NOV Inc. sees some competitive upsides as the global tariff fight unfolds thanks to its diversified supply chains, CEO Clay Williams said on the company’s April 29 earnings call.
Even so, the drilling and production equipment and services provider estimates tariff expenses for second-quarter at $8 million to $10 million and increasing to $15 million in subsequent quarters.
"We believe that this will be manageable for NOV and [that] our teams will be able to significantly reduce 80% or more, but probably not fully eliminate, the full effect of known tariffs,” he said. “About half of NOV’s manufacturing capacity is in the U.S. with the remainder spread out in various countries around the world, and we have a lot of options to adjust our supply chains.”
Williams, who said NOV started diversifying supply chains away from higher-risk markets in 2022, outlined the company’s five-point tariff plan:
- Leverage NOV’s U.S. manufacturing footprint to reshore as much content as possible for products destined for U.S. customers;
- Utilize the United States–Mexico–Canada Agreement trade agreement to make use of NOV's manufacturing capabilities in Mexico and Canada;
- Reroute manufacturing and assembly of products going to markets outside North America to international plants;
- Source raw materials from the U.S. or from lower-tariff countries when possible; and
- Negotiate discounts with vendors in higher-tariff countries to share costs, if suitable alternate suppliers aren’t available.
Still, Williams said, the effects are being felt. NOV has already seen some U.S. vendors increase prices for steel and other components as their Chinese competitors face tariffs.
“Near-term, we'll not be able to outrun the impact of tariffs on shipments that are in transit,” he said. “There will be unanticipated second-order effects, including the inflationary impact and extended lead times caused by all global manufacturers simultaneously trying to rewire their supply chains.”
Williams said he believes some of the company’s business lines will “realize improved competitive positioning as a result” of the tariffs. The downhole tools business has a wide base of global suppliers and manufacturing sites, he said, and NOV’s plant in Texas “produces the highest quality, most technically advanced drill pipe that has enabled super-extended lateral and ultra-deepwater drilling.”
Williams said NOV is the only U.S. provider of drill pipe that doesn't depend heavily on supplies from China. Other drill pipe makers will face tariffs, a relative benefit for NOV.
“If today’s tariff regime remains in place, customers will be able to purchase our premium drill pipe, which offers superior technology and quality, at prices that are much more competitive,” he said. “We’re looking forward to having a more even playing field.”
NOV reported net income of $73 million in first-quarter 2025, down 39% from a year earlier. Revenue fell 2% to $2.1 billion. NOV’s adjusted EBITDA increased 5% to $252 million.
For the second quarter, NOV expects revenue to slip between 1% to 4% from $2.22 billion in second-quarter 2024, with adjusted EBITDA between $250 million and $280 million.