HMH 2Q26 First Take – ALERT

Research evidence excerpt

J P M O R G A N

North America Equity Research

05 August 2026

HMH

2Q26 First Take – ALERT

Overweight

HMH, HMH US

Price (05 Aug 26):$20.62

Oil & Gas Exploration & Production

EBITDA Results. Adj. EBITDA $34mm vs. JPMe/STe $36/$36mm.

JPM View: Stock Reaction - Neutral. In a top-line that looks unremarkable on

the surface and net loss that included red ink, we would encourage investors to look

past the optics to the metrics that matter most in the early-innings of an offshore

recovery story: margins, cash, and orders. HMH printed Adjusted EBITDA of

$34mm (+3% YoY, +13% QoQ) slightly below JPMe/STe of $36mm, but delivered

EBITDA margins of 19.8% (+368bps YoY, +226bps QoQ) and FCF of $22.2mm

(up from $4.6mm in 1Q26). Meanwhile, orders of $205mm (+19% YoY, -6% QoQ)

held book-to-bill at 1.2x, driven by service order intake surging +50% YoY to

$118mm on digital technology strength. Revenue of $171mm was softer-thanexpected (-16% YoY, -0% QoQ) driven by Product segment revenue that was down

-38% sequentially due to delays in the Middle East. The total consolidated net loss

of -$5.0mm is almost entirely a non-cash accounting entry of a $22.0mm one-time

pre-IPO SBC charge that inflated SG&A to $60.4mm and is fully added back in the

Adjusted EBITDA bridge. Positively, interest expense fell to $3.9mm (from

$7.0mm in 1Q26 and $9.1mm in 2Q25) on retirement of the related-party loan with

the use of IPO proceeds, a tangible reduction in the go-forward cost of capital that

leaves the underlying operating trajectory firmly intact. Notably, HMH exited with

$119.7mm of cash and has no debt maturity until June 2028.

Arun Jayaram AC

(1-212) 622-8541

Jason Kim

(1-212) 622-1408

Sowmya Vemulapalli

(1-212) 270-4660

J.P. Morgan Securities LLC

Our positive thesis on HMH as a margin expansion story driven by disciplined cost

management, favorable mix, and increased utilization, with an order book that

converts to revenue in 2H26, remains intact. Management framed the sequential

softness as delayed equipment and repair bookings amid geopolitical uncertainty

and project-timing shifts on transient headwinds, which we believe continues to

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