Third Quarter 2026
Filed Nov 4, 2026Revenue was $171.1 million, down 21% year-over-year and substantially flat sequentially; Adjusted EBITDA Margin was 22.3% and orders were $191 million, producing book-to-bill of 1.12x.
Revenue and net income attributable to HMH declined year-over-year amid lower volume across all three product lines and Middle East disruption, while service activity, mix, cost execution, order growth and expanded Adjusted EBITDA Margin supported sequential EBITDA improvement.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenueGAAP | $171.1M | substantially flat | down 21% |
| Service revenueGAAP | $97.13M | increased 9% | decreased 7% |
| Product revenueGAAP | $16.70M | decreased 19% | decreased 69% |
| Spare parts revenueGAAP | $57.20M | decreased 6% | decreased 2% |
| Related party revenueGAAP | $45K | – | – |
| Total cost of salesGAAP | $112.9M | – | decreased by $44.5 million, or 28% |
| Cost of sales as a percentage of revenueGAAP | 66% | – | – |
| Gross marginGAAP | 34% | down 2% | up 6% |
| Selling, general and administrative expensesGAAP | $33.93M | – | – |
| Research and development expensesGAAP | $222K | – | – |
| Restructuring and other expensesGAAP | $2.17M | – | – |
| Total operating expensesGAAP | $149.3M | – | – |
| Operating income (loss)GAAP | $21.83M | – | – |
| Interest income (expense), netGAAP | −$3.76M | – | – |
| Income (loss) before income taxesGAAP | $17.52M | – | – |
| Income tax (expense) benefitGAAP | −$7.18M | – | – |
| Net income (loss)GAAP | $10.34M | – | – |
| Net income attributable to HMH Holding Inc.GAAP | $4.98M | – | – |
| Net income (loss) as a percentage of revenueGAAP | 6.0% | – | – |
| Ordersother | $191M | down 7% | up 12% |
| Book-to-billother | 1.12x | – | – |
| Product order intakeother | $16M | decreased 27% | flat year-over-year |
| Service order intakeother | $115M | down 3% | up 16% |
| Spare parts order intakeother | $60M | down 8% | up 7% |
| Adjusted EBITDAnon-GAAP | $38.19M | up 13% | down 3% |
| Adjusted EBITDA Marginnon-GAAP | 22.3% | – | – |
| Net cash provided by (used in) operating activitiesGAAP | −$6.19M | – | – |
| Capital expenditures and development costsother | $5.4M | – | – |
| Free Cash Flownon-GAAP | −$11.59M | – | – |
| Cash and cash equivalentsGAAP | $90.07M | – | – |
| Long-term debt, netGAAP | $196.7M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| ServiceYear-over-year lower contract services agreement activity was partially offset by stronger digital technology and repair volume. Sequential growth was driven by increased demand for repairs and field services. | $97.13M | increased 9% | decreased 7% |
| ProductLower order intake and backlog of equipment orders, as well as delays in the Middle East due to the ongoing conflict in the region. | $16.70M | decreased 19% | decreased 69% |
| Spare partsThe year-over-year and sequential decreases reflect the pace of order intake and regional mix. | $57.20M | decreased 6% | decreased 2% |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Capital returns
- Purchase of treasury shares of $(2,198) (in thousands).
- Completed acquisition of Deepwater Riser Services for $14.5 million.
- Acquisition of business, net of cash of $(14,499) (in thousands).
What drove it
- Higher service activity offset lower product and spare parts revenue sequentially.
- Year-over-year revenue decline was driven by lower volume across product, service and spare parts.
- Adjusted EBITDA margin benefited from revenue mix, cost efficiencies and lower variable compensation expense.
- Year-over-year service order growth was driven by strong repair and field service volume.
- The acquisition of Deepwater Riser Services expands the aftermarket platform and riser inspection, recertification, refurbishment and storage capabilities.
Concerns
- Equipment order activity remained below expectations as larger equipment and upgrade opportunities shifted to later periods.
- Customer contract awards took longer than anticipated, narrowing execution windows for certain projects.
- Customers remained disciplined in capital deployment.
- Continued Middle East disruptions and rig reactivation delays remain near-term headwinds.
- Cash flow used in operating activities was $6.2 million and Free Cash Flow was negative at $11.6 million in the quarter.
What to watch
- Conversion of the equipment and upgrade opportunity pipeline into orders and revenue.
- Service activity, including repairs and field services, which supported sequential revenue and Adjusted EBITDA improvement.
- Middle East conflict-related delays and the stated roughly $17 million revenue and $8 million Adjusted EBITDA impact for the nine months ended September 30, 2026.
- Execution of the Houma, Louisiana consolidation and integration of Deepwater Riser Services.
- Product and spare parts order intake after their sequential declines.
Balance sheet and cash flow
- Cash and cash equivalents were $90,073 (in thousands) at September 30, 2026, compared to $96,585 (in thousands) at December 31, 2025.
- Total liquidity was approximately $165 million, inclusive of the revolving credit facility.
- Long-term debt, net was $196,727 (in thousands) at September 30, 2026.
- HMH has no long-term debt maturity until June 2028.
- Net cash provided by (used in) operating activities was $(6,189) (in thousands).
- Purchase of property, plant and equipment was $(1,727) (in thousands), and development costs were $(3,678) (in thousands).
- Net increase (decrease) in cash and cash equivalents was $(29,632) (in thousands).
Analysis
HMH reported a weaker year-over-year revenue period, with total revenue of $171.1 million down 21% as volume declined across product, service and spare parts. Product revenue decreased 69%, reflecting lower equipment order intake and backlog as well as Middle East delays. Service revenue declined 7% year-over-year but increased 9% sequentially on repairs and field services, making service the principal offset to sequential weakness in product and spare parts.
Profitability improved sequentially despite substantially flat revenue. Gross margin was 34%, while Adjusted EBITDA Margin was 22.3%, compared with 18.2% in the third quarter of 2025 and 19.8% in the second quarter of 2026. Management attributed the margin outcome to favorable mix, cost efficiencies and lower variable compensation expense. Adjusted EBITDA was $38.2 million, down 3% year-over-year but up 13% sequentially. Net income attributable to HMH was $5.0 million, compared with $16.2 million in the third quarter of 2025 and $5.0 million in the second quarter of 2026.
Orders provided a more constructive demand signal than revenue. Orders were $191 million, up 12% year-over-year, and exceeded revenue for book-to-bill of 1.12x. Service order intake rose 16% year-over-year on repair and field-service volume, while spare parts order intake rose 7%. Product order intake was flat year-over-year and declined 27% sequentially. Management said equipment and upgrade opportunities shifted to later periods, contract awards took longer than anticipated, and customers remained disciplined in capital deployment.
Cash generation was negative in the quarter. Cash flow used in operating activities was $6.2 million and Free Cash Flow was negative at $11.6 million. The company spent $5.4 million on capital expenditures and development costs and completed the Deepwater Riser Services acquisition for $14.5 million. HMH ended the period with $90.1 million of cash and cash equivalents and approximately $165 million of total liquidity. The filing provided no financial outlook, while identifying continued Middle East disruptions and rig reactivation delays as near-term headwinds and noting a roughly $17 million revenue and $8 million Adjusted EBITDA impact from the Middle East conflict for the nine months ended September 30, 2026.
Management, verbatim
Equipment order activity remained below our expectations in the third quarter as several larger equipment and upgrade opportunities shifted to later periods. Customer contract awards took longer than anticipated, narrowing execution windows for certain projects, while customers remained disciplined in their capital deployment. Importantly, we have not seen these opportunities disappear and continue to see a healthy pipeline across our installed base. Stronger service activity, favorable business mix, and disciplined cost execution provide resilience as we navigate this near-term variability and position the business for the next phase of market activity.
Eirik Bergsvik, Chief Executive Officer
We remain confident in the underlying deepwater fundamentals and believe HMH is well positioned to benefit from the opportunities developing into 2027. Continued Middle East disruptions and rig reactivation delays remain near-term headwinds, but our focus remains firmly on disciplined execution, strengthening our market position and converting our opportunity pipeline into profitable growth.
Eirik Bergsvik, Chief Executive Officer
Not in the filing
stated, not guessed- Forward financial guidance was not provided.
- Prior guidance was not provided.
- GAAP diluted EPS and non-GAAP diluted EPS were not reported.
- A tax rate was not reported.
- A prior-year or prior-quarter gross-margin percentage was not reported on the gross-margin line.
- Dividend information was not reported.
- A total debt figure was not reported.
- A debt maturity amount was not reported.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.