HMH Holding Inc. Class A ((HMH)) has held its Q2 earnings call. Read on for the main highlights of the call.

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HMH Holding Inc. Class A’s latest earnings call struck a cautiously optimistic tone. Management highlighted strong order growth, expanding margins, and solid cash generation that support a constructive long‑term view. At the same time, they acknowledged sharp product revenue declines, regional delays, and softer repair demand that are weighing on near‑term results but framed these as timing issues rather than structural weakness.

Robust Order Growth and Healthy Book‑to‑Bill

HMH reported quarterly orders of $205 million, up 19% year‑over‑year, signaling solid demand in core markets. The book‑to‑bill ratio came in at 1.2x, meaning new orders exceeded revenue and pointing to a growing backlog that should support future top‑line expansion.

Aftermarket Services and Digital Upgrades Drive Momentum

Aftermarket services orders reached $118 million, surging 50% year‑over‑year and 19% sequentially. Management attributed this strength to demand for digital technology upgrades, which deepen customer relationships and increase visibility into recurring revenue streams.

EBITDA Margins Edge Higher on Cost Discipline

Adjusted EBITDA rose to $34 million, up 3% year‑over‑year and 13% versus the prior quarter. The adjusted EBITDA margin improved to roughly 19.8%–20%, reflecting disciplined cost execution and a favorable business mix despite revenue headwinds.

Spares Recovery and Service Revenue Strength

Spares revenue came in at $61 million, up 17% from a year earlier even though it slipped 8% sequentially on timing. Service revenue climbed to $89 million, a robust 24% sequential increase, highlighting growing digital and repair activity compared with the prior quarter.

Positive Free Cash Flow and Solid Liquidity

Free cash flow was a positive $22 million in the quarter when excluding one‑time IPO cash impacts. The company closed the period with $120 million in cash and cash equivalents and total liquidity of about $195 million, including its revolver, giving it flexibility to navigate volatility.

Improved 2027 Visibility and Industry Tailwinds

HMH now has roughly 80% visibility into 2027 floater rig years, up from about 65% at the same point last year. Management cited industry forecasts for stronger floater utilization and multi‑year contracts that should underpin long‑term aftermarket demand.

Guidance Intact and CapEx Discipline

Full‑year 2026 adjusted EBITDA guidance was reaffirmed at $157–$177 million, underscoring confidence in the trajectory. Capital spending excluding development is expected to be about 2% of revenue, reflecting an asset‑light, disciplined approach to investment.

Strategic M&A Pipeline Under Evaluation

Executives noted that the company is actively advancing several strategic M&A opportunities. They see high‑quality assets that could broaden capabilities and, if executed prudently, support long‑term value creation for shareholders.

Sharp Product Revenue Decline Clouds Near Term

Product revenue fell to $21 million, down 66% year‑over‑year and 38% sequentially, marking a significant drag on total sales. Management linked the drop to a lower starting backlog and delayed equipment deliveries and installations, with the Middle East particularly affected.

Middle East Delays Push Revenue Out

Installation and delivery delays in the Middle East created an estimated $10 million revenue headwind in the quarter. Some equipment and installation work remains pushed out, with management indicating that certain revenue may slip into later periods and potentially into 2027.

Weaker Short‑Cycle Repair Demand

Short‑cycle repair activity came in softer than planned, weighing on aftermarket services revenue, which was down 4% year‑over‑year. Even so, aftermarket revenue improved sequentially, underscoring quarter‑to‑quarter variability driven by timing of customer repair decisions.

Nonrecurring IPO and Restructuring Charges

The quarter included $22.8 million of nonrecurring IPO expenses and $5 million of restructuring charges. These one‑time items reduced reported earnings and clouded comparisons to prior periods but are not expected to recur at the same scale.

Sequential Order Softness and Customer Caution

Total orders were down 6% sequentially, reflecting normal timing variability in product awards and repair projects. Management also pointed to slower customer decision‑making amid geopolitical uncertainty, which may delay near‑term revenue recognition.

Spares Timing Volatility and Near‑Term Risk

While spares revenue rose strongly year‑over‑year, the 8% sequential decline illustrates the timing‑driven nature of that business. Executives cautioned that customers are pacing spend ahead of fleet reactivations, which could drive some near‑term volatility in spares demand.

Forward‑Looking Outlook and Second‑Half Inflection

HMH reiterated full‑year 2026 adjusted EBITDA guidance and expects revenue to be meaningfully stronger in the second half versus the first. Management also anticipates another quarter of book‑to‑bill above 1x and sees roughly 80% visibility into 2027 floater rig years, supporting expectations for an order and revenue inflection as industry activity builds.

The call painted a picture of a business facing short‑term friction but strengthening underneath. Order growth, higher margins, and solid cash flow show HMH’s core fundamentals improving, while delays and softer repairs mainly reflect timing and macro caution. For investors, the key takeaway is that management sees a more favorable earnings and revenue profile emerging into late 2026 and 2027, supported by strong backlog and industry tailwinds.