NOV Q1 Earnings: EBITDA Rises 5% Despite Revenue Dip

Rhea-AI Summary

NOV reported its Q1 2025 financial results with mixed performance indicators. Net income was $73 million ($0.19 per share), showing a 39% decrease year-over-year, while Adjusted EBITDA rose 5% to $252 million. The company generated $135 million in operating cash flow and returned $109 million to shareholders through buybacks and dividends.

Key segment performance:

• Energy Products and Services: Revenue of $992 million, down 2% YoY
• Energy Equipment: Revenue of $1.15 billion, down 3% YoY, with backlog at $4.41 billion

CEO Clay Williams noted solid execution despite macroeconomic uncertainties, including global trade tensions and OPEC+ production changes. The company expects modest sequential revenue improvement in Q2 2025 but anticipates lower activity in the second half of the year due to ongoing market uncertainties.

Positive

• Adjusted EBITDA increased 5% year-over-year to $252 million (12% of sales)
• Generated $135M in operating cash flow and $51M in free cash flow
• Returned $109M to shareholders via buybacks ($81M) and dividends
• Energy Equipment operating profit increased $39M to $134M
• New orders increased by $47M compared to Q1 2024
• Strong backlog of $4.41B, up $458M from Q1 2024
• Maintains solid liquidity with $1.16B cash and $1.50B available credit

Negative

• Net income decreased 39% to $73M ($0.19 per share)
• Revenue declined 2% to $2.10B compared to Q1 2024
• Operating profit decreased 6% to $152M
• Energy Products & Services revenue down 2% with $38M lower operating profit
• Book-to-bill ratio remains weak at 80%
• Management expects lower activity in second half of 2025
• Forecasts 1-4% revenue decline for Q2 2025

Insights

Financial Analyst specializing in Oil & Gas Equipment

NOV posts mixed Q1 results with lower revenue/income but improved EBITDA margins, returned capital, and strong backlog amid cautious outlook.

NOV's Q1 2025 results present a mixed financial picture. While net income fell 39% year-over-year to $73 million ($0.19 per share) and revenue declined 2% to $2.10 billion, the company delivered operational improvements with Adjusted EBITDA increasing 5% to $252 million and improved margins of 12.0%.

The segment performance reveals divergent trends. Energy Products and Services saw decreases in both revenue (-2%) and profitability, with operating profit dropping to $83 million. In contrast, Energy Equipment demonstrated substantial profitability improvements despite 3% lower revenues, with operating profit increasing $39 million to $134 million.

The company's financial flexibility remains solid with $1.16 billion in cash and $1.50 billion available credit. NOV generated $135 million in operating cash flow and $51 million in free cash flow, enabling it to return $109 million to shareholders through share repurchases and dividends.

The backlog strength is noteworthy at $4.41 billion, an increase of $458 million year-over-year, providing revenue visibility. New orders of $437 million represent a book-to-bill ratio of 80%.

Management's outlook indicates caution, citing increasing macroeconomic uncertainties and global trade tensions. While they expect modest sequential revenue improvement in Q2, they anticipate softer activity in the second half of 2025, guiding to a 1-4% year-over-year revenue decline for Q2.

NOV Inc. (NYSE: NOV) reported first quarter 2025 results showing mixed performance with lower revenue but improved adjusted EBITDA and cash flow compared to the same period last year, according to a press release issued by the company.

The Houston-based oil and gas equipment provider posted $2.10 billion in revenue for the quarter, representing a 2% decrease compared to the first quarter of 2024. Net income fell to $73 million, or $0.19 per share, a 39% decline from the year-ago period. Operating profit decreased 6% to $152 million, or 7.2% of sales.

Despite the revenue decline, the company reported that adjusted EBITDA increased 5% year-over-year to $252 million, or 12.0% of sales. Cash flow from operations reached $135 million with free cash flow of $51 million for the quarter.

Segment Performance

The company's Energy Products and Services segment generated $992 million in revenue, down 2% from the prior year. Operating profit for this segment decreased $38 million to $83 million, representing 8.4% of sales. According to the release, revenue declined due to lower industry activity levels, particularly affecting demand for shorter-cycle capital equipment offerings.

The Energy Equipment segment reported $1.15 billion in revenue, a 3% year-over-year decrease. Despite lower revenue, this segment's operating profit increased $39 million to $134 million, or 11.7% of sales. The company attributed the improved profitability to better pricing and strong execution.

New orders for Energy Equipment totaled $437 million, up $47 million compared to the first quarter of 2024. The segment's backlog for capital equipment orders stood at $4.41 billion as of March 31, 2025, representing an increase of $458 million from the same period last year.

Shareholder Returns and Financial Position

NOV returned $109 million to shareholders during the quarter through a combination of share repurchases and dividends. The company repurchased 5.4 million shares of common stock for $81 million in the period.

As of March 31, 2025, NOV reported total debt of $1.74 billion, with $1.50 billion available on its primary revolving credit facility and $1.16 billion in cash and cash equivalents.

Business Highlights and Contract Wins

The press release highlighted several significant achievements during the quarter, including:

• An agreement with Petrobras to develop flexible pipes for high CO₂ deepwater applications
• A contract to supply an integrated cable-lay system for a Japanese customer's new vessel
• A Triethylene Glycol gas dehydration project for a National Oil Company in the Middle East
• Record-setting drilling runs in the Utica shale play using NOV's drilling technology
• Multiple pipeline supply contracts, including over 16 km of composite pipeline for a West Texas project

Outlook and Management Commentary

For the second quarter of 2025, NOV expects year-over-year consolidated revenues to be down 1% to 4% with adjusted EBITDA between $250 million and $280 million.

"NOV posted solid results in the first quarter of 2025, delivering higher cash flow and adjusted EBITDA compared to the prior year," said Clay Williams, Chairman and CEO, in the release. "We executed well on our large backlog of offshore production technologies, and we continued to drive accelerating adoption of our new, differentiated technologies."

Williams noted that macroeconomic challenges, including "global trade tensions, weakening economic outlook, and incremental OPEC+ production, are increasing uncertainty and caution" among customers. Despite these headwinds, the company expects "modest sequential revenue improvement in the second quarter of 2025," according to the release.

The company also mentioned it is working to manage the impact of new tariffs by adjusting its global supply chain to mitigate effects as much as possible.

All information is sourced from the company's press release. This article is for informational purposes only and does not constitute financial advice.

Source: Company investor relations

FAQ

How much did NOV (NYSE: NOV) return to shareholders in Q1 2025?

NOV returned $109 million to shareholders in Q1 2025, consisting of $81 million in share repurchases (5.4 million shares) and the remainder in dividends.

What is NOV's revenue outlook for Q2 2025?

NOV expects Q2 2025 consolidated revenues to be down 1-4% year-over-year, with Adjusted EBITDA projected between $250 million and $280 million.

How did NOV's Q1 2025 earnings compare to Q1 2024?

NOV's net income decreased 39% to $73 million ($0.19 per share) in Q1 2025 compared to Q1 2024, while Adjusted EBITDA increased 5% to $252 million.

What major contracts did NOV win in Q1 2025?

NOV secured contracts including a Petrobras flexible pipe development agreement, a Japanese cable-lay system contract, a Middle East TEG gas dehydration project, and a deepwater conductor casing supply contract for Suriname's GranMorgu project.

How much cash and available credit did NOV have as of March 31, 2025?

As of March 31, 2025, NOV had $1.16 billion in cash and cash equivalents, with $1.50 billion available on its primary revolving credit facility.