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 and nine months ended September 30, 2025, revenue was $527 million and $1,529 million, an increase of $45 million or 9.3% and $100 million or 7.0%, respectively, when compared to the corresponding periods of 2024. For the three and nine months ended September 30, 2025, the increases were primarily driven by incremental revenue from acquisitions completed in 2024, and midstream growth, and for the nine months ended, that growth was partially offset by lower market activity.

For the three and nine months ended September 30, 2025, the U.S. generated an operating profit of $28 million and $80 million, an increase of $3 million and $4 million, respectively, when compared to the corresponding periods of 2024. For the three and nine months ended September 30, 2025, operating profit increased primarily due to the increase in revenue discussed above.

Canada

For the three and nine months ended September 30, 2025, revenue was $53 million and $163 million, a decrease of $12 million or 18.5% and $24 million or 12.8%, respectively, when compared to the corresponding periods of 2024. For the three and nine months ended September 30, 2025, the decreases were primarily driven by weaker project activity, coupled with unfavorable foreign exchange rate impacts for the nine month period compared to the prior year.

For the three and nine months ended September 30, 2025, Canada generated an operating profit of $2 million and $6 million, a decrease of $1 million and $2 million, respectively, when compared to the corresponding periods of 2024. For the three and nine months ended September 30, 2025, operating profit decreased primarily due to the decline in revenue discussed above.

International

For the three and nine months ended September 30, 2025, revenue was $54 million and $169 million, a decrease of $5 million or 8.5% and $17 million or 9.1%, respectively, when compared to the corresponding periods of 2024. For the three and nine months ended September 30, 2025, the decreases were primarily driven by weaker project activity.

For the three and nine months ended September 30, 2025, the International segment generated an operating profit of $3 million and $9 million, an improvement of $8 million and an increase of $9 million, respectively, when compared to the corresponding periods of 2024. For the three and nine months ended September 30, 2025, operating profit improved primarily as a result of $8 million of expenses related to the restructuring plan in the International segment recognized in the third quarter of 2024 that did not repeat.

Cost of products

For the three and nine months ended September 30, 2025, cost of products was $489 million and $1,433 million, respectively, compared to $471 million and $1,400 million, respectively, for the corresponding periods of 2024. For the three and nine months ended September 30, 2025, the increases were primarily due to the increases in revenue in the periods. 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 and nine months ended September 30, 2025, warehousing, selling and administrative expenses were $112 million and $333 million, respectively, compared to $107 million and $313 million, respectively, for the corresponding periods of 2024. For the three and nine months ended September 30, 2025, the increases were primarily driven by increases 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.

Impairment and other charges

For the three and nine months ended September 30, 2025, impairment and other charges were nil, compared to $5 million in both periods for the corresponding periods of 2024. For the three and 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.

Other income (expense)

For the three and nine months ended September 30, 2025, other income (expense) was $1 million expense in both periods compared to $1 million expense and nil, respectively, for the corresponding periods of 2024. For the three and nine months ended September 30, 2025, the changes were primarily attributable to decreases in interest income compared to the prior year.

Income tax provision

The effective tax rates for the three and nine months ended September 30, 2025, were 21.9% and 22.3%, respectively, compared to 40.9% and 29.8%, respectively, for the corresponding periods 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. 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, 2025, were lower than the effective tax rates for the three and nine months ended September 30, 2024, primarily due to the aforementioned foreign currency translation losses and other charges incurred in 2024 which did not repeat in the corresponding periods in 2025, as well as due to an increase in tax benefits related to stock-based compensation and utilization of U.S. foreign tax credits.