National Oilwell Varco's 2025 Q2 Earnings Call: Unpacking Key Contradictions in Growth, Tariffs, and Market Recovery

Market opportunities and growth drivers, tariff mitigation strategies and impact on cash flow, offshore market recovery, cost reduction and market preparation, and market growth expectations are the key contradictions discussed in National Oilwell Varco's latest 2025Q2 earnings call.



Revenue and Profitability Trends:
- NOV reported revenue of $2.2 billion for Q2 2025, representing a 4% increase sequentially but a 1% decrease year-on-year.
- The company's adjusted EBITDA was $252 million, corresponding to 11.5% of sales.
- The sequential revenue increase was driven by strong capital equipment sales, particularly in the Energy Equipment segment, while the year-on-year decline was attributed to reduced demand for aftermarket parts and consumable products, especially in North America.

Market Challenges and Global Activity:
- NOV's Energy Products and Services segment reported a 2% decrease in revenue compared to Q2 2024, which was offset by a 3% sequential increase in sales.
- The decline was due to a 6% drop in global drilling activity, exacerbated by tariff-related and inflationary cost pressures.
- The company expects North American oil-directed rig counts to decline further, impacting business activity in the region.

Offshore Deepwater Activity:
- The company's offshore drilling contractor customers face challenges with white space utilization, but anticipate easing in 2H 2026.
- NOV is seeing robust demand for subsea flexible pipe and expects offshore activity to accelerate in 2026.
- The outlook for production-related projects remains encouraging, with a healthy backlog and expected demand for FPSO awards.

Cost Reduction and Efficiency Initiatives:
- NOV plans to remove over $100 million in annual costs by the end of 2026 through various structural cost reduction and process improvement efforts.
- The company is addressing higher tariffs and inflation by leveraging supply chain experience and versatile manufacturing footprint.
- NOV is also focusing on strategic sourcing, business consolidations, and exiting non-profitable product lines to enhance operational efficiencies.