DNOW Inc.

Previous 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”, “budget”, “estimates”, “expects”, “goal”, “guidance”, “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 (including but not limited to certain risks relating to any mergers or acquisitions, such as: the timing of the closing of the merger or acquisition; the risk that the conditions to the transaction are not satisfied on a timely basis or at all or the failure of the transaction to close for any other reason or to close on the anticipated terms; the possibility that regulatory approvals for any dispositions or acquisitions will not be received on a timely basis, if at all, or that such approvals may require modification to the terms of the mergers or remaining businesses; the risk that the expected benefits, synergies and cost reduction efforts of the mergers or acquisitions may not be fully achieved in a timely manner, or at all), successful integration of the business of MRC Global into our business, 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 Iran, 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 and national economic conditions and acti…

Excerpt shortened here; the source contains the full paragraph.

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”, “budget”, “estimates”, “expects”, “goal”, “guidance”, “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, inherent uncertainty in third-party projections due to assumptions made and risks involved, difficulties encountered in integrating mergers and acquisitions (including but not limited to certain risks relating to any mergers or acquisitions, such as: the timing of the closing of the merger or acquisition; the risk that the conditions to the transaction are not satisfied on a timely basis or at all or the failure of the transaction to close for any other reason or to close on the anticipated terms; the possibility that regulatory approvals for any dispositions or acquisitions will not be received on a timely basis, if at all, or that such approvals may require modification to the terms of the mergers or remaining businesses; the risk that the expected benefits, synergies and cost reduction efforts of the mergers or acquisitions may not be fully achieved in a timely manner, or at all), successful integration of the business of MRC Global into our business, 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 Iran, 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 an…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

DNOW is a holding company headquartered in Houston, Texas that was incorporated in Delaware on November 22, 2013. We operate primarily under the DNOW and MRC Global brands along with several affiliated and acquired brands operating in local, regional or international markets.

Current wording

DNOW is a holding company headquartered in Houston, Texas that was incorporated in Delaware on November 22, 2013. We operate primarily under the DNOW and MRC Global brands along with several affiliated and acquired brands operating in local, regional, national and international markets.

Previous wording

Upstream: exploration, production and extraction of oil and gas, as well as the use, transfer and disposal of produced water

Current wording

Upstream: production and extraction of oil and natural gas, as well as the use, transfer and disposal of produced water

Previous wording

Downstream and Industrial: downstream and industrial including crude oil refining, petrochemical and chemical processing, general industrials, pharmaceutical, mining, water/wastewater treatment, data centers, LNG terminals and RNG facilities

Current wording

Downstream and Industrial: crude oil refining, petrochemical and chemical processing, general industrials, pharmaceutical, mining, water/wastewater treatment, data centers, LNG terminals and RNG facilities

Previous wording

Midstream: gathering and transmission infrastructure for processing and transmission of oil, gas or water

Current wording

Midstream: gathering and transmission infrastructure for processing and transmission of oil, gas, natural gas liquids (“NGLs”), refined petroleum products or water

Previous wording

Our comprehensive products and solutions offerings includes an extensive array of PVF, gas products, pumps, fabricated equipment, valve automation, valve modification, gaskets, fasteners, electrical components, measurement, instrumentation, artificial lift, pumping systems, process and production equipment, production measurement technology, MRO consumables and other general and specialty products. Our team of approximately 5,100 employees support our customers through approximately 300 strategic locations including regional distribution centers, super centers, branches and corporate offices.

Current wording

Our comprehensive products and solutions offerings includes an extensive array of PVF, gas products, pumps, fabricated equipment, valve automation, valve modification, gaskets, fasteners, electrical components, measurement, instrumentation, artificial lift, pumping systems, process and production equipment, production measurement technology, MRO consumables and other general and specialty products. Our team of approximately 5,050 employees support our customers through approximately 295 strategic locations including regional distribution centers, super centers, branches and corporate offices.

Previous wording

We derive our revenue predominantly from the sale of PVF, pumps, and fabricated equipment to upstream, gas utilities, downstream, energy transition and industrial and midstream markets customers globally. Our business is dependent upon both the current conditions and future prospects in these industries and, in particular, our customers' maintenance and expansionary operating and capital expenditures. The outlook for customer spending is influenced by numerous factors, including the following:

Current wording

We derive our revenue predominantly from the sale of PVF, pumps and fabricated equipment to upstream, gas utilities, downstream and industrial and midstream markets customers globally. Our business is dependent upon both the current conditions and future prospects in these industries and, in particular, our customers’ maintenance and expansionary operating and capital expenditures. The outlook for customer spending is influenced by numerous factors, including the following:

Previous wording

Oil and Natural Gas Demand and Prices. Sales of PVF and infrastructure products to the oil and natural gas industry constitute a significant portion of our sales. As a result, we depend upon the maintenance and capital expenditures of oil and natural gas companies to explore for, extract, produce and process oil, natural gas and refined products. Demand for oil and natural gas, current and projected commodity prices and the costs necessary to produce oil and natural gas impact customer capital spending, additions to and maintenance of pipelines, refinery utilization and petrochemical processing activity. Additionally, as some of these participants rebalance their capital investment away from traditional, carbon-based energy toward alternative sources, we expect to continue to supply them and enhance our product and service offerings to support their changing requirements, including in areas such as carbon capture utilization, sequestration and storage, biofuels, RNG, offshore wind and hydrogen processing.

Current wording

Oil and Natural Gas Supply, Demand and Prices. Sales of PVF and infrastructure products to the oil and natural gas industry constitute a significant portion of our sales. As a result, we depend upon the maintenance and capital expenditures of oil and natural gas companies to explore for, extract, produce and process oil, natural gas and refined products. Demand for oil and natural gas, current and projected commodity prices and the costs necessary to produce oil and natural gas impact customer capital spending, additions to and maintenance of pipelines, refinery utilization and petrochemical processing activity. Additionally, as some of these participants rebalance their capital investment away from traditional, carbon-based energy toward alternative sources, we expect to continue to supply them and enhance our product and service offerings to support their changing requirements, including in areas such as carbon capture utilization, sequestration and storage, biofuels, RNG, offshore wind and hydrogen processing.

Previous wording

The U.S. government has imposed tariffs on steel products, which were expanded throughout 2025. A significant portion of the products that we sell are made from steel. In addition, a portion of the products that we sell are sourced from China and India, including certain valve sub-assemblies and pump sub-components that are finished in the U.S. The tariffs on products from Canada and Mexico have a lesser direct impact on our business as they do not represent a significant portion of the products that we purchase from those countries for resale to our customers. Even so, a significant portion of our U.S. inventory and products are domestically made but some products, such as valves and pumps, often have a significant portion of non-U.S. components, and we do import some valves, pumps and other products. In many instances, we have successfully collaborated with our customers to implement tariff pass-throughs throughout 2025 and into 2026. However, in some instances, tariffs raised infrastructure costs for our customers, making projects less viable and resulting in delays or cancellations among certain downstream clients.

Current wording

The U.S. government has imposed tariffs on steel, copper, aluminum and other products, which were expanded throughout 2025 and 2026. A significant portion of the products that we sell are made from steel. In addition, a portion of the products that we sell are sourced from China and India, including certain valve sub-assemblies and pump sub-components that are finished in the U.S. The tariffs on products from Canada and Mexico have a lesser direct impact on our business as they do not represent a significant portion of the products that we purchase from those countries for resale to our customers. In many instances, we have successfully collaborated with our customers to implement tariff pass-throughs throughout 2025 and 2026. However, in some instances, tariffs raised infrastructure costs for our customers, making projects less viable and resulting in delays or cancellations among certain downstream clients.

Previous wording

The U.S. Supreme Court has invalidated the use of the International Emergency Economic Powers Act (“IEEPA”) to impose tariffs. The overall impact on IEEPA tariffs had been limited, as the administration quickly enacted or announced other statutory authorities to maintain or adjust tariffs. Besides the Section 232 tariffs on steel and aluminum noted above, Section 122 and 301 tariffs, along with pointed anti-dumping and countervailing duties, have been imposed to varying degrees.

Current wording

The U.S. Supreme Court has invalidated the use of the International Emergency Economic Powers Act (“IEEPA”) to impose tariffs. The overall impact on IEEPA tariffs had been limited, as the administration quickly invoked or announced other statutory authorities to maintain or adjust tariffs. Besides the Section 232 tariffs on steel, copper and aluminum, Section 122 and 301 tariffs, along with pointed anti-dumping and countervailing duties, have been imposed to varying degrees.

Previous wording

The Upstream sector of our business includes the traditional exploration, production and extraction of oil and gas, as well as the use, transfer and disposal of produced water, and is the most cyclical of our markets. In the six months ended June 30, 2026, this sector represented 39% of ourtotal Company revenue. The Upstream sector revenue increased 17% in the six months ended June 30, 2026 compared to the corresponding period of 2025. During the six months ended June 30, 2026, West Texas Intermediate (“WTI”) oil prices averaged $83.87 per barrel, up 22.9% from the corresponding period of 2025. Natural gas prices also drive customer activity and have experienced volatility but increased throughout 2025, driven by climate and seasonal weather patterns, increased LNG exports and lower storage levels.

Current wording

The Upstream sector of our business encompasses the surface infrastructure, equipment and processing systems used to gather production from existing and newly completed oil and natural gas wells; separate crude oil, natural gas and produced water; and perform the initial treating and conditioning necessary to prepare hydrocarbons for delivery to midstream transportation and processing systems. This includes wellhead and flowline systems, gathering lines, production separators, water-handling equipment, gas dehydration, crude oil treating and related production facilities. In the nine months ended September 30, 2026, this sector represented 38% oftotal Company revenue. The Upstream sector revenue increased 16% in the nine months ended September 30, 2026 compared to the corresponding period of 2025 primarily as a result of the acquisition of MRC Global in the fourth quarter of 2025. During the nine months ended September 30, 2026, West Texas Intermediate (“WTI”) oil prices averaged $84.98 per barrel, up 26.1% from the corresponding period of 2025. Natural gas prices also drive customer activity and have experienced volatility driven by climate and seasonal weather patterns, increased LNG exports and lower storage levels.

Previous wording

Recent industry reports have projected flat to lower upstream customer spending levels in 2026, due to current supply and demand projections. We also expect majority of our publicly traded oil and gas producer customers will remain disciplined and consistent with their commitments to their budgets, maintaining returns to their shareholders and operating within their cash flow requirements. Despite this, we expect opportunities for revenue synergies from cross-selling products related to our acquisitions will support growth in this sector. We also expect incremental growth in water management and disposal solutions, supported by our Flex Flow, Trojan and Edge Controls offerings, as customers seek to optimize operating costs and manage produced water volumes more effectively.

Current wording

Recent industry reports have projected flat to lower upstream customer spending levels through the remainder of 2026, due to current supply and demand projections. We also expect themajority of our publicly traded oil and gas producer customers will remain disciplined and consistent with their commitments to their budgets, maintaining returns to their shareholders and operating within their cash flow requirements. Despite this, we expect opportunities for revenue synergies from cross-selling products and incremental growth in water management and disposal solutions, supported by our Flex Flow, Trojan and Edge Controls offerings, as customers seek to optimize operating costs and manage produced water volumes more effectively. The majority of the revenue in this sector comes from large independents and major production companies, which are expected to strongly influence the increase in capital spending in the coming years for this sector.

Previous wording

The Gas Utilities sector contributed 23% of our total Company revenue in the six months ended June 30, 2026, and we expect revenue from this sector to increase in future periods following the November 2025 acquisition of MRC Global. Market growth fundamentals of this sector are positive due to the demand for natural gas, distribution integrity upgrade programs as well as new home construction in certain U.S. states. The majority of the work we perform with our gas utility customers are multi-year programs where they continually evaluate, monitor and implement measures to improve their pipeline distribution networks, ensuring the safety and the integrity of their system. As of 2025, which is the most recently available information, the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) estimates approximately 33% of the gas distribution main and service line miles are over 40 years old or of unknown origin. This infrastructure requires continuous replacement and maintenance as these gas distribution networks continue to age. We supply many of the replacement products including valves, line pipe, smart meters, risers and other gas products. A large percentage of the line pipe we sell is sold to our gas utilities customers for line replacement and new sections of their distribution network. As our gas utility customers connect new homes and businesses to their gas distribution network, the growth in the housing market creates new revenue opportunities for our business to supply the related infrastructure products. Some of our customers in this sector support both gas and electric distribution, and certain customers have announced allocating a higher proportion of their capital budget to electric distribution. However, based on market fundamentals, the need for natural gas to fuel new electric generation facilities and new market share opportunities, we expect the Gas Utilities sector to continue to have steady growth in the coming years. Additionally, due to its reduced dependency on energy demand and commodity prices, this sector is less volatile than the others.

Current wording

The Gas Utilities sector contributed 24% of our total Company revenue in the nine months ended September 30, 2026. Market growth fundamentals of this sector are positive due to the demand for natural gas, distribution integrity upgrade programs as well as new home construction in certain U.S. states. The majority of the work we perform with our gas utility customers are multi-year programs where they continually evaluate, monitor and implement measures to improve their pipeline distribution networks, ensuring the safety and the integrity of their systems. We supply products including valves, line pipe, smart meters, risers and other gas products to infrastructure modernization and replacement programs. A large percentage of our line pipe sales are attributable to gas utilities customers for line replacement and new sections of their distribution network. As our gas utility customers connect new homes and businesses to their gas distribution network, the growth in the housing market creates new revenue opportunities for our business to supply the related infrastructure products. Some of our customers in this sector support both gas and electric distribution, and certain customers have announced allocating a higher proportion of their multi-year capital budget to electric distribution versus gas distribution infrastructure. However, based on market fundamentals, the need for natural gas to fuel new electric generation facilities and new market share opportunities, we expect the Gas Utilities sector to continue to have steady growth in the coming years. Additionally, due to its reduced dependency on energy demand and commodity prices, this sector is less volatile than the others.

Previous wording

Downstream and Industrial sector generated 18% of our total Company revenue in the six months ended June 30, 2026. We expect this sector to deliver strong growth in the coming years driven by increased customer activity levels related to maintenance, repair and operations (“MRO”) activities, project turnaround activity in refineries and chemical plants and new energy transition related projects. Additionally, we have expanded into new markets, including mining and data centers. We are also negotiating master service agreements with targeted owners and subcontractors for PVF work in new data center cooling systems. While still early, we are seeing encouraging momentum in both areas. This sector has a significant amount of project activity, which can create substantial variability between quarters.

Current wording

Downstream and Industrial sector generated 18% of our total Company revenue in the nine months ended September 30, 2026. We expect this sector to deliver strong growth in the coming years driven by increased customer activity levels related to maintenance, repair and operations (“MRO”) activities, project turnaround activity in refineries and chemical plants and new energy transition-related projects. Additionally, we have expanded into new markets, including mining and data centers. We are also negotiating master service agreements with targeted owners and subcontractors for PVF work in new data center cooling systems. While still early, we are seeing encouraging momentum in both areas. This sector has a significant amount of project activity, which can create substantial variability between quarters.

Previous wording

The outlook for energy transition projects within the Downstream and Industrial sector is supported by government incentives and policies. Many of our customers have made commitments to net zero emissions to address climate change. Our customer base represents many of the primary leaders in the energy transition movement, and they are positioned to lead the effort to decarbonize through nearer-term efforts such as renewable or biodiesel refineries and offshore wind power generation as well as longer-term efforts such as carbon capture, sequestration and storage and hydrogen. However, as U.S. government support is waning for these projects even while European government support continues, we are monitoring our customers' plans for, and the pace of development of, these projects.

Current wording

The outlook for energy transition projects within the Downstream and Industrial sector is supported by government incentives and policies. Many of our customers have made commitments to net zero emissions to address climate change. Our customer base represents many of the primary leaders in the energy transition movement, and they are positioned to lead the effort to decarbonize through nearer-term efforts such as renewable or biodiesel refineries and offshore wind power generation as well as longer-term efforts such as carbon capture, sequestration and storage and hydrogen. However, as U.S. government support continues to decline for these types of projects, European government support continues.

Previous wording

DNOW’s Midstream sector is primarily U.S. based and driven by the increased demand for pipelines and gathering systems. In the six months ended June 30, 2026, this sector represented 20% of our total Company revenue. The Midstream sector revenue increased 71% in the six months ended June 30, 2026 compared to the corresponding period of 2025 primarily as a result of the acquisition of MRC Global in November 2025. The outlook in 2026 is expected to have growth primarily driven by demand for natural gas infrastructure as LNG exports continue to rise and gas fired power generation increases for data centers. According to a 2025 Interstate Natural Gas Association of American ("INGAA") Foundation report, to meet energy demand through 2052, North America will require more than $1 trillion in capital investment across natural gas, oil, natural gas liquids, hydrogen and CO 2 infrastructure, averaging $40 billion to $48 billion annually, varying by investment. This market driver is anticipated to positively impact our Midstream sector, contributing to opportunities for growth. The revenue profile for this sector tends to be volatile between quarters, as it can often be tied to large projects.

Current wording

DNOW’s Midstream sector is primarily U.S. based and driven by the increased demand for transmission pipelines and gathering systems. In the nine months ended September 30, 2026, this sector represented 20% of our total Company revenue. The Midstream sector revenue increased 81% in the nine months ended September 30, 2026 compared to the corresponding period of 2025 primarily as a result of the acquisition of MRC Global in the fourth quarter of 2025. The outlook is expected to have growth primarily driven by demand for natural gas infrastructure as LNG exports continue to rise and gas-fired power generation increases for data centers. The revenue profile for this sector tends to be volatile between quarters, as it can often be tied to large projects.

Previous wording

Furthermore, as new LNG capacity comes online, this drives the need for associated pipeline infrastructure, which several LNG projects are expected to do in 2026. U.S. natural gas production is expected to rise, leading to the need for additional pipeline infrastructure and gathering systems. Rising electricity consumption from AI-driven data centers creates the need for additional natural gas transportation, which is also expected to drive growth in this sector.

Current wording

Furthermore, as new LNG capacity comes online, this drives the need for associated pipeline infrastructure. U.S. natural gas production is expected to rise, leading to the need for additional pipeline infrastructure and gathering systems. Rising electricity consumption from AI-driven data centers creates the need for additional natural gas transportation, which is also expected to drive growth in this sector. Both LNG and power generation capacity expansion projects tend to be multi-year projects and therefore produce cyclicality of natural gas demand and periods of oversupply. Natural gas is also used for heating during winter months, and winter weather patterns have a short term impact on natural gas price, storage and demand.

Previous wording

It is important to note that these challenges are dynamic and continue to evolve. If additional pricing fluctuations arise due to tariffs or quotas, the ultimate effect on our revenue and cost of products—which are determined using the LIFO inventory costing methodology—remains uncertain and subject to volatility.

Current wording

It is important to note that these challenges are dynamic and continue to evolve. If additional pricing fluctuations arise due to tariffs or quotas, the ultimate effect on our revenue and cost of products remains uncertain and subject to volatility.

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 second quarter of 2026 and 2025 and the first quarter of 2026 include the following:

Current wording

Our results are dependent on, among other factors, crude oil and natural gas prices, the level of worldwide oil and gas drilling and completions, well remediation activity, 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 2026 and 2025 and the second quarter of 2026 include the following:

Previous wording

Monthly averages for the quarters indicated, except for U.S. Wells Completed. See sources on following page.

Current wording

Monthly averages for the quarters indicated, except for U.S. Wells Completed.

Previous wording

Sources: Rig count: Baker Hughes, Inc. (www.bakerhughes.com); West Texas Intermediate Crude and Natural Gas Prices: Department of Energy, Energy Information Administration (“EIA”) (www.eia.gov); Hot-Rolled Coil Prices: SteelBenchmarker™ Hot Roll Coil USA (www.steelbenchmarker.com); U.S. Wells Completed: Department of Energy, Energy Information Administration (www.eia.gov) (As revised).

Current wording

Sources: WTI and Natural Gas Prices: Department of Energy, Energy Information Administration (“EIA”) (www.eia.gov); Hot-Rolled Coil Prices: SteelBenchmarker™ Hot Roll Coil USA (www.steelbenchmarker.com); U.S. Wells Completed: Department of Energy, Energy Information Administration (www.eia.gov) (As revised); Active Rigs: Baker Hughes, Inc. (www.bakerhughes.com).

Previous wording

We play a vital role in supporting customers’ supply chains, providing essential products for energy and industrial markets, including infrastructure across upstream, gas utilities, midstream, downstream and industrial sectors. Our business depends on both capital and maintenance spending by our customers. Global oil and gas consumption is rising due to population growth and expanding energy needs in emerging markets. The EIA projects world energy consumption to increase 34% between 2022 and 2050, with significant growth in renewables (118%), natural gas (29%) and hydrocarbon-based liquids (23%). U.S. oil production is expected to peak at 14 million barrels per day in 2028 and gradually decline, while natural gas production will grow, largely driven by LNG expansion and power generation. The gas utilities industry is expected to grow as aging distribution networks prompt replacement and modernization. PHMSA estimates that roughly 33% of gas distribution lines are over 40 years old or of unknown origin, driving ongoing maintenance. Housing market growth further increases demand for related infrastructure products. According to the EIA, the U.S. will remain a net exporter of petroleum products due to expanded terminal capacity, with strong markets for our goods and services. This projected increase in oil and gas to meet the rise in international energy demand continues to provide a robust market for our existing goods and services. We anticipate future growth from energy transition projects, as traditional energy customers shift capital to these areas. Our established relationships and experience position us well for this evolving market. The U.S. midstream sector is expanding, particularly in natural gas infrastructure to meet LNG export and power demands. Federal policies have accelerated project reviews and simplified processes for pipeline development. According to a 2025 INGAA Foundation report, to meet energy demand through 2052, North America will require more than $1 trillion in capital investment across natural gas, oil, natural gas liquids, hydrogen and CO 2 infrastructure, averaging $40 billion to $48 billion annually, varying by investment. Globally, refining capacity—especially in Asia and the Middle East—is projected to outpace demand growth later in the decade; the U.S. market remains stable but faces planned capacity reductions. As refineries age or convert to renewable fuels, we supply critical infrastructure for continued operations and conversions. The U.S. chemicals market is expected to grow steadily, while short term cycles will exist and remain globally competitive through 2040, due to feedstock cost advantage from shale gas and natural gas liquids (“NGLs”). The European market is transitioning toward specialty and sustainable chemicals with commodity chemicals declining. Demand for our products is shaped by operational budgets, capacity expansions, and compliance needs.

Current wording

We play a vital role in supporting customers’ supply chains, providing essential products for energy and industrial markets, including infrastructure across upstream, gas utilities, midstream, downstream and industrial sectors. Our business depends on both capital and maintenance spending by our customers. Global oil and gas consumption is rising due to population growth and expanding energy needs in emerging markets. The EIA projects world energy consumption to increase 34% between 2022 and 2050, with significant growth in renewables (118%), natural gas (29%) and hydrocarbon-based liquids (23%). U.S. oil production is expected to peak at 14 million barrels per day in 2030 and gradually decline, while natural gas production will grow, largely driven by LNG expansion and power generation. The gas utilities industry is expected to grow as aging distribution networks prompt replacement and modernization. Pipeline and Hazardous Materials Safety Administration estimates that roughly 33% of gas distribution lines are over 40 years old or of unknown origin, driving ongoing maintenance. Housing market growth further increases demand for related infrastructure products. According to the EIA, the U.S. will remain a net exporter of petroleum products due to expanded terminal capacity, with strong markets for our goods and services. This projected increase in oil and gas to meet the rise in international energy demand continues to provide a robust market for our existing goods and services. We anticipate future growth from energy transition projects, as traditional energy customers shift capital to these areas. Our established relationships and experience position us well for this evolving market. The U.S. midstream sector is expanding, particularly in natural gas infrastructure to meet LNG export and power demands. Federal policies have accelerated project reviews and simplified processes for pipeline development. According to a 2025 Interstate Natural Gas Association of America Foundation report, to meet energy demand through 2052, it is estimated that North America could require more than $1 trillion in capital investment across natural gas, oil, natural gas liquids, hydrogen and CO 2 infrastructure, averaging $40 billion to $48 billion annually, varying by investment. Globally, refining capacity—especially in Asia and the Middle East—is projected to outpace demand growth later in the decade. The U.S. market remains stable but faces planned capacity reductions. As refineries age or convert to renewable fuels, we supply critical infrastructure for continued operations and conversions. The U.S. chemicals market is expected to grow steadily, while short term cycles will exist and remain globally competitive through 2040, due to feedstock cost advantage from shale gas and NGLs. The European market is transitioning toward specialty and sustainable chemicals with commodity chemicals declining. Demand for our products is shaped by operational budgets, capacity e…

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Previous wording

The results of operations are presented before consideration of the noncontrolling interests. Our results of operations are as follows (in millions):

Current wording

Our results of operations are as follows (in millions):

Previous wording

Adjusted Gross Profit and Adjusted EBITDA are non-GAAP financial measures. For a reconciliation of these measures to an equivalent GAAP measure, see pages 26-28 herein.

Current wording

Adjusted Gross Profit and Adjusted EBITDA are non-GAAP financial measures. For a reconciliation of these measures to an equivalent GAAP measure, see pages 25-27 herein.

Previous wording

U.S. Segment—Revenue was $1,109 million and $2,094 million for the three and six months ended June 30, 2026, an increase of $581 million and an increase of $1,092 million compared to the corresponding periods of 2025. Theincrease for the three and six months ended June 30, 2026 was primarily driven by incremental revenue from the MRC Global acquisition completed in the fourth quarter of 2025.

Current wording

U.S. Segment. Revenue was $1,125 million and $3,219 million for the three and nine months ended September 30, 2026, respectively, an increase of $598 million and $1,690 million compared to the corresponding periods of 2025. The increase for the three and nine months ended September 30, 2026 was primarily driven by incremental revenue from the MRC Global acquisition completed in the fourth quarter of 2025.

Previous wording

Our Canadian revenue was approxim ately 4% of total revenue for both the three and six months ended June 30, 2026, compared to 8% and 9% for the three and six months ended June 30, 2025, respectively. We are subject to fluctuations in foreign currency exchange rates relative to the U.S. dollar. Our Canadian revenue is favorably impacted as the U.S. dollar weakens relative to the Canadian dollar, and unfavorably impacted as the U.S. dollar strengthens relative to the Canadian dollar. For the three and six months ended June 30, 2026, our Canadian segment revenuewas unfavorably impacted by less than $1 million and favorably impacted by approximately $2 million, respectively, due to changes in foreign currency exchange rates.

Current wording

Our Canadian revenue was approxim ately 4% of total revenue for both the three and nine months ended September 30, 2026, compared to 8% and 9% for the three and nine months ended September 30, 2025, respectively. The decrease in Canadian revenue as a percentage of total revenue was primarily attributable to the acquisition of MRC Global in the fourth quarter of 2025, which increased revenue in other geographic markets. We are subject to fluctuations in foreign currency exchange rates relative to the U.S. dollar. Our Canadian revenue is favorably impacted as the U.S. dollar weakens relative to the Canadian dollar, and unfavorably impacted as the U.S. dollar strengthens relative to the Canadian dollar. For the three and nine months ended September 30, 2026, our Canadian segment revenuewas unfavorably impacted by less than $1 million and favorably impacted by approximately $2 million, respectively, due to changes in foreign currency exchange rates.

Previous wording

International Segment—Revenue was $151 million and $298 million for the three and six months ended June 30, 2026, an increase of $99 million and an increase of $183 million compared to the corresponding periods of 2025. Theincrease was primarily due to the acquisition of MRC Global in the fourth quarter of 2025.

Current wording

International Segment. Revenue was $156 million and $454 million for the three and nine months ended September 30, 2026, an increase of $102 million and $285 million, respectively, compared to the corresponding periods of 2025. Theincrease was primarily due to the incremental revenue from the acquisition of MRC Global in the fourth quarter of 2025.

Previous wording

Our international revenue was approx imately 11% and 12% of total revenue for the three and six months ended June 30, 2026, compared to 8% and 9% for the three and six months ended June 30, 2025, respectively. We are subject to fluctuations in foreign currency exchange rates relative to the U.S. dollar. Our international revenue is favorably impacted as the U.S. dollar weakens relative to other foreign currencies, and unfavorably impacted as the U.S. dollar strengthens relative to other foreign currencies. For the three and six months ended June 30, 2026, our international segment revenue was favorably impacted by approximately $1 million and $4 million, respectively, due to changes in foreign currency exchange rates.

Current wording

Our international revenue was approx imately 12% of total revenue for both the three and nine months ended September 30, 2026, compared to 9% for both the three and nine months ended September 30, 2025, respectively. We are subject to fluctuations in foreign currency exchange rates relative to the U.S. dollar. Our international revenue is favorably impacted as the U.S. dollar weakens relative to other foreign currencies, and unfavorably impacted as the U.S. dollar strengthens relative to other foreign currencies. For the three and nine months ended September 30, 2026, our international segment revenue was favorably impacted by less than $1 million and $4 million, respectively, due to changes in foreign currency exchange rates.

Previous wording

Gross Profit. Our gross profit was $243 million (18.6% of revenue) and $436 million (17.5% of revenue) for the three and six months ended June 30, 2026, respectively, as compared to $129 million (20.5% of revenue) and $267 million (21.8% of revenue) for the three and six months ended June 30, 2025, respectively. The increase was primarily attributable to incremental revenue due to the acquisition of MRC Global in November 2025. Compared to average cost, our LIFO inventory costing methodology increased cost of products by $19 million and $35 million for the three and six months ended June 30, 2026, respectively, as compared to a $15 million and $16 million increase in cost of products for the three and six months ended June 30, 2025, respectively.

Current wording

Gross Profit. Gross profit was $265 million (19.8% of revenue) and $701 million (18.3% of revenue) for the three and nine months ended September 30, 2026, respectively, as compared to $143 million (22.6% of revenue) and $410 million (22.0% of revenue) for the three and nine months ended September 30, 2025, respectively. The increase in gross profit dollars was primarily attributable to incremental revenue due to the acquisition of MRC Global in the fourth quarter of 2025. The reduced gross margin percentage is primarily due to the dilutive contribution of the MRC Global acquisition. Compared to average cost, our U.S. LIFO inventory costing methodology increased cost of products by $11 million and $46 million for the three and nine months ended September 30, 2026, respectively, as compared to a $2 million and $18 million increase in cost of products for the three and nine months ended September 30, 2025, respectively.

Previous wording

Adjusted Gross Profit. Adjusted Gross Profit increased to $272 million (20.8% of revenue) and $528 million (21.2% of revenue) for the three and six months ended June 30, 2026 from $146 million (23.2% of revenue) and $287 million (23.4% of revenue) for the three and six months ended June 30, 2025, an increase of $126 million and $241 million, respectively. For the three and six months ended June 30, 2026, the increase was primarily driven by the U.S. and International segments, partially offset by the Canada segment. The reduced margin percentage is primarilydue to changes in product and customer mix resulting from the integration of MRC Global's product portfolio into the Company's expanded offering.

Current wording

Adjusted Gross Profit. Adjusted Gross Profit increased to $283 million (21.2% of revenue) and $811 million (21.2% of revenue) for the three and nine months ended September 30, 2026, respectively, as compared to $147 million (23.2% of revenue) and $434 million (23.3% of revenue) for the three and nine months ended September 30, 2025, respectively. For the three and nine months ended September 30, 2026, the increase was primarily driven by the U.S. and International segments, partially offset by the Canada segment. The reduced margin percentage is primarily due toto the dilutive contribution of the MRC Global acquisition.

Previous wording

Adjusted Gross Profit is a non-GAAP financial measure. We define Adjusted Gross Profit as revenues, less cost of products, plus amortization of intangibles, plus inventory-related charges incremental to normal operations, plus transaction costs associated with acquisitions, such as inventory fair value step-up or write-downs, and plus or minus the impact of our LIFO inventory costing methodology. We present Adjusted Gross Profit because we believe it is a useful indicator of our operating performance without regard to items, such as amortization of intangibles that can vary substantially from company to company depending upon the nature and extent of acquisitions. Similarly, the impact of the LIFO inventory costing method can cause results to vary substantially from company to company depending upon whether they elect to utilize LIFO and depending upon which method they may elect. We use Adjusted Gross Profit as a key performance indicator in managing our business. We believe that gross profit is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to Adjusted Gross Profit.

Current wording

Adjusted Gross Profit is a non-GAAP financial measure. We define Adjusted Gross Profit as revenues, less cost of products, plus amortization of intangibles, plus inventory-related charges incremental to normal operations, plus transaction costs associated with acquisitions, such as inventory fair value step-up or write-downs, and plus or minus the impact of our U.S. LIFO inventory costing methodology. We present Adjusted Gross Profit because we believe it is a useful indicator of our operating performance without regard to items, such as amortization of intangibles that can vary substantially from company to company depending upon the nature and extent of acquisitions. Similarly, the impact of the LIFO inventory costing method can cause results to vary substantially from company to company depending upon whether they elect to utilize LIFO and depending upon which method they may elect. We use Adjusted Gross Profit as a key performance indicator in managing our business. We believe that gross profit is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to Adjusted Gross Profit.

Previous wording

The following table reconciles gross profit, as derived from our consolidated financial statements, with Adjusted Gross Profit, a non-GAAP financial measure (in millions):

Current wording

The following table reconciles gross profit, as reported in our consolidated financial statements, with Adjusted Gross Profit, a non-GAAP financial measure (in millions):

Previous wording

Selling, general and administrative (“SG&A”) expenses. SG&A expenses were $238 million and $481 million forthe three and six months ended June 30, 2026, compared to$112 million and $221 millionfor the corresponding periods of 2025, an increase of $126 million and $260 million, respectively. The increasewas primarily drivenby incremental expenses from the MRC Global acquisition completed in the fourth quarter of 2025. SG&A expenses include branch location, distribution center and regional expenses (including costs such as compensation, benefits and rent) as well as depreciation and corporate selling, general and administrative expenses.

Current wording

Selling, general and administrative (“SG&A”) expenses. SG&A expenses were $232 million and $713 million forthe three and nine months ended September 30, 2026, respectively, compared to$112 million and $333 millionfor the corresponding periods of 2025, an increase of $120 million and $380 million, respectively. The increasewas primarily drivenby incremental expenses from the MRC Global acquisition completed in the fourth quarter of 2025. SG&A expenses include branch location, distribution center and regional expenses (including costs such as compensation, benefits and rent) as well as depreciation and corporate selling, general and administrative expenses.

Previous wording

Impairment and other charges. Impairment and other charges were $4 million for boththe three and six months ended June 30, 2026, compared to nil for the corresponding periods of 2025. These impairment charges were related to the operating right-of-use asset associated with a corporate office lease in Houston, Texas. The impairment resulted from the Company's decision to permanently vacate the leased premises.

Current wording

Impairment and other charges. Impairment and other charges were nil and $4 million forthe three and nine months ended September 30, 2026, respectively, compared to nil for the corresponding periods of 2025. During the second quarter of 2026, the Company decided to permanently vacate the leased corporate office in Houston, Texas, and recognized an impairment of the related operating right-of-use asset.

Previous wording

Operating profit (loss). Our operating profit (loss) was $1 million and ($49) millionfor the three and six months ended June 30, 2026, compared to an operating profitof $17 million and $46 million for the corresponding periods of 2025, a decrease of $16 million and $95 million, respectively, primarily due to inventory-related transaction charges, our LIFO inventory costing methodology, reduced margins and increases in incremental SG&A expenses associated with the MRC Global acquisition.

Current wording

Operating profit (loss). Our operating profit (loss) was $33 million and ($16) millionfor the three and nine months ended September 30, 2026, respectively, compared to an operating profitof $31 million and $77 million for the corresponding periods of 2025, an increase of $2 million and a decrease of $93 million, respectively, primarily due to inventory-related transaction charges, our LIFO inventory costing methodology, reduced margins and increases in incremental SG&A expenses associated with the MRC Global acquisition.

Previous wording

U.S. Segment—Operating loss was $8 million and $62 million for the three and six months ended June 30, 2026, a decrease of $23 million and a decrease of $98 million compared to the corresponding periods of 2025. Operating profit decreased primarily due to inventory-related transaction charges, our LIFO inventory costing methodology and increases in incremental expenses associated with the MRC Global acquisition.

Current wording

U.S. Segment. Operating profit (loss) was $19 million and ($43) million for the three and nine months ended September 30, 2026, respectively, a decrease of $7 million and $105 million compared to the corresponding periods of 2025. Operating profit decreased primarily due to inventory-related transaction charges, our U.S. LIFO inventory costing methodology and increases in incremental expenses associated with the MRC Global acquisition.

Previous wording

Canada Segment—Operating profit was $1 million and $2 million for the three and six months ended June 30, 2026, an increase of $1 million and a decrease of $2 million compared to the corresponding periods of 2025. Operating profit increased primarily due to a reduction in SG&A expenses for three months ended June 30, 2026. For the six months ended June 30, 2026 the decline in operating profit was driven by the decline in revenue discussed above.

Current wording

Canada Segment. Operating profit was $3 million and $5 million for the three and nine months ended September 30, 2026, respectively, an increase of $1 million and a decrease of $1 million compared to the corresponding periods of 2025. Operating profit increased primarily due to a reduction in SG&A expenses for three months ended September 30, 2026. For the nine months ended September 30, 2026 the decline in operating profit was driven by the decline in revenue discussed above.

Previous wording

International Segment—Operating profit was$8 million and $11 million for the three and six months ended June 30, 2026, an increase of $6 million and an increase of $5 million compared to the corresponding periods of 2025.

Current wording

International Segment. Operating profit was$11 million and $22 million for the three and nine months ended September 30, 2026, respectively, an increase of $8 million and $13 million compared to the corresponding periods of 2025. The increase was primarily due to the acquisition of MRC Global in the fourth quarter of 2025.

Previous wording

Other (expense) income, net. Other expense was $10 million and $20 million for the three and six months ended June 30, 2026 and was primarily attributable to interest expense on borrowings associated with the acquisition of MRC Global completed in the fourth quarter of 2025. Other (expense) income was nil for the corresponding periods of 2025.

Current wording

Other expense, net. Other expense, net was $10 million and $30 million for the three and nine months ended September 30, 2026, respectively, and was primarily attributable to interest expense on borrowings associated with the acquisition of MRC Global completed in the fourth quarter of 2025. Other expense, net was $1 million for the corresponding periods of 2025.

Previous wording

Income tax provision (benefit). The effective tax rate for the three and six months ended June 30, 2026, was (133.3%) and 5.8%, respectively, compared to 17.6% and 21.7%, respectively, for the corresponding periods of 2025. 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 and six months ended June 30, 2026 were impacted by changes in forecasted annual earnings and the geographic mix of those earnings, which resulted in a change in the estimated annual effective tax rate from the estimate used during the first quarter of 2026. The revised estimated annual effective tax rate contributed to income tax expense during the second quarter of 2026 despite a pretax loss for the quarter, resulting in a negative effective tax rate for the three months ended June 30, 2026.

Current wording

Income tax (benefit) provision. The effective tax rate for the three and nine months ended September 30, 2026 was (13.0%) and 15.2%, respectively, compared to 23.3% and 22.4%, respectively, for the corresponding periods of 2025. In general, the Company's effective tax rates differ 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 rates for the three and nine months ended September 30, 2026 were impacted by changes in forecasted annual earnings and the geographic mix of those earnings, which resulted in a change in the estimated annual effective tax rate from the estimate used during the second quarter of 2026. The revised estimated annual effective tax rate contributed to income tax benefit during the three months ended September 30, 2026 despite pretax income for the quarter, resulting in a negative effective tax rate for that period.