DNOW Inc

The results of operations are presented before consideration of the noncontrolling interest. Operating results by reportable segment are as follows (in millions):

United States

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.

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.

Canada

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.

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.

International

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.

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.

Cost of products

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.

Warehousing, selling and administrative expenses

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.

Other income (expense)

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.

Income tax provision

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.