Release Details

DNOW Reports Second Quarter 2024 Results

August 7, 2024

Earnings Conference Call
August 7, 2024
8:00 a.m. CT
1 (888) 660-6431 (within North America)
1 (929) 203-2118 (outside of North America)
Access Code: 7372055
Webcast: ir.dnow.com

HOUSTON--(BUSINESS WIRE)--Aug. 7, 2024-- DNOW Inc. (NYSE: DNOW) announced results for the second quarter ended June 30, 2024.

Second Quarter 2024 Highlights

  • Revenue was $633 million for the second quarter of 2024
  • Net income attributable to DNOW Inc. was $24 million, or $0.21 per diluted share, for the second quarter of 2024
  • Non-GAAP net income attributable to DNOW Inc. excluding other costs was $28 million, or $0.25 per diluted share, for the second quarter of 2024
  • EBITDA excluding other costs was $50 million or 7.9% of revenue for the second quarter of 2024
  • Cash provided by operating activities was $21 million for the second quarter of 2024 and $211 million for the trailing four quarters ending June 30, 2024
  • Repurchased $10 million of common stock in the second quarter of 2024
  • Cash and cash equivalents was $197 million and long-term debt was zero at June 30, 2024 with total liquidity of approximately $579 million

David Cherechinsky, President and CEO of DNOW, added, “We are delighted with the growth we achieved during the second quarter, in a challenging market, where we delivered $50 million in EBITDA and produced $18 million in free cash flow, bringing our free cash flow haul to $201 million over the past four quarters. We opportunistically repurchased $10 million in shares in the quarter and are on a path to complete the $80 million share repurchase program this year.

We continue to execute on our strategy to bolster DNOW’s capabilities and expand our core market, while further penetrating into midstream, energy evolution and adjacent industrial markets, providing additional opportunities for growth. The future remains bright thanks to our dedicated, skilled and passionate employees who work tirelessly and successfully to help solve our customers’ complex operational and supply chain challenges.

With $197 million in cash, no debt and $579 million of total liquidity, we continue to pursue complementary, margin accretive acquisitions where the combination would maximize shareholder value and fuel future DNOW success.”

Prior to the earnings conference call a presentation titled “DNOW Second Quarter 2024 Key Takeaways” will be available on the Company’s Investor Relations website.

About DNOW

DNOW is a worldwide supplier of energy and industrial products and packaged, engineered process and production equipment with a legacy of over 160 years. Headquartered in Houston, Texas, with approximately 2,600 employees and a network of locations worldwide, we offer a broad set of supply chain solutions combined with a suite of digital offerings branded as DigitalNOW® that provide customers world-class technology for digital commerce, data and information management. Our locations provide products and solutions to exploration and production, midstream transmission and storage companies, refineries, chemical companies, utilities, mining, municipal water, manufacturers, engineering and construction as well as companies operating in the decarbonization, energy transition and renewables end markets.

Statements made in this press release that are forward-looking in nature are intended to be "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 and may involve risks and uncertainties. These statements may differ materially from actual future events or results. Readers are referred to documents filed by DNOW Inc. with the U.S. Securities and Exchange Commission, which identify significant risk factors which could cause actual results to differ from those contained in the forward-looking statements.

 

DNOW INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

 
  June 30,   December 31,
 

2024

 

  

2023
       
ASSETS
Current assets:      
Cash and cash equivalents

$

197

 

  

$

299

 
Receivables, net

 

403

 

  

 

384

 
Inventories, net

 

399

 

  

 

366

 
Prepaid and other current assets

 

24

 

  

 

19

 
Total current assets

 

1,023

 

  

 

1,068

 
Property, plant and equipment, net

 

139

 

  

 

131

 
Deferred income taxes

 

105

 

  

 

118

 
Goodwill

 

192

 

  

 

139

 
Intangibles, net

 

57

 

  

 

28

 
Other assets

 

47

 

  

 

45

 
Total assets

$

1,563

 

  

$

1,529

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:      
Accounts payable

$

278

 

  

$

288

 
Accrued liabilities

 

123

 

  

 

120

 
Other current liabilities

 

11

 

  

 

10

 
Total current liabilities

 

412

 

  

 

418

 
Long-term operating lease liabilities

 

32

 

  

 

30

 
Other long-term liabilities

 

20

 

  

 

18

 
Total liabilities

 

464

 

  

 

466

 
Commitments and contingencies      
Stockholders' equity:      
Preferred stock - par value $0.01; 20 million shares authorized; no shares issued and
outstanding

 

−

 

  

 

−

 
Common stock - par value $0.01; 330 million shares authorized; 106,549,496 and 106,257,565
shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

 

1

 

  

 

1

 
Additional paid-in capital

 

2,028

 

  

 

2,032

 
Accumulated deficit

 

(783

)

  

 

(828

)
Accumulated other comprehensive loss

 

(151

)

  

 

(145

)
DNOW Inc. stockholders' equity

 

1,095

 

  

 

1,060

 
Noncontrolling interest

 

4

 

  

 

3

 
Total stockholders' equity

 

1,099

 

  

 

1,063

 
Total liabilities and stockholders' equity

$

1,563

 

  

$

1,529

 
 

DNOW INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In millions, except per share data)

 
  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,
 

2024

  

2023

 

  

2024

  

2024

  

2023

 
                   
Revenue

$

633

  

$

594

 

  

$

563

  

$

1,196

  

$

1,178

 
Operating expenses:                  
Cost of products  

495

  

 

460

 

  

 

434

  

 

929

  

 

907

 
Warehousing, selling and administrative

 

105

  

 

98

 

  

 

101

  

 

206

  

 

200

 
Operating profit

 

33

  

 

36

 

  

 

28

  

 

61

  

 

71

 
Other income (expense)

 

−

  

 

(1

)

  

 

1

  

 

1

  

 

(1

)
Income before income taxes

 

33

  

 

35

 

  

 

29

  

 

62

  

 

70

 
Income tax provision

 

8

  

 

1

 

  

 

8

  

 

16

  

 

4

 
Net income

 

25

  

 

34

 

  

 

21

  

 

46

  

 

66

 
Net income attributable to noncontrolling interest

 

1

  

 

−

 

  

 

−

  

 

1

  

 

1

 
Net income attributable to DNOW Inc.

$

24

  

$

34

 

  

$

21

  

$

45

  

$

65

 
Earnings per share attributable to DNOW Inc. stockholders:                  
Basic

$

0.21

  

$

0.31

 

  

$

0.20

  

$

0.41

  

$

0.59

 
Diluted

$

0.21

  

$

0.31

 

  

$

0.19

  

$

0.41

  

$

0.59

 
Weighted-average common shares outstanding, basic

 

107

  

 

107

    

 

106

  

 

107

  

 

108

 
Weighted-average common shares outstanding, diluted

 

108

  

 

108

    

 

107

  

 

107

  

 

109

 
 

DNOW INC.

SUPPLEMENTAL INFORMATION

 

BUSINESS SEGMENTS (UNAUDITED)

(In millions)

 
  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,
 

2024

  

2023

  

2024

  

2024

  

2023
Revenue:                  
United States

$

512

  

$

456

  

$

435

  

$

947

  

$

883
Canada

 

56

  

 

66

  

 

66

  

 

122

  

 

149
International

 

65

  

 

72

  

 

62

  

 

127

  

 

146
Total revenue

$

633

  

$

594

  

$

563

  

$

1,196

  

$

1,178
 

DNOW INC.

SUPPLEMENTAL INFORMATION (CONTINUED)

U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) TO NON-GAAP RECONCILIATIONS

NET INCOME ATTRIBUTABLE TO DNOW INC. TO NON-GAAP EBITDA EXCLUDING OTHER COSTS RECONCILIATION (UNAUDITED)

(In millions)

 
  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,
 

2024

 

  

2023

 

  

2024

 

  

2024

 

  

2023

 
                   
GAAP net income attributable to DNOW Inc. (1)

$

24

 

  

$

34

 

  

$

21

 

  

$

45

 

  

$

65

 
Net income attributable to noncontrolling interest (2)

 

1

 

  

 

−

 

  

 

−

 

  

 

1

 

  

 

1

 
Interest expense (income), net

 

(1

)

  

 

−

 

  

 

(2

)

  

 

(3

)

  

 

(1

)
Income tax provision

 

8

 

  

 

1

 

  

 

8

 

  

 

16

 

  

 

4

 
Depreciation and amortization

 

9

 

  

 

6

 

  

 

7

 

  

 

16

 

  

 

12

 
Other costs:                  
Stock-based compensation

 

4

 

  

 

4

 

  

 

2

 

  

 

6

 

  

 

7

 
Other (3)

 

5

 

  

 

2

 

  

 

3

 

  

 

8

 

  

 

6

 
EBITDA excluding other costs

$

50

 

  

$

47

 

  

$

39

 

  

$

89

 

  

$

94

 
EBITDA % excluding other costs (4)

 

7.9

%

  

 

7.9

%

  

 

6.9

%

  

 

7.4

%

  

 

8.0

%
 

NET INCOME ATTRIBUTABLE TO DNOW INC. TO NON-GAAP NET INCOME ATTRIBUTABLE TO DNOW INC. EXCLUDING OTHER COSTS RECONCILIATION (UNAUDITED)

 
  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,
 

2024

  

2023

  

2024

  

2024

  

2023
                   
GAAP net income attributable to DNOW Inc. (1)

$

24

  

$

34

 

  

$

21

  

$

45

  

$

65

 
Other, net of tax (5) (6)

 

4

  

 

(7

)

  

 

2

  

 

6

  

 

(10

)
Net income attributable to DNOW Inc. excluding other costs (6)

$

28

  

$

27

 

  

$

23

  

$

51

  

$

55

 
 

DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO DNOW INC. STOCKHOLDERS TO NON-GAAP DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO DNOW INC. STOCKHOLDERS EXCLUDING OTHER COSTS RECONCILIATION (UNAUDITED)

 
  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,
 

2024

  

2023

  

2024

  

2024

  

2023
                   
GAAP diluted earnings per share attributable to DNOW Inc. stockholders (1)

$

0.21

  

$

0.31

 

  

$

0.19

  

$

0.41

  

$

0.59

 
Other, net of tax (5) (6)

 

0.04

  

 

(0.06

)

  

 

0.02

  

 

0.05

  

 

(0.09

)
Diluted earnings per share attributable to DNOW Inc. stockholders excluding other costs (6)

$

0.25

  

$

0.25

 

  

$

0.21

  

$

0.46

  

$

0.50

 

(1)

  

In an effort to provide investors with additional information regarding our results as determined by GAAP, we disclose various non-GAAP financial measures in our quarterly earnings press releases and other public disclosures. The non-GAAP financial measures include: (i) earnings before interest, taxes, depreciation and amortization (EBITDA) excluding other costs, (ii) net income attributable to DNOW Inc. excluding other costs and (iii) diluted earnings per share attributable to DNOW Inc. stockholders excluding other costs. Each of these financial measures excludes the impact of certain other costs and therefore has not been calculated in accordance with GAAP. A reconciliation of each of these non-GAAP financial measures to its most comparable GAAP financial measure is included in the schedules herein.

(2)

  

Net income attributable to noncontrolling interest represents the income retained by the noncontrolling party of a joint venture in our international segment which we consolidate into our financials as we are the primary beneficiary and controlling member.

(3)

  

Other includes certain income and expenses and does not include stock-based compensation expense.


For the three and six months ended June 30, 2024, Other was primarily related to transaction-related charges, of which approximately $1 million and $3 million, respectively, were included in warehousing, selling and administrative, and approximately $4 million and $5 million, respectively, were included in cost of products. Transaction-related charges include transaction costs, inventory fair value step-up, retention bonus accruals and integration expenses associated with acquisitions.
 

(4)

  

EBITDA % excluding other costs is defined as EBITDA excluding other costs divided by Revenue.

(5)

  

Other, net of tax includes certain income and expenses and does not include stock-based compensation expense.


For the three and six months ended June 30, 2024, Other, net of tax, included approximately $4 million and $6 million, respectively, related to transaction-related charges.
 

(6)

  

Totals may not foot due to rounding.

 

Mark Johnson
Senior Vice President and Chief Financial Officer
(281) 823-4754

Source: DNOW Inc.