S-1/A: HMH Holding Inc. Launches IPO, Targets Offshore Drilling Growth

HMH Holding Inc. announces its initial public offering of 10.52 million Class A common shares, aiming to reduce debt and capitalize on a recovering offshore and international onshore oil and gas market.

Summary

• HMH Holding Inc. is offering 10,520,000 shares of its Class A common stock in an initial public offering, with an estimated price range of $19.00 to $22.00 per share.
• The company will use $40.5 million of the net proceeds to purchase B.V. Voting Class A and B Shares from Baker Hughes and Akastor, and contribute the remaining net proceeds to HMH B.V. to repay $137.1 million in Shareholder Loans.
• HMH Holding Inc. will operate under an Up-C structure, with Principal Stockholders (Baker Hughes and Akastor) initially holding 75.6% of the combined voting power through Class B common stock.
• For the year ended December 31, 2025, net income was $46.1 million (5.6% of revenue), a decrease from $52.0 million in 2024.
• Adjusted EBITDA for 2025 was $156.2 million (19.0% of revenue), a slight decrease from $158.4 million in 2024.
• Free Cash Flow significantly increased to $72.0 million in 2025 from $16.5 million in 2024.
• Revenue decreased by 2.6% to $821.8 million in 2025 from $843.4 million in 2024, primarily due to lower spare parts and product revenue, partially offset by increased service revenue.
• Aftermarket services accounted for 46.7% of revenue in 2025, sales of spare parts for 27.3%, and sales of projects and products for 26.0%.
• The company has a backlog of $329.3 million as of December 31, 2025, with $115.4 million from projects and products and $213.9 million from services.
• HMH Holding Inc. is an emerging growth company and will take advantage of reduced public company reporting requirements.
• The company has identified and remediated material weaknesses in internal control over financial reporting in 2024 and 2025.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this filing positively, reflecting a strategic move to public markets that will significantly reduce debt and provide capital for growth. While net income saw a slight dip, strong Free Cash Flow generation and a stable Adjusted EBITDA, coupled with a positive outlook for core and adjacent markets, indicate a healthy underlying business. The IPO structure and management's experience further support a favorable long-term view, despite inherent industry cyclicality and regulatory risks.

Positives

• Significant increase in Free Cash Flow to $72.0 million in 2025 from $16.5 million in 2024, demonstrating improved liquidity.
• Strong Adjusted ROCE of 19.9% in 2025, indicating efficient use of capital.
• Asset-light business model with low capital expenditures (2.4% of revenue in 2025 and 2024) allows for scalable growth with limited incremental investment.
• Recurring and resilient revenue streams from aftermarket services (46.7% of revenue in 2025) and spare parts sales (27.3% of revenue in 2025).
• Large global installed base of over 1,100 equipment installations, with approximately 75% serving the highly regulated offshore drilling market, driving consistent demand for services.
• Positioned to capitalize on expected growth in offshore and international onshore oil and gas drilling markets, with Rystad Energy forecasting over $700 billion in global upstream capital expenditures for 2025-2027.
• Active investment in R&D, developing cutting-edge technologies like a fully electric BOP, hybrid energy solution rigs, and advanced digital solutions (DrillPerform, RiCon, DrillCERT, SeaLytics, DEAL) to enhance safety, efficiency, and reduce emissions.
• Experienced management team with over 20 years in the drilling segment and a proven track record in M&A and business integration, including the successful formation of HMH B.V. and the Drillform Acquisition.
• Expansion into adjacent industries like onshore and subsea mining, leveraging existing engineering and manufacturing expertise, with increasing demand for mining equipment like slurry pumps.
• Remediation of previously identified material weaknesses in internal control over financial reporting in 2024 and 2025.

Negatives

• Net income decreased by 11.2% to $46.1 million in 2025 from $52.0 million in 2024.
• Total revenue decreased by 2.6% to $821.8 million in 2025 from $843.4 million in 2024, driven by decreases in spare parts revenue ($23.6 million) and product revenue ($12.0 million).
• Cost of sales as a percentage of revenue increased to 70.1% in 2025 from 67.7% in 2024, due to revenue mix, lower facility utilization, and a $12.3 million contract asset write-off.
• Adjusted ROCE decreased to 19.9% in 2025 from 22.0% in 2024.
• Dependence on a limited number of customers, with the top five customers accounting for 45.2% of total consolidated revenues in 2025, and one customer accounting for 20.8% of revenues.
• Increased interest expense, net, by $6.1 million (16.4%) to $43.4 million in 2025, mainly due to a loss on debt extinguishment from refinancing senior secured bonds.
• Restructuring and other expenses increased by $4.9 million in 2025, attributable to an internal restructuring program and lease exits.

Risks

• The cyclical nature of the oil and natural gas E&P industry and volatility of oil and natural gas prices directly affect demand for products and services.
• Intense competition in the oilfield services industry, including from larger companies with greater resources and numerous small local competitors, could lead to market share loss or price reductions.
• Dependence on suppliers and a limited number of customers, with potential for product shortages, long lead times, price increases, and adverse impacts from customer defaults or contract cancellations.
• Risks associated with multi-year, fixed-price contracts, including cost over-runs, operating cost inflation, labor availability, supplier pricing, and potential claims for liquidated damages.
• Impact of global geopolitical developments (e.g., Russia-Ukraine war, Middle East conflicts, Venezuela instability) on economic conditions, supply chains, and demand for products and services.
• Exposure to changing macroeconomic conditions, including inflation, which could increase operating costs and capital expenditures, and interest rate fluctuations affecting debt servicing costs.
• Growth through acquisitions involves risks such as difficulties in identifying suitable targets, integrating businesses, obtaining financing, and potential for increased leverage.
• Risks related to existing international operations and expansion into new geographical markets, including political/social instability, export controls, economic sanctions, and foreign currency exchange rate fluctuations.
• Potential for material weaknesses in internal control over financial reporting to be identified in the future, leading to restatements or failure to meet reporting obligations.
• Changes in tax laws, regulations, and treaties (e.g., Pillar Two, IRA 2022, One Big Beautiful Bill Act) could adversely affect tax liabilities and financial results.
• Non-compliance with anti-corruption laws and economic sanctions could result in penalties, fines, and reputational harm.
• Impairment in the carrying value of long-lived assets, goodwill, or other intangible assets could reduce earnings.
• New technology from competitors could make the company less competitive or require substantial development costs.
• Inadequate intellectual property rights protection or inability to obtain/retain licenses to third-party IP could negatively impact business.
• Errors or failures in proprietary software could result in liability or reputational damage.
• Cybersecurity attacks, IT system failures, and network disruptions pose risks of data breaches, operational interruptions, and reputational damage.
• Indebtedness could materially adversely affect financial condition, limiting ability to obtain additional financing or requiring substantial cash flow for debt service.
• As a holding company, dependence on distributions from HMH B.V. to pay taxes, Tax Receivable Agreement obligations, and corporate expenses.
• Lack of an existing public market for Class A common stock, with potential for price volatility and difficulty in selling shares.
• Payments under the Tax Receivable Agreement could be significant and potentially exceed actual tax benefits, especially upon early termination or change of control.
• Principal Stockholders' concentrated voting power (75.6%) may conflict with other stockholders' interests.
• Significant reduction of ownership interests by Principal Stockholders could adversely affect the company.
• Risk of HMH B.V. being treated as a publicly traded partnership for U.S. federal income tax purposes, leading to significant tax inefficiencies.
• Immediate and substantial dilution for new investors in the IPO.
• Increased costs and management time required for public company compliance.
• Future sales by existing stockholders could cause stock price decline.
• Anti-takeover provisions in organizational documents could delay or prevent a change of control.
• Uncertainty regarding dividend payments, as the company intends to retain future earnings for growth.
• Environmental liabilities and stringent regulations (e.g., NPCA, EU Taxonomy, CSRD, CS3D, Clean Air Act, Clean Water Act) could increase costs, delay projects, or reduce demand for products and services.
• Increased activism against oil and natural gas exploration and development activities could lead to decreased drilling, reputational harm, and reduced access to capital.
• Physical climate risks (e.g., severe weather) and transition risks (e.g., evolving climate regulation, alternative fuel mandates, shifting consumer preferences) could increase operating expenses or decrease resources.
• Imposition of laws or executive actions to restrict, delay, or cancel leasing, permitting, or drilling activities in deepwaters could reduce demand for services and products.

Future Outlook

The company anticipates continued growth in global oil and gas activity, particularly in offshore E&P spending and Middle East onshore E&P spending. Rystad Energy forecasts global greenfield and brownfield oil and gas capital expenditures to exceed $700 billion annually from 2025-2027, a 60% increase from 2020. Offshore floater rig activity is expected to grow at a compounded annual rate of approximately 4% between 2025 and 2028. The company expects increased demand for its equipment, aftermarket services, and spare parts due to increased drilling activity, aging equipment, and reactivation of stacked rigs. Opportunities for newbuild offshore rigs may arise as market demand increases. The company also projects continued growth in demand for its mining-related equipment, such as slurry pumps, driven by large-scale electrification and renewable energy initiatives.

Management Comments

• "We believe that oil and gas will continue to play a leading role in the future global energy mix."
• "We believe that current low levels of E&P capital spending are not sustainable, and the E&P industry will require more capital investment in order to increase production capacity to meet near-term and long-term demand for oil and gas."
• "We believe that we are well-positioned to continue supporting and building our presence in the offshore drilling market as a result of our full, integrated suite of mission-critical drilling solutions, highly technical expertise, aftermarket services offerings and long experience providing and maintaining equipment in this industry."
• "We believe that there is limited availability of premium, modern jack-ups that could be supportive of continued newbuild activity in the near term as operator requirements continue to increase and the availability of suitable jack-up rigs remains limited."
• "We plan to focus our development efforts in the coming years on what we believe are game-changing technologies like open water drilling and the electric BOP."
• "Our management team has established conservative financial principles to guide us through decision-making in any potential commodity cycle."

Industry Context

StockSavvy.ai notes that HMH Holding Inc.'s strategic focus on offshore drilling and adjacent mining industries aligns with broader market trends. Rystad Energy forecasts significant increases in global upstream capital expenditures for oil and gas, particularly in offshore and international onshore markets, which provides a favorable backdrop for HMH's core business. The increasing demand for critical minerals, driven by renewable energy technologies, also positions HMH to leverage its expertise in mining applications. The industry is experiencing a recovery in offshore rig utilization and day rates, especially for modern high-spec floaters, after a prolonged downturn. However, the industry remains susceptible to geopolitical instability, commodity price volatility, and evolving environmental regulations, which could impact customer spending and operational costs.

Comparison to Industry Standards

• HMH Holding Inc. is one of only a few providers of subsea BOPs accepted by major drilling contractors and operators in key offshore geographies like the Gulf of Mexico and the Norwegian sector of the North Sea, indicating a strong competitive position in mission-critical equipment.
• The company holds the second-largest installed base of topside drilling equipment and risers and the third-largest installed base within main pressure control equipment categories (including BOPs and diverters) in the global offshore drilling fleet, comparable to major competitors like NOV Inc. and Schlumberger Limited's Cameron International.
• HMH's asset-light business model and strong Adjusted ROCE of 19.9% in 2025 suggest capital efficiency that may compare favorably to more capital-intensive industry peers.
• The company's R&D efforts, including the development of a fully electric BOP and advanced digital solutions, demonstrate a commitment to innovation that is critical for maintaining competitiveness against industry leaders and addressing evolving customer demands for efficiency and environmental sustainability.
• While the onshore drilling market is more fragmented with numerous smaller competitors and Chinese manufacturers, HMH is growing its market presence and is among the leading OEMs in multiple onshore equipment categories, indicating effective competition in a diverse market.

Management Changes

Corporate Governance

Legal Proceedings

• The company is a party to ongoing legal proceedings in the ordinary course of business, but does not believe the results will have a material adverse effect on its business, financial condition, results of operations, or liquidity.
• Multiple lawsuits have been filed challenging the SEC's new climate rules, which have been consolidated in the U.S. Court of Appeals for the Eighth Circuit. The SEC issued an order staying the final rules until judicial review is complete, and later voted to end the defense of the rules in litigation. The Eighth Circuit has held the cases in abeyance pending further SEC action.
• The U.S. Court of Appeals for the Ninth Circuit issued an injunction to the enforcement of the California Climate-Related Financial Risk Act, and the California Air Resources Board indicated it will not enforce the January 1, 2026 deadline, pending resolution of ongoing judicial challenges.
• Litigation regarding the EPA's rescission of the Endangerment Finding and prior scientific assessment of climate change risks is ongoing, with unclear impacts on GHG emissions regulation.
• Legal challenges to federal offshore leasing decisions could delay or suspend offshore lease auctions.
• The temporary pause on the DOE's review of LNG export authorizations was overturned by the U.S. District Court for the Western District of Louisiana in July 2024, and the Trump Administration restarted the review in January 2025.

Related Party Transactions

• HMH B.V. entered into a loan agreement (Shareholder Loan Agreement) with Baker Hughes Holdings LLC and Akastor AS on October 1, 2021, to finance operations. As of December 31, 2025, $143.7 million was outstanding ($112.4 million to Baker Hughes, $31.3 million to Akastor), bearing 8.0% interest per annum. These loans are unsecured and will be repaid with IPO proceeds.
• HMH B.V. entered into Shareholder Notes with Baker Hughes Holdings LLC ($3.45 million) and Akastor AS ($3.49 million) on March 17, 2023, accruing 8.0% interest per annum. These will be netted against Shareholder Loans in connection with the IPO.
• HMH B.V. has license agreements with a Baker Hughes subsidiary for limited use of 'Vetco' and 'VetcoGray' trademarks and other intellectual property, perpetual for IP and renewable for trademarks.
• A remarketing agreement with Baker Hughes requires HMH B.V. to provide services for the sale, leasing, or remarketing of certain BOPs and associated control systems returned to Baker Hughes.
• A transition services agreement with Baker Hughes for administrative, finance, and digital services concluded, with HMH B.V. paying $15.8 million.
• Baker Hughes assigned $6.8 million of account receivables to HMH B.V. as full payment for an excess long-term incentive liability identified in the post-closing statement related to HMH B.V.'s formation.
• Akastor agreed to pay certain carved-out pension liabilities existing in MHWirth AS prior to its contribution to HMH B.V. until Akastor owns less than 5% of HMH B.V.'s equity interests. HMH B.V. recorded a receivable of $21.4 million from Akastor for these payments as of December 31, 2025.
• Akastor issued financial guarantees of approximately $5.0 million in favor of MHWirth AS for performance under certain operational support frame agreements as of December 31, 2025.
• A transition services agreement with Akastor for finance, IT, and treasury services concluded at the end of 2023, with HMH B.V. paying $0.4 million.
• The contribution of Akastor's subsidiary, Step Oiltools B.V., was delayed due to Russian regulatory approvals. Following the Russian invasion of Ukraine and subsequent liquidation of Step Oiltools, the parties settled a sellers credit of approximately $16.0 million payable by Akastor to HMH B.V. in exchange for liquidation proceeds. The fair value of this receivable was remeasured to zero as of December 31, 2025 and 2024.

Stakeholder Impact

• **Shareholders (New Class A):** Will experience immediate and substantial dilution ($11.1 per share) due to the IPO price being significantly higher than the pro forma net tangible book value. Their voting power will be 24.4% (or 28.1% if underwriters exercise option), while Principal Stockholders retain majority voting power, potentially limiting influence.
• **Shareholders (Principal Stockholders Baker Hughes & Akastor):** Will retain significant control (75.6% voting power) and economic interest in HMH B.V. through Class B common stock and B.V. Non-Voting Shares. They will benefit from the Tax Receivable Agreement, receiving 85% of certain tax savings, and have rights to designate board members.
• **Employees:** Will benefit from the 2026 Long-Term Incentive Plan (LTIP) and the vesting of historical phantom awards upon IPO, providing equity incentives. However, the company has undergone workforce reductions and reorganizations in recent years, impacting 135 individuals in 2025. Certain employees in international markets are represented by labor unions, which could lead to labor disruptions.
• **Customers:** Will continue to receive highly engineered equipment, aftermarket services, and digital solutions. The company's R&D efforts aim to improve safety, efficiency, and reduce costs for customers. However, dependence on a limited number of customers and the cyclical nature of the oil and gas industry pose risks to customer relationships and demand.
• **Suppliers:** The company relies on a broad range of raw materials and components from key vendors. Supply chain disruptions, price increases, or non-performance by suppliers could negatively impact operations and costs.
• **Creditors:** The IPO proceeds will be used to repay $137.1 million in Shareholder Loans, reducing the company's overall indebtedness and potentially improving its credit profile. Existing debt agreements contain restrictive covenants that could limit financial flexibility.

Next Steps

• Complete the initial public offering and list Class A common stock on The Nasdaq Global Select Market under the symbol HMH.
• Repay $137.1 million of outstanding Shareholder Loans using IPO proceeds.
• Implement the 2026 Long-Term Incentive Plan (LTIP) and grant awards to directors, consultants, and employees.
• Continue R&D efforts on game-changing technologies like open water drilling and the electric BOP, seeking funding from operator partners.
• Focus on organic and inorganic investments to increase penetration in the onshore drilling market.
• Continue to utilize engineering and manufacturing expertise for growth in onshore and subsea mining businesses.
• Explore expansion into adjacent markets consistent with core competencies, such as completion, intervention, and production equipment for oil and gas, renewables, marine products, and industrial equipment.
• Identify, source, acquire, and integrate businesses with similar characteristics (aftermarket component, proprietary technology, capital-light model).
• Publicly report EU Taxonomy-alignment of activities in coming years as CSRD reporting begins.
• List the Senior Secured Bonds due 2028 on the Euronext ABM during the first half of 2026.
• Determine and disclose 2025 annual cash bonus amounts for Named Executive Officers by April 30, 2026.

Key Dates

Recommendation

HMH Holding Inc.'s IPO is a significant event that will deleverage the company by repaying substantial shareholder loans and provide capital for strategic growth initiatives, particularly in the recovering offshore drilling and adjacent mining sectors. While the company faces inherent cyclicality in the oil and gas industry and has experienced a slight dip in net income in 2025, its strong Free Cash Flow generation, asset-light model, and commitment to R&D are positive indicators. However, the concentration of voting power with Principal Stockholders and the immediate dilution for new investors warrant a cautious approach. The long-term success hinges on effective execution of growth strategies and navigating geopolitical and regulatory challenges. A 'hold' recommendation is appropriate for investors to observe the company's performance as a public entity and its ability to capitalize on market opportunities while managing identified risks.

Keywords

Oil and Gas Drilling, Offshore Drilling, Aftermarket Services, Drilling Equipment, Pressure Control Systems, BOPs, Digital Solutions, Mining Industry, IPO, SEC Filing, Up-C Structure, Tax Receivable Agreement, Energy Technology, Capital Expenditures, Free Cash Flow, Adjusted EBITDA, ESG, Climate Change, Supply Chain, International Operations, R&D, Hydril, Wirth, Maritime Hydraulics, Nasdaq