DNOW Inc
For the period ended Mar 31, 2025. Filed May 7, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 7, 2025
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DNOW$13.27-3.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0000950170-24-123220
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-07.
0000950170-25-065520
Forward-Looking StatementsCompany OverviewSummary of Reportable SegmentsOperating Environment OverviewExecutive SummaryOutlookResults of OperationsNon-GAAP Financial Measure and ReconciliationLiquidity and Capital ResourcesCapital SpendingShare Repurchase ProgramCritical Accounting EstimatesThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 88 previous paragraphs and 74 current paragraphs.
29 unchanged; 35 reworded; 9 added; 21 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
The following discussion should be read in conjunction with the unaudited consolidated financial statements and notes thereto contained in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto included in the most recent Annual Report on Form 10-K.
Current report
The Company has committed to close certain foreign subsidiaries in the International segment. Impairment of assets were not material for the three months ended March 31, 2025; however, accumulated translation gains and losses attributable to the foreign subsidiaries which are components of other comprehensive income (loss) are reclassified to earnings and may result in additional charges when liquidations are substantially complete.
Current report
For the three months ended March 31, 2025, revenue was $63 million, an increase of $1 million or 1.6% when compared to the corresponding period of 2024. For the three months ended March 31, 2025, the increase was primarily driven by stronger project activity.
Current report
For the three months ended March 31, 2025, other income (expense) was nil compared to $1 million for the corresponding period of 2024. For the three months ended March 31, 2025, the change was primarily attributable to a decrease in interest income compared to the prior year.
Current report
Stock-based compensation excludes less than $1 million for the three months ended March 31, 2025 as such amounts were reported in Other.
Current report
For the three months ended March 31, 2025, Other primarily included approximately $2 million of transaction-related charges and $1 million of International restructuring charges, both of which were included in warehousing, selling, and administrative.
Current report
For the three months ended March 31, 2024, Other was related to transaction-related charges, including approximately $2 million in warehousing, selling and administrative, and approximately $1 million in cost of products for cost of inventory that was stepped up to fair value during purchase accounting related to an acquisition.
Current report
In connection with acquisitions in 2024, the Company is committed to total future retention payments of up to $13 million payable in 2026 and 2027. Payments are due to various employees if non-financial post combination service conditions are met pursuant to the terms and conditions of the retention agreements.
Current report
For the three months ended March 31, 2025, net cash used in operating activities was $16 million compared to $81 million provided by operating activities in the corresponding period of 2024. For the three months ended March 31, 2025, net cash used in operating activities was primarily related to a net increase of $65 million in working capital. The increase reflected a proactive investment of $32 million in inventory to support customer demand, coupled with $52 million growth in accounts receivable due to revenue growth and timing of collections.
Removed paragraphs (21)
Previous report
Forward-Looking Statements
Previous report
Company Overview
Previous report
Summary of Reportable Segments
Previous report
In the third quarter of 2024, we began a plan to restructure operations in the International segment to optimize locations to improve operating margins. For the three and nine months ended September 30, 2024, the Company recognized $8 million in charges, including approximately $5 million of foreign currency translation losses included in impairment and other charges, approximately $2 million of inventory write-downs included in cost of products and $1 million of other exit costs included in warehousing, selling and administrative. We could incur additional non-cash foreign currency translation losses as we complete the International restructuring; however we do not expect the remaining restructuring related liabilities to be material.
Previous report
Basis of Presentation
Previous report
The unaudited consolidated financial information included in this report has been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and Article 10 of SEC Regulation S-X. All significant intercompany transactions and accounts have been eliminated. Variable interest entities for which the Company is the primary beneficiary are fully consolidated with the equity held by the outside stockholders and their portion of net income (loss) reflected as noncontrolling interest in the accompanying consolidated financial statements. The principles for interim financial information do not require the inclusion of all the information and footnotes required by GAAP for complete financial statements. Therefore, these financial statements should be read in conjunction with the financial statements included in the Company’s most recent Annual Report on Form 10-K. In the opinion of the Company's management, the consolidated financial statements include all adjustments, which are of a normal recurring nature unless disclosed otherwise, necessary for a fair presentation of the results for the interim periods. The results of operations for the three and nine months ended September 30, 2024, are not necessarily indicative of the results to be expected for the full year.
Previous report
Operating Environment Overview
Previous report
Executive Summary
Previous report
Outlook
Previous report
Results of Operations
Previous report
For the three and nine months ended September 30, 2024, revenue was $59 million and $186 million, a decrease of $13 million or 18.1% and $32 million or 14.7%, respectively, when compared to the corresponding periods of 2023. For the three and nine months ended September 30, 2024, the decreases were primarily driven by weaker project activity.
Previous report
Impairment and other charges
Previous report
For the three and nine months ended September 30, 2024, impairment and other charges were $5 million in both periods, compared to nil for the corresponding periods of 2023. For the nine months ended September 30, 2024, the Company recognized approximately $5 million of foreign currency translation losses as a result of substantially completing the liquidation of certain foreign subsidiaries in the International segment.
Previous report
For the three and nine months ended September 30, 2024, the Company recorded expense of $1 million and income of nil, respectively, compared to expense of nil and $1 million, respectively, for the corresponding periods of 2023. For the nine months ended September 30, 2023, the improvements were primarily attributable to an increase in interest income.
Previous report
For the three months ended September 30, 2024, Other was primarily related to the International restructuring charges of $8 million, of which approximately $5 million of foreign currency translation losses included in impairment and other charges, approximately $2 million of inventory write-downs included in cost of products and $1 million of other exit costs included in warehousing, selling and administrative; additionally, Other also included transaction-related charges of approximately $2 million recorded in warehousing, selling and administrative.
Previous report
EBITDA % excluding other costs is defined as EBITDA excluding other costs divided by Revenue.
Previous report
Liquidity and Capital Resources
Previous report
For the nine months ended September 30, 2024, net cash provided by operating activities was $176 million compared to $83 million provided by operating activities in the corresponding period of 2023. For the nine months ended September 30, 2024, net cash provided by operating activities comprised of $59 million of net income; plus $75 million of reconciling adjustments, primarily depreciation, amortization, and deferred income taxes; and a net decrease of $42 million in working capital. For the nine months ended September 30, 2024, the improvement was primarily driven by improved inventory efficiency and better collections.
Previous report
Capital Spending
Previous report
Share Repurchase Program
Previous report
Critical Accounting Policies and Estimates
Reworded paragraphs (35)
Previous wording
Some of the information in this document contains, or has incorporated by reference, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements typically are identified by use of terms such as “may,” “believe,” “anticipate,” “expect,” “plan,” “predict,” “estimate,” “will be” or other similar words and phrases, although some forward-looking statements are expressed differently. You should be aware that our actual results could differ materially from results anticipated in the forward-looking statements due to a number of factors, including, but not limited to, changes in oil and gas prices, changes in the energy markets, customer demand for our products, significant changes in the size of our customers, difficulties encountered in integrating mergers and acquisitions, general volatility in the capital markets, ability to complete the share repurchase program, changes in applicable government regulations, increased borrowing costs, geopolitical conditions (including the Ukraine and Middle East conflicts and their regional and global impacts) or any litigation arising out of or related thereto, impairments in long-lived assets and worldwide economic activity. You should also consider carefully the statements under “Risk Factors,” as disclosed in our Form 10-K, which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements. Given these uncertainties, current or prospective investors are cautioned not to place undue reliance on any such forward-looking statements. We undertake no obligation to update any such factors or forward-looking statements to reflect future events or developments.
Current wording
Some of the statements in this document including information referenced or incorporated by reference from our other filings with the SEC, constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements typically are identified by use of terms such as “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “plans,” “may,” “will,” “might,” “would,” “should,” “seeks,” “project,” “predict,” “potential,” “currently,” “continue,” “intends,” “outlook,” “forecasts,” “targets,” “reflects,” “could,” or other similar words and phrases, although some forward-looking statements could be expressed differently. Forward-looking statements are current only as of the date they are made. You should be aware that our actual results could differ materially from results anticipated in the forward-looking statements due to a number of factors and risks many of which are outside of our control, including, but not limited to, changes in oil and gas prices, changes in the energy markets, customer demand for our products, changes in trade policies including the imposition or elimination of additional tariffs and duties, significant changes in the size of our customers, difficulties encountered in integrating mergers and acquisitions, general volatility in the capital markets, ability to complete the share repurchase program, changes in applicable government regulations, increased borrowing costs, geopolitical conditions and tensions (including the Ukraine and Middle East conflicts and their regional and global impacts) or any litigation arising out of or related thereto, impairments in long-lived assets, the occurrence of cyber incidents, or failure by us or our third-party service providers to maintain cybersecurity and the integrity of confidential data, and worldwide economic conditions and activity. You should also consider carefully the statements under “Risk Factors,” as disclosed in our Form 10-K, which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements and that are otherwise described from time to time in our SEC reports as filed. Given these uncertainties, current or prospective investors are cautioned not to place undue reliance on any such forward-looking statements. We undertake no obligation to update any such factors or forward-looking statements to reflect new information, future events or developments, or otherwise, except to the extent required by applicable law.
Previous wording
We are a global distributor to the oil and gas and industrial markets with a legacy of over 160 years. We operate primarily under the DNOW brand along with several affiliated brands operating in local or regional markets that are tied to prior acquisitions. Through a network of approximately 165 locations and approximately 2,550 employees worldwide, we offer a complementary suite of digital procurement channels that, in conjunction with our locations, provides products to the energy and industrial markets around the world.
Current wording
We are a distributor to the oil and gas, energy transition and industrial markets with a legacy of over 160 years. We operate primarily under the DNOW brand along with several affiliated brands operating in local, regional or international markets that are tied to prior acquisitions. Through a network of approximately 165 locations and approximately 2,575 employees worldwide, our operating locations utilize a complementary suite of technology, systems, order and fulfillment processes and sourcing and procurement channels to provide products and services to a variety of customers operating in the energy and industrial markets. Additionally, through our DigitalNOW® platform, customers can leverage technology across applications to solve a wide array of complex operational and product sourcing challenges to assist in maximizing their return on assets.
Previous wording
Our product and service offerings are consumed throughout all sectors of the energy industry – from upstream drilling and completion, exploration and production (“E&P”), midstream transmission, gas and crude oil processing infrastructure development to downstream petroleum refining and petrochemicals – as well as in other industries, such as chemical processing, mining, water/wastewater, food and beverage, gas utilities and the evolution of energy transition markets inclusive of greenhouse gas reduction and emissions capture and storage, renewable fuels such as biofuels and renewable natural gas (“RNG”), wind, solar, production of hydrogen as a fuel to power equipment and select industrial markets. The industrial distribution end markets include engineering and construction firms that perform capital and maintenance projects for their end-user clients. We also provide supply chain and materials management solutions to the same markets where we sell products.
Current wording
Our product and service offerings are consumed throughout the energy industry – from upstream drilling and completion, exploration and production (“E&P”), midstream transmission, gas and crude oil processing infrastructure development to downstream petroleum refining and petrochemicals – as well as in other industries, such as chemical processing, mining, water/wastewater, food and beverage, gas utilities and the evolution of energy transition markets inclusive of greenhouse gas reduction and emissions capture and storage, renewable fuels such as biofuels and renewable natural gas (“RNG”), wind, solar, production of hydrogen as a fuel to power equipment and select industrial markets. The energy and industrial distribution end markets we serve are inclusive of engineering and construction firms that perform capital and maintenance projects for their clients. We also provide supply chain and materials management solutions to the same markets where we sell products.
Previous wording
Our global product offering includes consumable maintenance, repair and operating (“MRO”) supplies, pipe, manual and automated valves, fittings, flanges, gaskets, fasteners, electrical, instrumentation, artificial lift, pumping solutions and modular process, production, measurement and control equipment. We also offer sourcing, procurement, warehouse and inventory management solutions as part of our supply chain and materials management offering. We have developed expertise in providing application systems, work processes, parts integration, optimization solutions and after-sales support that provide more efficient and productive solutions for our customers.
Current wording
Our global product offering includes pipe, manual and automated valves, fittings, flanges, gaskets, fasteners, electrical, instrumentation, artificial lift, pumping solutions and modular process, production, measurement, automation, control equipment, and consumable maintenance, repair and operating (“MRO”) supplies. We also offer sourcing, procurement, warehouse and inventory management solutions as part of our supply chain and materials management offering. We have developed expertise in providing application systems, work processes, parts integration, optimization solutions and after-sales support that provide more efficient and productive solutions for our customers.
Previous wording
We support land and offshore operations for the major oil and gas producing regions around the world through our network of locations. Our key markets, beyond North America, include South America, Europe, the Middle East, Asia Pacific, Central Asia and West and North Africa. Products sold through our locations support greenfield expansion upstream capital projects, midstream infrastructure and transmission and MRO consumables used in day-to-day production. We provide downstream energy and industrial products for petroleum refining, chemical processing, liquefied natural gas (“LNG”) terminals, power generation utilities and customer on-site locations.
Current wording
We support land and offshore operations for the major oil and gas producing regions through our network of locations. Our key markets include the U.S., Canada, the United Kingdom ("UK"), Norway, Australia, the Netherlands, Singapore and the Middle East area with the ability to provide products through an export model to operators with operations in Southeast Asia and West Africa. Products sold through our locations support brownfield and greenfield expansion upstream capital projects, midstream infrastructure and transmission and MRO consumables used in day-to-day production. We provide downstream energy and industrial products for petroleum refining, chemical processing, liquefied natural gas (“LNG”) terminals, power generation, gas utilities serviced by a combination of customer on-site locations and off-site service locations in combination with our digital offerings.
Previous wording
Our supplier network consists of thousands of vendors in approximately 40 countries. From our operations, we sell to customers operating in approximately 80 countries. The supplies and equipment stocked by each of our branches are customized to meet varied and changing local customer demands. The breadth and scale of our offering enhances our value proposition to our customers, suppliers and shareholders.
Current wording
Our supplier network consists of thousands of vendors in approximately 30 countries. From our operations, we sell to customers operating in approximately 75 countries. The supplies and equipment stocked by each of our locations are customized to meet varied and changing local customer demands. We believe the breadth, scale and availability of our product offering enhances our value proposition to our customers, suppliers and shareholders.
Previous wording
We have expanded, through acquisitions and organic investments, in Australia, Canada, England, Kuwait, Netherlands, Norway, Scotland, Singapore, the United Arab Emirates (“UAE”) and the United States (“U.S.”).
Current wording
We primarily have operations in the U.S. and Canada, complemented with a number of strategic international operations, through acquisitions and organic investments, in Australia, England, Kuwait, the Netherlands, Norway, Scotland, Singapore, and the United Arab Emirates (“UAE”).
Previous wording
We operate through three reportable segments: U.S., Canada and International. The segment data included in our Management’s Discussion and Analysis are presented on a basis consistent with our internal management reporting. Segment information appearing in Note 9 “Business Segments” of the notes to the unaudited consolidated financial statements (Part I, Item 1 of this Form 10-Q) is also presented on this basis.
Current wording
We operate through three reportable segments: United States, Canada and International. The segment data included in our Management’s Discussion and Analysis are presented on a basis consistent with our internal management reporting. Segment information appearing in Note 9 “Business Segments” of the notes to the unaudited consolidated financial statements (Part I, Item 1 of this Form 10-Q) is also presented on this basis.
Previous wording
We offer higher value solutions in key product lines in the U.S. which broaden and deepen our customer relationships and related product line value. Examples of these include artificial lift, pumps, valves and valve actuation, process and production equipment, fluid transfer products, measurement and controls, spoolable and coated steel pipe and composite pipe, along with many other products required by our customers, which enable them to focus on their core business while we manage varying degrees of their supply chain. We also provide additional value to our customers through the engineering, design, construction, assembly, fabrication and optimization of products and equipment essential to the safe and efficient production, transportation and processing of oil and gas.
Current wording
We offer higher value solutions in key product lines in the U.S. which broaden and deepen our customer relationships and related product line value. Examples of these include pumps, valves and valve actuation, process and production equipment, fluid transfer products, measurement, automation and controls, spoolable and coated steel-pipe and composite pipe, along with many other products required by our customers, which enable them to focus on their core business while we manage varying degrees of their supply chain. We also provide additional value to our customers through the engineering, design, construction, assembly, fabrication and optimization of products and equipment essential to the safe and efficient production, transportation and processing of oil and gas and produced water.
Previous wording
We have a network of approximately 40 locations in the Canadian oilfield, predominantly in the oil rich provinces of Alberta, Saskatchewan, Manitoba and other targeted locations across the country. Our Canada segment primarily serves energy exploration, production, mining and drilling businesses, offering customers many of the same products and value-added solutions that we perform in the U.S. In Canada, we also provide training for, and supervise the installation of, jointed and spoolable composite pipe. This product line is supported by inventory, as well as product and installation expertise to serve our customers.
Current wording
We have a network of approximately 40 locations in the Canadian oilfield, predominantly in the oil rich provinces of Alberta, Saskatchewan, and Manitoba. Our Canada segment primarily serves energy exploration, production, mining and drilling businesses, offering customers many of the same products and value-added solutions that we perform in the U.S. In Canada, we also provide training for, and supervise the installation of, jointed and spoolable composite pipe. This product line is supported by inventory, as well as product and installation expertise to serve our customers.
Previous wording
We serve the needs of our international customers from approximately 15 locations outside the U.S. and Canada, which are strategically located in major oil and gas development areas. Our approach in these markets is similar to our approach in North America, as our customers turn to us to provide products and supply chain solutions support closer to their drilling and exploration activities. Our long legacy of operating in many international regions, combined with expansion into several key markets, provides a competitive advantage as few of our competitors have a presence in most of the global energy producing regions.
Current wording
We serve the needs of our international customers from approximately 15 locations outside the U.S. and Canada, which are strategically located in major oil and gas development areas. Our approach in these markets and the products we offer is similar to our strategy in the U.S. and Canada, with the addition of the distribution of electrical products in the UK, Australia and international export markets. Our long legacy of operating in select international regions provides a competitive advantage as few of our competitors have a presence in most of the global energy producing areas.
Previous wording
Our results are dependent on, among other factors, the level of worldwide oil and gas drilling and completions, well remediation activity, crude oil and natural gas prices, capital spending by oilfield service companies and drilling contractors, and the worldwide oil and gas inventory levels. Key industry indicators for the third quarter of 2024 and 2023 and the second quarter of 2024 include the following:
Current wording
Our results are dependent on, among other factors, the level of worldwide oil and gas drilling and completions, well remediation activity, crude oil and natural gas prices, capital spending by oilfield service companies and drilling contractors, and the worldwide oil and gas inventory levels. Key industry indicators for the first quarter of 2025 and 2024 and the fourth quarter of 2024 include the following:
Previous wording
The worldwide quarterly average rig count increased 1.7% (from 1,703 rigs to 1,732 rigs) and the U.S. declined 2.8% (from 603 rigs to 586 rigs) in the third quarter of 2024 compared to the second quarter of 2024. The average price per barrel of West Texas Intermediate Crude declined 6.7% (from $81.71 per barrel to $76.24 per barrel), and average natural gas prices increased 1.4% (from $2.08 per MMBtu to $2.11 per MMBtu) in the third quarter of 2024 compared to the second quarter of 2024. The average price per short ton of Hot-Rolled Coil declined 15.2% (from $796.03 per short ton to $674.99 per short ton) in the third quarter of 2024 compared to the second quarter of 2024. U.S. Wells Completed declined 5.7% (from 2,924 completion count to 2,757 completion count) in the third quarter of 2024 compared to the second quarter of 2024.
Current wording
The worldwide quarterly average rig count remained flat at 1,707 and the U.S. increased 0.3% (from 586 rigs to 588 rigs) in the first quarter of 2025 compared to the fourth quarter of 2024. The average price per barrel of West Texas Intermediate Crude increased 1.6% (from $70.69 per barrel to $71.84 per barrel), and average natural gas prices increased 70.1% (from $2.44 per MMBtu to $4.15 per MMBtu) in the first quarter of 2025 compared to the fourth quarter of 2024. The average price per short ton of Hot-Rolled Coil increased 9.0% (from $691.05 per short ton to $753.21 per short ton) in the first quarter of 2025 compared to the fourth quarter of 2024. U.S. Wells Completed declined 1.7% (from 2,850 completion count to 2,801 completion count) in the first quarter of 2025 compared to the fourth quarter of 2024.
Previous wording
U.S. rig count at October 25, 2024 was 585 rigs, flat from the third quarter 2024 average. The price for West Texas Intermediate Crude was $72.02 per barrel at October 25, 2024, down 5.5% from the third quarter 2024 average. The price for natural gas was $1.93 per MMBtu at October 25, 2024, down 8.5% from the third quarter 2024 average. The price for Hot-Rolled Coil was $697.00 per short ton at October 28, 2024, up 3.3% from the third quarter 2024 average.
Current wording
U.S. rig count at April 25, 2025 was 587 rigs, flat from the first quarter 2025 average. The price for West Texas Intermediate Crude was $63.85 per barrel at April 25, 2025, down 11.1% from the first quarter 2025 average. The price for natural gas was $2.71 per MMBtu at April 25, 2025, down 34.7% from the first quarter 2025 average. The price for Hot-Rolled Coil was $925.00 per short ton at April 28, 2025, up 22.8% from the first quarter 2025 average.
Previous wording
For the three and nine months ended September 30, 2024, the Company generated net income attributable to DNOW Inc. of $13 million and $58 million on $606 million and $1,802 million in revenue, respectively. For the three and nine months ended September 30, 2024, revenue increased $18 million or 3.1% and $36 million or 2.0%, respectively, and net income attributable to DNOW Inc. declined $22 million and $42 million, respectively, when compared to the corresponding periods of 2023.
Current wording
For the three months ended March 31, 2025, the Company generated net income attributable to DNOW Inc. of $22 million on $599 million in revenue. For the three months ended March 31, 2025, revenue increased $36 million or 6.4% and net income attributable to DNOW Inc. increased $1 million when compared to the corresponding period of 2024.
Previous wording
For the three and nine months ended September 30, 2024, the Company generated an operating profit of $23 million and $84 million, respectively, compared to an operating profit of $37 million and $108 million, respectively, for the corresponding periods of 2023.
Current wording
For the three months ended March 31, 2025, the Company generated an operating profit of $30 million compared to $28 million for the corresponding period of 2024.
Previous wording
Our outlook for the Company remains tied to crude oil and natural gas commodity prices, global oil and gas drilling and completions activity, oil and gas spending, and global demand for oil, its refined petroleum products, crude oil, natural gas liquids and natural gas production and decline rates. Crude oil and natural gas prices as well as crude oil and natural gas storage levels are primary catalysts for determining customer activity. In recent years, oil prices have remained volatile and economic uncertainty continues to drive commodity price volatility globally. Despite lower North American rig count resulting from enhancements in technology leading to increased rig efficiencies, we maintain a constructive outlook for our market. Amid these dynamics, we will continue to support our customers, optimize our operations, advance our strategic goals and manage the Company based on market conditions.
Current wording
Our outlook for the Company remains tied to crude oil and natural gas commodity prices, global oil and gas drilling and completions activity, oil and gas spending, and global demand for oil, its refined petroleum products, crude oil, natural gas liquids and natural gas production and decline rates. Crude oil and natural gas prices as well as crude oil and natural gas storage levels are primary catalysts for determining customer activity. In recent years, oil prices have remained volatile, and ongoing economic and geopolitical uncertainty continues to drive commodity price volatility globally, including impacts from the recently announced OPEC+ plans for increased production. Additionally, the U.S. government has announced the imposition of tariffs on several foreign jurisdictions, which has increased economic uncertainty. Current uncertainties about tariffs and their effects on trading relationships may affect costs for and availability of products or contribute to inflation in the markets in which we operate. Although we are continuing to monitor the economic effects of such announcements, as well as opportunities to mitigate their related impacts, costs and other effects associated with the tariffs remain uncertain. Amid these dynamics, we will continue to support our customers, maintain close communication with our strategic vendors, optimize our operations, advance our strategic goals and manage the Company based on market conditions.
Previous wording
We see the evolution in energy transition investments to reduce atmospheric carbon, source carbon capture, storage and new energy streams as an opportunity for DNOW to supply many of the current products and services we provide, as well as an opportunity to partner and source from new suppliers to expand our offering and to meet our customers’ needs for their energy evolution investments. A number of our larger customers are leading the investments in energy evolution projects where we expect to continue to support them while expanding our product and solution offerings to meet their changing requirements. We are also targeting new customers that are not traditional oil and gas customers, but are those that will play a part in the future as our customers discover and invest in new sources of energy.
Current wording
We see the evolution in energy transition investments to reduce atmospheric carbon, source carbon capture, storage and new energy streams as an opportunity for DNOW to supply many of the current products and services we provide, as well as an opportunity to partner and source from new suppliers to expand our offering and to meet our customers’ needs for their energy evolution investments. A number of our larger customers are leading the investments in energy evolution projects where we expect to continue to support them while expanding our product and solution offerings to meet their changing requirements. Part of our growth strategy is to expand our revenues by targeting new customers in non-oil and gas end markets, in addition to servicing those customers that will play a part in the future of the evolving mix of traditional and new sources of energy.
Previous wording
For the three and nine months ended September 30, 2024, revenue was $482 million and $1,429 million, an increase of $34 million or 7.6% and $98 million or 7.4%, respectively, when compared to the corresponding periods of 2023. For the three and nine months ended September 30, 2024, the increases were primarily driven by incremental revenue from an acquisition completed in the first quarter of 2024, partially offset by the weakening in U.S. drilling and completions activity.
Current wording
For the three months ended March 31, 2025, revenue was $474 million, an increase of $39 million or 9.0% when compared to the corresponding period of 2024. For the three months ended March 31, 2025, the increase was primarily driven by incremental revenue from acquisitions completed in 2024, partially offset by the weakening in U.S. drilling and completions activity.
Previous wording
For the three and nine months ended September 30, 2024, the U.S. generated an operating profit of $25 million and $76 million, a decline of $4 million and $5 million, respectively, when compared to the corresponding periods of 2023. For the three and nine months ended September 30, 2024, operating profit decreased primarily due to an increase in expenses related to an acquisition completed in the first quarter of 2024, partially offset by the increase in revenue discussed above.
Current wording
For the three months ended March 31, 2025, the U.S. generated an operating profit of $22 million, a decrease of $1 million when compared to the corresponding period of 2024. For the three months ended March 31, 2025, operating profit decreased primarily due to an increase in expenses related to acquisitions completed in 2024, partially offset by the increase in revenue discussed above.
Previous wording
For the three and nine months ended September 30, 2024, revenue was $65 million and $187 million, a decline of $3 million or 4.4% and $30 million or 13.8%, respectively, when compared to the corresponding periods of 2023. For the three and nine months ended September 30, 2024, the decreases were primarily driven by weaker project activity, coupled with unfavorable foreign exchange rate impacts.
Current wording
For the three months ended March 31, 2025, revenue was $62 million, a decline of $4 million or 6.1% when compared to the corresponding period of 2024. For the three months ended March 31, 2025, the decrease was primarily driven by unfavorable foreign exchange rate impacts.
Previous wording
For the three and nine months ended September 30, 2024, Canada generated an operating profit of $3 million and $8 million, a decline of $3 million and $9 million, respectively, when compared to the corresponding periods of 2023. For the three and nine months ended September 30, 2024, operating profit decreased primarily due to the decline in revenue discussed above.
Current wording
For the three months ended March 31, 2025, Canada generated an operating profit of $4 million, an increase of $1 million when compared to the corresponding period of 2024. For the three months ended March 31, 2025, operating profit increased primarily due to a decrease in operating expenses.
Previous wording
For the three and nine months ended September 30, 2024, the International segment generated an operating loss of $5 million and nil, a decline of $7 million and $10 million, respectively, when compared to the corresponding periods of 2023. For the three and nine months ended September 30, 2024, operating profit decreased primarily due to an increase in expense of $8 million related to the restructuring plan in the International segment.
Current wording
For the three months ended March 31, 2025, the International segment generated an operating profit of $4 million, an increase of $2 million when compared to the corresponding period of 2024. For the three months ended March 31, 2025, operating profit increased primarily due to a decrease in operating expenses.
Previous wording
For the three and nine months ended September 30, 2024, cost of products was $471 million and $1,400 million, respectively, compared to $454 million and $1,361 million, respectively, for the corresponding periods of 2023. For the three and nine months ended September 30, 2024, the increases were primarily due to the increase in revenue in the period. Cost of products includes the cost of inventory sold and items, such as vendor consideration, inventory allowances, amortization of intangibles and inbound and outbound freight.
Current wording
For the three months ended March 31, 2025, cost of products was $460 million compared to $434 million for the corresponding period of 2024. For the three months ended March 31, 2025, the increase was primarily due to the increase in revenue in the period. Cost of products includes the cost of inventory sold and items, such as vendor consideration, inventory allowances, amortization of intangibles and inbound and outbound freight.
Previous wording
For the three and nine months ended September 30, 2024, warehousing, selling and administrative expenses were $107 million and $313 million, respectively, compared to $97 million and $297 million, respectively, for the corresponding periods of 2023. For the three and nine months ended September 30, 2024, the increases were primarily driven by an increase in expenses related to an acquisition completed in the first quarter of 2024. Warehousing, selling and administrative expenses include branch location, distribution center and regional expenses (including costs such as compensation, benefits and rent) as well as corporate general selling and administrative expenses.
Current wording
For the three months ended March 31, 2025, warehousing, selling and administrative expenses were $109 million compared to $101 million for the corresponding period of 2024. For the three months ended March 31, 2025, the increase was primarily driven by an increase in expenses related to acquisitions completed in 2024. Warehousing, selling and administrative expenses include branch location, distribution center and regional expenses (including costs such as compensation, benefits and rent) as well as corporate general selling and administrative expenses.
Previous wording
The effective tax rates for the three and nine months ended September 30, 2024, were 40.9% and 29.8%, respectively, compared to 5.4% and 5.6%, respectively, for the corresponding periods of 2023. In general, the Company's effective tax rate differs from the U.S. statutory rate due to recurring items, such as differing tax rates on income earned in foreign jurisdictions, nondeductible expenses and state income taxes. For the three and nine months ended September 30, 2024, the effective tax rates were also impacted by foreign currency translation losses and other charges incurred as a result of substantially completing the liquidation of certain foreign subsidiaries with no associated tax benefit. The effective tax rates for the three and nine months ended September 30, 2024, were higher than the effective tax rates for the three and nine months ended September 30, 2023, due to the aforementioned foreign currency translation losses and other charges with no associated tax benefit as well as realization of deferred tax assets that had a corresponding release of valuation allowance in the three and nine months ended September 30, 2024 that did not recur in the corresponding periods in 2024.
Current wording
The effective tax rate for the three months ended March 31, 2025, was 23.3% compared to 27.6% for the corresponding period of 2024. In general, the Company's effective tax rate differs from the U.S. statutory rate due to recurring items, such as differing tax rates on income earned in foreign jurisdictions, nondeductible expenses and state income taxes. The effective tax rate for the three months ended March 31, 2025, was lower than the effective tax rate for the three months ended March 31, 2024, primarily due to an increase in tax benefits related to stock-based compensation.
Previous wording
In an effort to provide investors with additional information regarding our results of operations as determined by GAAP, we disclose non-GAAP financial measures. The primary non-GAAP financial measure we disclose is earnings before interest, taxes, depreciation and amortization, excluding other costs (“EBITDA excluding other costs”). This financial measure excludes the impact of certain amounts and is not calculated in accordance with GAAP. A reconciliation of this non-GAAP financial measure, to its most comparable GAAP financial measure, is included below.
Current wording
In an effort to provide investors with additional information regarding our results of operations as determined by GAAP, we disclose non-GAAP financial measures. The primary non-GAAP financial measure we disclose is earnings before interest, taxes, depreciation and amortization, excluding other costs (“EBITDA excluding other costs”) and EBITDA excluding other costs as of percentage of revenue. This financial measure excludes the impact of certain amounts and is not calculated in accordance with GAAP. A reconciliation of this non-GAAP financial measure, to its most comparable GAAP financial measure, is included below.
Previous wording
For the nine months ended September 30, 2024, Other included the International restructuring charges of $8 million mentioned above as well as transaction-related charges of approximately $10 million, of which $5 million were included in cost of products and approximately $5 million included in warehousing, selling and administrative. Transaction-related charges include transaction costs, inventory fair value step-up, retention bonus accruals and integration expenses associated with acquisitions.
Current wording
Transaction-related charges include transaction costs, inventory fair value step-up, retention bonus accruals and integration expenses associated with acquisitions.
Previous wording
As of September 30, 2024 and December 31, 2023, we had cash and cash equivalents of $261 million and $299 million, respectively. As of September 30, 2024, $89 million of our cash and cash equivalents were maintained in the accounts of our various foreign subsidiaries. During the first nine months of 2024, we repatriated $3 million from our foreign subsidiaries. The Company makes a determination each period concerning its intent and ability to indefinitely reinvest the cash held by its foreign subsidiaries. The Company has not recorded deferred income taxes on undistributed foreign earnings that it considers to be indefinitely reinvested. Future changes to our indefinite reinvestment assertion could result in additional taxes (withholding and/or state taxes), offset by any available foreign tax credits.
Current wording
As of March 31, 2025 and December 31, 2024, we had cash and cash equivalents of $219 million and $256 million, respectively. As of March 31, 2025, $112 million of our cash and cash equivalents were maintained in the accounts of our various foreign subsidiaries. During the first three months of 2025, we repatriated $2 million from our foreign subsidiaries. The Company makes a determination each period concerning its intent and ability to indefinitely reinvest the cash held by its foreign subsidiaries. The Company has not recorded deferred income taxes on undistributed foreign earnings that it considers to be indefinitely reinvested. Future changes to our indefinite reinvestment assertion could result in additional taxes (withholding and/or state taxes), offset by any available foreign tax credits.
Previous wording
We maintain a $500 million five-year senior secured revolving credit facility that will mature on December 14, 2026. Availability under the revolving credit facility is determined by a borrowing base comprised of eligible receivables, eligible inventory and certain cash deposits in the U.S. and Canada. As of September 30, 2024, we had no borrowings against our revolving credit facility, and had approximately $493 million in availability (as defined in the Credit Agreement) resulting in the excess availability (as defined in the Credit Agreement) of 99%, subject to certain restrictions. Availability excluding certain cash deposits was approximately $361 million. Borrowings that result in the excess availability dropping below the greater of 10% of the borrowing base or $40 million are conditioned upon compliance with or waiver of a minimum fixed charge ratio (as defined in the Credit Agreement). The credit facility contains usual and customary affirmative and negative covenants for credit facilities of this type including financial covenants. As of September 30, 2024, we were in compliance with all covenants. We continuously monitor compliance with debt covenants. A default, if not waived or amended, would prevent us from taking certain actions, such as incurring additional debt.
Current wording
We maintain a $500 million five-year senior secured revolving credit facility that will mature on December 14, 2026. Availability under the revolving credit facility is determined by a borrowing base comprised of eligible receivables, eligible inventory and certain cash deposits in the U.S. and Canada. As of March 31, 2025, we had no borrowings against our revolving credit facility, and had approximately $434 million in availability (as defined in the Credit Agreement) resulting in the excess availability (as defined in the Credit Agreement) of 99%, subject to certain restrictions. Availability excluding certain cash deposits was approximately $348 million. Borrowings that result in the excess availability dropping below the greater of 10% of the borrowing base or $40 million are conditioned upon compliance with or waiver of a minimum fixed charge ratio (as defined in the Credit Agreement). The credit facility contains usual and customary affirmative and negative covenants for credit facilities of this type including financial covenants. As of March 31, 2025, we were in compliance with all covenants. We continuously monitor compliance with our debt covenants. A default, if not waived or amended, would prevent us from taking certain actions, such as incurring additional debt.
Previous wording
For the nine months ended September 30, 2024, net cash used in investing activities was $190 million compared to $47 million used in investing activities in the corresponding period of 2023. For the nine months ended September 30, 2024, net cash used in investing activities was primarily related to business acquisitions of $185 million, net of cash acquired.
Current wording
For the three months ended March 31, 2025, net cash used in investing activities was $5 million compared to $188 million used in investing activities in the corresponding period of 2024. For the three months ended March 31, 2025, net cash used in investing activities was primarily related to purchases of property, plant and equipment of $6 million while net cash used in investing activities in the corresponding period of 2024 was primarily related to business acquisitions of $185 million, net of cash acquired.
Previous wording
For the nine months ended September 30, 2024, net cash used in financing activities was $25 million compared to $54 million used in financing activities in the corresponding period of 2023. For the nine months ended September 30, 2024, net cash used in financing activities was primarily attributable to the Company's payment of $18 million for share repurchases compared to $49 million for the corresponding period of 2023.
Current wording
For the three months ended March 31, 2025, net cash used in financing activities was $17 million compared to $4 million used in financing activities in the corresponding period of 2024. For the three months ended March 31, 2025, net cash used in financing activities was primarily related to share repurchases of $8 million and withholding tax payments for employee awards of $7 million.
Previous wording
For the nine months ended September 30, 2024, the effect of the change in exchange rates on cash and cash equivalents was $1 million favorable compared to nil for the corresponding period of 2023.
Current wording
For the three months ended March 31, 2025, the effect of the change in exchange rates on cash and cash equivalents was $1 million favorable compared to nil for the corresponding period of 2024.
Previous wording
On August 3, 2022, the Company’s Board of Directors approved a share repurchase program, under which the Company is authorized to purchase up to $80 million of its outstanding common stock through December 31, 2024. We expect to fund share repurchases primarily with cash on hand, cash flow from operations and the usage of the available portion of the revolving credit facility. The timing and amount of any repurchases will be made at our discretion, taking into account a number of factors, including market conditions. For the nine months ended September 30, 2024, we repurchased 1,379,020 shares of our common stock for a total of approximately $18 million. As of September 30, 2024, we had approximately $6 million remaining under the program’s authorization, excluding 1% excise tax, as enacted under the Inflation Reduction Act of 2022.
Current wording
On January 24, 2025, the Company’s Board of Directors authorized a new share repurchase program to purchase up to $160 million of its outstanding common stock. We expect to fund share repurchases primarily with cash on hand, cash flow from operations and the usage of the available portion of the revolving credit facility. The timing and amount of any repurchases will be made at our discretion, taking into account a number of factors, including market conditions. The share repurchase program does not obligate the Company to repurchase shares and may be suspended or discontinued at any time at our discretion. All shares repurchased shall be retired pursuant to the terms of the share repurchase program. For the three months ended March 31, 2025, we repurchased 443,806 shares of our common stock for a total of approximately $8 million, of which 155,313 shares, or $3 million, were held in treasury stock and subsequently retired in April 2025. As of March 31, 2025, we had approximately $152 million remaining under the program’s authorization.
Previous wording
For a discussion of the critical accounting policies and estimates that we use in the preparation of our consolidated financial statements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K. In preparing the financial statements, the Company makes assumptions, estimates and judgments that affect the amounts reported. The Company periodically evaluates its estimates and judgments that are most critical in nature, which are related to allowance for credit losses, inventory reserves, purchase price allocation of acquisitions and income taxes. Its estimates are based on historical experience and on its future expectations that the Company believes are reasonable. The combination of these factors forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results are likely to differ from our current estimates and those differences may be material.
Current wording
For a discussion of the critical accounting estimates that we use in the preparation of our consolidated financial statements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2024. Since the filing of our Form 10-K, there have been no material changes in our critical accounting estimates from those disclosed therein. In preparing the financial statements, the Company makes assumptions, estimates and judgments that affect the amounts reported. The Company periodically evaluates its estimates and judgments that are most critical in nature, which are related to allowance for credit losses, inventory reserves, goodwill, purchase price allocation of acquisitions and income taxes. Its estimates are based on historical experience and on its future expectations that the Company believes are reasonable. The combination of these factors forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results are likely to differ from our current estimates and those differences may be material.
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U.S., Canada and International Operations
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Additionally, through our growing DigitalNOW® platform, customers can leverage world-class technology across ecommerce, data visualization, data management and supply chain optimization applications to solve a wide array of complex operational and product sourcing challenges to assist in maximizing their return on assets.
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Non-GAAP Financial Measure and Reconciliation