NOV
Ouch, the quarter hit back
NOV just told investors its first-quarter numbers are looking softer, with adjusted EBITDA now expected to land at $177 million instead of the earlier $200 million to $225 million range. That’s not exactly the kind of surprise that makes a stock pop on a Wednesday afternoon.
What went wrong?
Management blamed disruptions in the Middle East tied to the Iran War, which clipped:
- about $54 million in revenue
- about $32 million in EBITDA
The pain was concentrated in end-of-quarter deliveries of capital equipment and products, and the company also got squeezed by higher shipping and freight costs plus weaker manufacturing cost absorption. Translation: the operating gears are still turning, but they’re grinding a little louder than anyone wants.
The side quests: rating, board, dividend
RBC Capital reiterated a Sector Perform rating and a $21 price target, which is basically Wall Street’s way of saying, “We see the drama, but we’re not overreacting yet.” NOV also said board member Ben A. Guill resigned for personal reasons, and the company bumped its quarterly dividend 20% to $0.09 per share.
Big picture
For investors, the main story is margin pressure from geopolitics bleeding into a very real earnings revision. The dividend hike is a nice headline, but the near-term question is whether NOV can keep deliveries, freight, and factory utilization from turning the quarter into a slow-motion game of whack-a-mole.