HMH Q3 Revenue Falls 21% as Equipment Orders Shift to 2027

HMH Holding Inc. (HMH) reported a 21% year-over-year decline in third-quarter 2026 revenue as equipment order delays and a smaller backlog weighed on product sales. Several mining and offshore opportunities moved into 2027, though the company characterized the delays primarily as timing-related rather than evidence of weaker underlying demand.

Revenue totaled $171 million, unchanged from the second quarter. Adjusted EBITDA was $38.2 million, down 3% year over year but up 13% sequentially. The non-GAAP adjusted EBITDA margin reached 22.3%, an increase of 410 basis points from a year earlier and 250 basis points from the previous quarter. GAAP net income was $10.3 million.

Orders increased 12% year over year to $191 million, producing a book-to-bill ratio of 1.1 times. Order intake was 7% lower than in the second quarter.

Aftermarket Demand Offsets Product Weakness

Services generated $97 million of revenue, down 7% year over year but up 9% sequentially. The annual decline reflected contract services, partly offset by growth in repairs and digital technology, while stronger repair demand drove the quarter-over-quarter increase. Services orders rose 16% from a year earlier to $115 million, supported by repairs and field services, but declined 3% sequentially following strong digital technology activity in the prior quarter.

Spares revenue was $57 million, down 2% year over year and 6% from the second quarter, reflecting the pace and regional mix of orders. Spares order intake increased 7% year over year to $60 million as stronger European topside demand offset reduced Middle East demand. Orders fell 8% sequentially because of lower pressure-control spares activity, partly offset by higher topside spares orders.

Products remained the principal drag, with revenue falling 69% year over year and 19% sequentially to $17 million. HMH attributed the decline to a lower equipment backlog and reduced quarterly order intake. Product orders totaled $16 million, unchanged from a year earlier but down 27% from the second quarter, as lower pressure-control equipment orders outweighed an increase in topside equipment orders.

Working Capital Pressures Cash Flow

HMH used $6.2 million of cash in operating activities and recorded negative free cash flow of $11.6 million. The company said working capital was affected by preparations for anticipated demand, including the procurement of long-lead materials before receiving purchase orders. Management said this approach was intended to shorten delivery times, improve the company’s cost position and ensure readiness if expected orders convert.

HMH also maintained its cost base during the temporary equipment slowdown. According to the presentation, that decision reduced the pace of facility cost absorption and working-capital liquidation during the year.

At September 30, HMH had $90.1 million of cash, $107 million of net debt and $165 million of liquidity. Its $75 million revolving credit facility was undrawn, while the net-debt leverage ratio stood at 0.6 times.

Full-Year Outlook and Strategic Priorities

HMH provided full-year 2026 adjusted EBITDA guidance of $135 million to $140 million. Capital expenditures are expected to equal about 2% of revenue, consistent with the company’s asset-light operating model.

The company said increasing deepwater investment supports activity growth into 2027, although Middle East disruptions and rig-reactivation delays remained headwinds during the quarter. On September 21, HMH announced the acquisition of Deepwater Riser Services, expanding its riser-services presence and exposure to the deepwater market.

Capital-allocation priorities include reinvestment in the installed base, organic growth that meets return and capital-structure objectives, and a conservative balance sheet with sufficient liquidity. HMH said potential acquisitions must complement its core products and end markets, demonstrate a record of strong returns and fit an asset-light model.

The outlook remains subject to the timing and conversion of delayed equipment opportunities, continued regional disruption and rig-reactivation schedules. HMH’s investment in materials ahead of purchase orders may support delivery readiness, but it also ties up working capital before anticipated demand becomes firm orders.