I would they
Speaker #5: to think But I dollar that I amount particularly
Speaker #5: history
Speaker #5: relevant . lot of Right . change in isn't isn't years ,
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Speaker #5: relevant . lot of Right . change in isn't isn't years , thanks . been
Speaker #5: relevant . lot of Right . change in isn't isn't years , thanks . been pricing
Speaker #5: and importantly , I market that anything you
Speaker #5: and importantly , I market that anything you environment sanctions when be
Speaker #5: more
Speaker #5: more
Speaker #6: So basically just driving that. Anything you could help us with as we're trying to kind of quantify the potential opportunity in Venezuela, what would be really helpful.
Speaker #5: do you think the kind very , very look , you is going to can you forward the , you could quick employees different . today .
Speaker #5: do you think the kind very , very look , you is going to can you forward the , you could quick
Speaker #5: do you think the kind very , very look , you is going to can you forward the , you could quick employees different .
Speaker #5: little And so you 30,000 employees .
Speaker #5: little And so you 30,000 employees . have a we're trying figure Good said back know , be . And We wondering out what over revenue per But employee what
Speaker #5: little And so you 30,000 employees . have a we're trying figure Good said back know , be . And We wondering out what over revenue per But employee what
Speaker #6: Thank you.
Speaker #5: Yeah.
Jose Bayardo: Yeah, Dan, fair question. But I think what I would point to is that I don't think kind of the history is; the precise dollar amount isn't particularly relevant, right? There's been a lot of change in pricing. And more importantly, I think the market environment going forward is going to be very, very different. But look, you can do the quick math. You said 450 employees. Today, we have a little over 30,000 employees. And so you can sort of figure out what the revenue per employee should be. And that's kind of in line with where we were.
Jose Bayardo: Yeah, Dan, fair question. But I think what I would point to is that I don't think kind of the history is; the precise dollar amount isn't particularly relevant, right? There's been a lot of change in pricing. And more importantly, I think the market environment going forward is going to be very, very different. But look, you can do the quick math. You said 450 employees. Today, we have a little over 30,000 employees. And so you can sort of figure out what the revenue per employee should be. And that's kind of in line with where we were.
Speaker #5: Fair question, but I think what I, Dan, would point to is that I don’t think kind of the history or the precise dollar amount is particularly relevant, right?
Speaker #5: of in line But the right relevant reason why put in were not I say it's the is
Speaker #5: we with where that's kind
Speaker #5: entirely the right mean by to and driving could get back
Speaker #5: when if place
Speaker #5: There's been a lot of change in pricing, and more importantly, I think the market environment going forward is going to be very, very different.
Speaker #5: work in the in importantly , our country . customers to go And what I is rules fundamentals get with , you
Speaker #5: But look, you can do the quick math. I said 450 employees. Today, we have a little over 30,000 employees. And so, you can sort of figure out what the revenue per—that kind of in-line employee—should be, and with where we were.
Speaker #5: us , and governance , the there , . alleviating more
Speaker #5: us , and governance , the there , . alleviating more really things . It's security been work it's a morning that right laws oil have been neglected for to
Speaker #5: time . create period of country whose sorts of that's going and massive create opportunities for new equipment . go back
Speaker #5: But the reason why I say it's not entirely relevant is because if and when the right fundamentals get put in place, to really get back to work in the country.
Jose Bayardo: But the reason why I say it's not entirely relevant is because if and when the right fundamentals get put in place to really get back to work in the country, and what I mean by that is the right governance, the right laws and rules that allow us and, more importantly, our customers to go to work there along with alleviating security concerns and all those sorts of things, it's a country whose oilfield assets have been neglected for an incredibly long period of time. And so that's going to create or should create massive opportunities for new capital equipment. So when you go back in the day when we were active there, virtually all lines of business were active there. So we certainly have the capability to do that and scale up very quickly.
Jose Bayardo: But the reason why I say it's not entirely relevant is because if and when the right fundamentals get put in place to really get back to work in the country, and what I mean by that is the right governance, the right laws and rules that allow us and, more importantly, our customers to go to work there along with alleviating security concerns and all those sorts of things, it's a country whose oilfield assets have been neglected for an incredibly long period of time. And so that's going to create or should create massive opportunities for new capital equipment. So when you go back in the day when we were active there, virtually all lines of business were active there. So we certainly have the capability to do that and scale up very quickly.
Speaker #5: day when
Speaker #5: there But And up to do that . Good right
Speaker #5: all lines of
Speaker #5: were , virtually the
Speaker #5: And what I mean by that is the right governance, the right laws and rules that allow us, and more importantly, our customers, to go to work there, along with alleviating security concerns and all those sorts of things.
Speaker #5: quickly . we opportunity you were scale when field assets and guardrails are than what there if
Speaker #5: think the
Speaker #5: place , And So when you
Speaker #5: If the country that's been—it's a country whose oilfield assets have been neglected for an incredibly long period of time. And so that's going to create, or should create, massive opportunities for new capital equipment.
Speaker #5: meaningfully larger
Speaker #5: past
Speaker #8: of basically just your just asking guys
Speaker #5: So, when you go back in the day when we were active there, virtually all lines of business were active there. So we certainly have the capability to do that and scale up very quickly.
Speaker #8: the the And explicit guide those
Speaker #8: the the And explicit guide
Speaker #8: items . But but just kind framework . wanted to check in So , on so the
Speaker #5: But we think the opportunity there, if and when the right guardrails are put in place, will be meaningfully larger than what they were in the past.
Jose Bayardo: But we think the opportunity there, if and when the right guardrails are put in place, will be meaningfully larger than what they were in the past.
Jose Bayardo: But we think the opportunity there, if and when the right guardrails are put in place, will be meaningfully larger than what they were in the past.
Speaker #8: I guess you guys should have kind of CapEx said like 2026 because I know you a
Speaker #8: 50% plus
Speaker #8: free cash
Speaker #8: conversion framework through
Speaker #8: conversion framework through cycle and
Speaker #8: see if that's flow still a on on good check in assumption or that's the
Speaker #6: Awesome, that's really helpful. And then I just wanted to check in on kind of your through-cycle CapEx and free cash flow framework. So not asking about 2026, because I know you guys gave the explicit guide for both of those items, but just wanted to check in on—I guess you guys have kind of said a 50% plus free cash flow conversion framework through-cycle and wanted to see if that's latest.
Dan Coots: Awesome. That's really helpful. And then just wanted to check in on kind of your through cycle CapEx and free cash flow framework. So not asking about 2026 because I know you guys gave the explicit guide for both of those items. But just wanted to check in on, I guess you guys have kind of said a 50%-plus free cash flow conversion framework through cycle. I wanted to see if that's still a good assumption or that's the latest. And then maybe if you could kind of unpack CapEx a little bit, how you think about that through cycle, whether it's in terms of revenue or some type of maintenance level plus some growth investments. So yeah, anything you could help with on the through cycle CapEx and free cash flow framework would be great.
[Analyst] (Morgan Stanley): Awesome. That's really helpful. And then just wanted to check in on kind of your through cycle CapEx and free cash flow framework. So not asking about 2026 because I know you guys gave the explicit guide for both of those items. But just wanted to check in on, I guess you guys have kind of said a 50%-plus free cash flow conversion framework through cycle. I wanted to see if that's still a good assumption or that's the latest. And then maybe if you could kind of unpack CapEx a little bit, how you think about that through cycle, whether it's in terms of revenue or some type of maintenance level plus some growth investments. So yeah, anything you could help with on the through cycle CapEx and free cash flow framework would be great.
Speaker #8: if you maybe could we kind of
Speaker #8: unpack
Speaker #8: CapEx a cycle little bit and , how you think about that through cycle , whether it's in terms of revenue or some type in the of , they were in you know , maintenance level plus some growth investments .
Speaker #8: So , yeah , anything you can help with on the through not cycle CapEx and free cash flow framework great . would be
Speaker #2: Yeah . Dan . This Rodney . stepping is and just giving the So some with team to free cash
Speaker #2: flow conversion for the last couple of years , 85% free cash conversion excellent performance by the team Thanks , lot of that was was really system .
Speaker #6: And then maybe if you could kind of still a good assumption, or—that's the—unpack CapEx a little bit, how you think about that through the cycle, whether it's in terms of revenue or some type of maintenance level plus some growth investments?
Speaker #2: improvements . So if you look at the . A Really on had on Dsos capability during that time , you back improvements look at the had that we've in particular for some of our project based businesses of the progress billings and flow timing timing of collections during that time improvements that we've , really strong also on our inventory turn improvement .
Speaker #6: So yeah, anything you could help with on the through-cycle CapEx and free cash flow framework would be great.
Speaker #3: Yeah, thanks, Dan. This is Rodney. So just stepping back and giving some credit to the team—with respect to free cash flow conversion for the last couple of years, 85% free cash flow conversion; really excellent performance by the team.
Rodney Reed: Yeah, thanks, Dan. This is Rodney. So just stepping back and giving some credit to the team with respect to free cash flow conversion for the last couple of years, 85% free cash flow conversion, really excellent performance by the team. A lot of that was really system structural improvements. So if you look at the improvements that we've had on DSOs during that time, you look at the improvements that we've had, in particular, for some of our project-based businesses with some of the progress billings and timing of collections during that time, really strong. And also on our inventory turn improvement. So 2023 inventory turns at 3.1, improving to 3.9, almost four turns in 2025. So just across the board, I know Jose gave some commentary on cash conversion through the cycle, but just some components there.
Rodney Reed: Yeah, thanks, Dan. This is Rodney. So just stepping back and giving some credit to the team with respect to free cash flow conversion for the last couple of years, 85% free cash flow conversion, really excellent performance by the team. A lot of that was really system structural improvements. So if you look at the improvements that we've had on DSOs during that time, you look at the improvements that we've had, in particular, for some of our project-based businesses with some of the progress billings and timing of collections during that time, really strong. And also on our inventory turn improvement. So 2023 inventory turns at 3.1, improving to 3.9, almost four turns in 2025. So just across the board, I know Jose gave some commentary on cash conversion through the cycle, but just some components there.
Speaker #2: and So 2023 inventory at 3.1 , to 3.9 . Almost four turns in 2025 . So just across the board I know Jose gave some commentary on cash conversion the the through cycle , but just some components there .
Speaker #3: A lot of that was really system structural improvements. So, if you look at the improvements that we've had on DSOs during that time, and you look at the improvements that we've had in particular for some of our project-based businesses with some of the progress billings and timing of collections during that time—really strong.
Speaker #2: then we kind And mentioned , as we think about through little bit more directed to of your to your question 26 , , about cash 40% to 50% free conversion for 26 .
Speaker #2: And if you look at components the flow of that CapEx and that sort of 315 million to $345 million range , you look at working capital as a percentage of revenue with some about flat to maybe slightly up .
Speaker #3: And also on our inventory turn improvement. So, 2023 inventory turns at 3.1, improving to 3.9—almost four turns—in 2025. So, just across the board, I know Jose gave some commentary on cash conversion through the cycle.
Speaker #2: So that that kind cash rate there for 26 . And I conversion forward , , probably as Jose mentioned , we've got organic opportunities .
Speaker #3: But just some components there. And then we kind of mentioned, as we think about '26—a little bit more directed to your question—about 40% to 50% free cash flow conversion for '26.
Rodney Reed: And then we kind of mentioned, as we think about 2026, a little bit more directed to your question, about 40% to 50% free cash flow conversion for 2026. And if you look at the components of that, CapEx in that sort of $315 million to $345 million range, you look at working capital as a percentage of revenue, probably about flat to maybe slightly up. So that kind of gets you to that cash conversion rate there for 2026. And I think going forward, as Jose mentioned, we've got some organic opportunities that we always evaluate. I think our CapEx in 2024 and 2025, if you look, was a touch higher than 2022 and 2023. 2026, that sort of midpoint gets back to a little bit more sort of average level.
Rodney Reed: And then we kind of mentioned, as we think about 2026, a little bit more directed to your question, about 40% to 50% free cash flow conversion for 2026. And if you look at the components of that, CapEx in that sort of $315 million to $345 million range, you look at working capital as a percentage of revenue, probably about flat to maybe slightly up. So that kind of gets you to that cash conversion rate there for 2026. And I think going forward, as Jose mentioned, we've got some organic opportunities that we always evaluate. I think our CapEx in 2024 and 2025, if you look, was a touch higher than 2022 and 2023. 2026, that sort of midpoint gets back to a little bit more sort of average level.
Speaker #2: And we always of gets you evaluate , I think our think going CapEx to 25 , if you look , was , was was a touch higher than 22 and 23 , in 26 .
Speaker #3: And if you look at the components of that, CapEx in that sort of $315 million to $345 million range, you look at working capital as a percentage of revenue, probably about flat to maybe slightly up.
Speaker #2: That sort midpoint gets back to a average little bit more level . But the but the with the thing is strength that we balance sheet and where we're at some right now , we've got the flexibility to to look at those going opportunities forward .
Speaker #2: sort of But overall , I'd say kind of sort of cycle , that 50% , have on the 24 and conversion 40 to 50% number from a perspective , is is a good marker us .
Speaker #3: So that kind of gets you to that cash conversion rate there for '26. And I think, going forward, as organic opportunities that we always evaluate.
Speaker #3: I think our CapEx in '24 and '25, if you look, was a touch higher than '22 and '23. '26, that sort of midpoint, gets back to a little bit more, sort of average level.
Speaker #3: Thank you
Speaker #3: . Now , last question and will come for from the line of Jeffrey LeBlanc TPS and company . Your line is now open
Speaker #9: Jose Good morning taking my
Speaker #3: But the positive thing is, with the strength that we have on the balance sheet and where we're at right now, we've got the flexibility to look at those opportunities going forward.
Rodney Reed: But the positive thing is, with the strength that we have on the balance sheet and where we're at right now, we've got the flexibility to look at those opportunities going forward. But overall, I'd say kind of through cycle, that sort of 40% to 50% number from a conversion perspective is a good marker for us.
Rodney Reed: But the positive thing is, with the strength that we have on the balance sheet and where we're at right now, we've got the flexibility to look at those opportunities going forward. But overall, I'd say kind of through cycle, that sort of 40% to 50% number from a conversion perspective is a good marker for us.
Speaker #9: Thank you for question .
Speaker #5: Good morning Jeff . of
Speaker #9: I wanted to see if you could provide earnings potential of your item . RTX robotics platform over a multiyear
Speaker #9: should think about the gating events for become the next it to top drive . Thank you .
Speaker #3: But overall, I'd say kind of through-cycle, that sort of 40% to 50% number from a conversion perspective is a good marker for us.
Speaker #5: Yeah . Thanks , Jeff . Look , we are with super excited about kind of what we're doing on the on the automation front .
Speaker #1: Thank you. Now, last question, and we'll confirm the lineup. Jeffrey Lilibank with TPH and Company, Yolanda
Speaker #1: Thank you. Now, last question, and we'll confirm the lineup. Jeffrey Lilibank with TPH and Company, Yolanda Smallven. Good morning, Jose and—
Operator: Thank you. Our last question will come from the line of Jeff LeBlanc with TPH & Co. Your line is now open.
Operator: Thank you. Our last question will come from the line of Jeff LeBlanc with TPH & Co. Your line is now open.
Speaker #5: And really , more broadly speaking , on all things that we're doing digital wise . First of just a quick answer on on the robotics piece .
Jeff LeBlanc: Good morning, Jose and team. Thank you for taking my question.
Jeff LeBlanc: Good morning, Jose and team. Thank you for taking my question.
Speaker #7: Thank you for taking my question.
Speaker #5: Good morning, team.
Jose Bayardo: Morning, Jeff.
Jose Bayardo: Morning, Jeff.
Speaker #5: Jeff.
Speaker #5: This is something that we put our system years ago . It's been operating
Jeff LeBlanc: I wanted to see if you could provide an earnings potential of your ATOM RTX Robotics platform over a multi-year period and how we should think about the gating events for it to become the next top drive? Thank you.
Jeff LeBlanc: I wanted to see if you could provide an earnings potential of your ATOM RTX Robotics platform over a multi-year period and how we should think about the gating events for it to become the next top drive? Thank you.
Speaker #7: To see if you could provide an earnings potential of your item, RTX Robotics platform, over a multi-year period, and how we should think about the gating events for it to become the next top drive.
Speaker #5: consistently with a couple of upgrades and getting better and better every day over the last couple years , operating an out in a very harsh a couple environment .
Speaker #7: Thank you.
Speaker #5: Yeah, thanks, Jeff. Look, we are super excited about kind of what we're doing on the automation front and, really, more broadly speaking, on all things that we're doing digital-wise.
Jose Bayardo: Yeah, thanks, Jeff. Look, we are super excited about kind of what we're doing on the automation front and really, more broadly speaking, on all things that we're doing digital-wise. First of all, just a quick answer on the robotics piece. This is something that we put our first, effectively, pilot system out a couple of years ago. It's been operating consistently with a couple of upgrades and getting better and better every day over the last couple of years, operating in a very harsh environment. We've been working very closely with a drilling contractor customer and an IOC. This is a great stage that's set to where we're doing a lot of cooperation with industry partners to ensure that this is successful. And we're working with two different IOCs and two different drilling contractors.
Jose Bayardo: Yeah, thanks, Jeff. Look, we are super excited about kind of what we're doing on the automation front and really, more broadly speaking, on all things that we're doing digital-wise. First of all, just a quick answer on the robotics piece. This is something that we put our first, effectively, pilot system out a couple of years ago. It's been operating consistently with a couple of upgrades and getting better and better every day over the last couple of years, operating in a very harsh environment. We've been working very closely with a drilling contractor customer and an IOC. This is a great stage that's set to where we're doing a lot of cooperation with industry partners to ensure that this is successful. And we're working with two different IOCs and two different drilling contractors.
Speaker #5: We've been working very closely with the contractor , customer and IOC . This is a stage . That's set to where we're doing a lot of with industry is successful .
Speaker #5: First of all, just to a quick answer on the robotics piece, this is something that we put our first, actually, pilot system out a couple of years ago.
Speaker #5: And , you know , we're working with partners to two different IOCs and two different drilling contractors and all four of those drilling customers are really excited about what we're delivering with them out in the field .
Speaker #5: It's been operating consistently with a couple of upgrades and getting better and better every day over the last couple of years, operating in a very harsh environment.
Speaker #5: We currently have great three rigs operating on land , three offshore , and we've sold cooperation around ensure robot 27 to 30 arms , and having we're constructive conversations with our about doing a whole lot So more .
Speaker #5: with the drilling contractor customer We've been working very closely and an IOC. This is a great stage that's set to where we're doing a lot of cooperation with industry partners to ensure that this is successful.
Speaker #5: And we're working with two different IOCs and two different drilling contractors and all four of those customers are really excited about what we're delivering with them out in the field.
Speaker #5: that's really about all I on that can give you front right now . the other But look , that that I'm thing excited is the capabilities that we have under one roof related data .
Jose Bayardo: And all four of those customers are really excited about what we're delivering with them out in the field. We currently have three rigs operating on land, three operating offshore. And we've sold around 27 to 30 robot arms. And we're having super constructive conversations with our customers about doing a whole lot more. So that's really about all I can give you on that front right now. But look, the other thing that I'm extremely excited about is the capabilities that we have under one roof related to data control systems and automation. Look, we've been in the data business for over 100 years. When we started an instrumentation business, obviously, we've migrated from analog to digital on a lot of fronts, including data capture, aggregation, and now more and more high-speed downhole data transmission.
Jose Bayardo: And all four of those customers are really excited about what we're delivering with them out in the field. We currently have three rigs operating on land, three operating offshore. And we've sold around 27 to 30 robot arms. And we're having super constructive conversations with our customers about doing a whole lot more. So that's really about all I can give you on that front right now. But look, the other thing that I'm extremely excited about is the capabilities that we have under one roof related to data control systems and automation. Look, we've been in the data business for over 100 years. When we started an instrumentation business, obviously, we've migrated from analog to digital on a lot of fronts, including data capture, aggregation, and now more and more high-speed downhole data transmission.
Speaker #5: We currently have three rigs operating on land, three operating offshore, and we've sold around 27 to 30 robot arms, and we're having super constructive conversations with our customers about doing a whole lot more.
Speaker #5: Control systems automation . Look , you know , we've been in the and data business to for over 100 years . When we started an instrumentation business , obviously we've migrated analog to digital on a lot of fronts , including data capture , aggregation , and now more and more high speed downhole data transmission .
Speaker #5: Combine that with our world class capabilities for control systems , then layer on top of that from automation and robotics . now the use of AI .
Speaker #5: I can't give you any more on that front right now, but look, the other thing that I'm extremely excited about is the capabilities that we have under one roof related to data, control systems, and automation.
Speaker #5: And we're super excited about where can take this over the coming years . So really excited about our where we prospects . There all .
Speaker #5: Look, we've been in the data business for over 100 years. When we started an instrumentation business, obviously, we've migrated from analog to digital on a lot of fronts, including data capture, aggregation, and now more and more high-speed downhole data transmission.
Speaker #9: Thank you for the color . I'll hand the call back to Thank you .
Speaker #10: Yeah Thanks , .
Speaker #3: the call you . And I'll now turn Thank
Speaker #3: over
Speaker #3: to closing Jose Bayardo for any remarks Mr.
Speaker #5: Combine that with our world-class capabilities for control systems, then layer on top of that automation and robotics, and now the use of AI, and we're super excited about where we can take all this over the coming years.
Jose Bayardo: Combine that with our world-class capabilities for control systems, then layer on top of that automation and robotics and now the use of AI. We're super excited about where we can take all this over the coming years. Really excited about our prospects there.
Jose Bayardo: Combine that with our world-class capabilities for control systems, then layer on top of that automation and robotics and now the use of AI. We're super excited about where we can take all this over the coming years. Really excited about our prospects there.
Speaker #5: thank you
Speaker #5: very much , everyone , for . Great , joining us here . This morning the . We operator . look to forward talking to everybody again here in late April Olivia , .
Speaker #3: To today's conference call . Thank you for participation . You may now disconnect . your
Speaker #5: So, really excited about our prospects.
Speaker #5: there. Okay.
Speaker #7: Thank you for the color. I'll hand the call back to the operator. Thank you.
Jeff LeBlanc: Thank you for the call. I'll hand the call back to the operator. Thank you.
Jeff LeBlanc: Thank you for the call. I'll hand the call back to the operator. Thank you.
Speaker #5: Thanks, Jeff. Thank
Jose Bayardo: Thanks, Jeff.
Jose Bayardo: Thanks, Jeff.
Operator: Thank you. I'll now turn the call back over to Mr. Jose Bayardo for any closing remarks.
Operator: Thank you. I'll now turn the call back over to Mr. Jose Bayardo for any closing remarks.
Speaker #1: you. And I'll now turn the call back over to Mr. Jose Bayardo for any closing remarks.
Speaker #5: Great. Olivia, thank you very much, everyone, for joining us here this morning. We look forward to talking to everybody again here in late April.
Jose Bayardo: Great. Livia, thank you very much, everyone, for joining us here this morning. We look forward to talking to everybody again here in late April.
Jose Bayardo: Great. Livia, thank you very much, everyone, for joining us here this morning. We look forward to talking to everybody again here in late April.
Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.
