Direct Speech: He said to his friend, "Good morning! How are you?"
Indirect Speech: He greeted his friend and asked how he was.
Explanation:
1. The salutation "Good morning!" in direct speech becomes "greeted" in indirect speech.
2. "How are you?" changes to "asked how he was" to convert the question into indirect speech.
3. The pronoun "you" changes to "he" because it is the friend's condition being reported.
\boxed{\text{He greeted his friend and asked how he was.}}