false 0001599617 0001599617 2024-11-07 2024-11-07

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) November 7, 2024

 

 

DNOW INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-36325   46-4191184

(State or other jurisdiction

of incorporation)

  

(Commission

File Number)

  

(IRS Employer

Identification No.)

 

7402 North Eldridge Parkway

Houston, Texas

   77041
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: 281-823-4700

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

  

Trading
Symbol(s)

  

Name of each exchange

on which registered

Common Stock, par value $0.01   DNOW   New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 2.02 Results of Operations and Financial Condition

On November 7, 2024, DNOW Inc. issued a press release announcing earnings for the quarter ended September 30, 2024 and conference call in connection therewith. A copy of the release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.

The information contained in this Current Report shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

The following exhibit is provided as part of the information furnished under Item 2.02 of this Current Report on Form 8-K:

 

99.1    DNOW Inc. press release dated November 7, 2024 announcing the earnings results for the third quarter ended September 30, 2024.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: November 7, 2024     DNOW INC.
     

/s/ Raymond W. Chang

     

Raymond W. Chang

Vice President & General Counsel

LOGO   

Earnings Conference Call

November 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

DNOW Reports Third Quarter 2024 Results

HOUSTON, TX, November 7, 2024 – DNOW Inc. (NYSE: DNOW) announced results for the third quarter ended September 30, 2024.

Third Quarter 2024 Highlights

 

  •  

Revenue was $606 million for the third quarter of 2024

 

  •  

Net income attributable to DNOW Inc. was $13 million, or $0.12 per diluted share, for the third quarter of 2024

 

  •  

Non-GAAP net income attributable to DNOW Inc. excluding other costs was $22 million, or $0.21 per diluted share, for the third quarter of 2024

 

  •  

EBITDA excluding other costs was $42 million or 6.9% of revenue for the third quarter of 2024

 

  •  

Cash provided by operating activities was $74 million for the third quarter of 2024 and $281 million for the trailing four quarters ending September 30, 2024

 

  •  

Repurchased $7 million of common stock in the third quarter of 2024

 

  •  

Cash and cash equivalents was $261 million and long-term debt was zero at September 30, 2024 with total liquidity of approximately $622 million

David Cherechinsky, President and CEO of DNOW, added, “The Company achieved solid results this quarter with year-over-year revenue growth, despite project delays in the period, thanks to the hard work of our dedicated employees, who provide a differentiated level of service and products to our customers every day.

We generated an additional $72 million in free cash flow during the quarter, yielding $273 million for the trailing four quarters, driven by record performance in our U.S. Process Solutions business, strong acquisition contribution and robust inventory velocity. These results were produced in a challenging oil and gas environment, with the backdrop of lower commodity prices and a wave of customer consolidations.

We repurchased $7 million of shares in the quarter and are on a path to complete the $80 million share repurchase program this year, as planned. We are well-positioned, with $261 million in cash and no debt, enjoying a range of options to pursue growth, deploy capital, drive efficiencies and generate improved returns for our shareholders.”

Prior to the earnings conference call a presentation titled “DNOW Third 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 2,500 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.

Contact:

Mark Johnson

Senior Vice President and Chief Financial Officer

(281) 823-4754

DNOW INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

 

     September 30,
2024		     December 31,
2023		  
ASSETS  

Current assets:

     

Cash and cash equivalents

    $ 261     $ 299  

Receivables, net

      405       384  

Inventories, net

      364       366  

Prepaid and other current assets

      28       19  
  

 

 

    

 

 

  

Total current assets

      1,058       1,068  

Property, plant and equipment, net

      138       131  

Deferred income taxes

      98       118  

Goodwill

      192       139  

Intangibles, net

      55       28  

Other assets

      46       45  
  

 

 

    

 

 

  

Total assets

    $ 1,587     $ 1,529  
  

 

 

    

 

 

  
LIABILITIES AND STOCKHOLDERS’ EQUITY  

Current liabilities:

     

Accounts payable

    $ 278     $ 288  

Accrued liabilities

      127       120  

Other current liabilities

      12       10  
  

 

 

    

 

 

  

Total current liabilities

      417       418  

Long-term operating lease liabilities

      31       30  

Other long-term liabilities

      21       18  
  

 

 

    

 

 

  

Total liabilities

      469       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; 106,022,368 and 106,257,565 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

      1       1  

Additional paid-in capital

      2,024       2,032  

Accumulated deficit

      (770 )      (828 ) 

Accumulated other comprehensive loss

      (141 )      (145 ) 
  

 

 

    

 

 

  

DNOW Inc. stockholders’ equity

      1,114       1,060  

Noncontrolling interest

      4       3  
  

 

 

    

 

 

  

Total stockholders’ equity

      1,118       1,063  
  

 

 

    

 

 

  

Total liabilities and stockholders’ equity

    $ 1,587     $ 1,529  
  

 

 

    

 

 

  

 

2

DNOW INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In millions, except per share data)

 

     Three Months Ended      Nine Months Ended  
     September 30,      June 30,      September 30,  
     2024     2023      2024      2024      2023  

Revenue

    $ 606     $ 588      $ 633      $ 1,802      $ 1,766  

Operating expenses:

              

Cost of products

      471       454        495        1,400        1,361  

Warehousing, selling and administrative

      107       97        105        313        297  

Impairment and other charges

      5       —         —         5        —   
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

  

Operating profit

      23       37        33        84        108  

Other income (expense)

      (1 )      —         —         —         (1 ) 
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

  

Income before income taxes

      22       37        33        84        107  

Income tax provision

      9       2        8        25        6  
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

  

Net income

      13       35        25        59        101  

Net income attributable to noncontrolling interest

      —        —         1        1        1  
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

  

Net income attributable to DNOW Inc.

    $ 13     $ 35      $ 24      $ 58      $ 100  
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

  

Earnings per share attributable to DNOW Inc. stockholders:

              

Basic

    $ 0.12     $ 0.32      $ 0.21      $ 0.53      $ 0.91  
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

  

Diluted

    $ 0.12     $ 0.32      $ 0.21      $ 0.53      $ 0.90  
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

  

Weighted-average common shares outstanding, basic

      106       107        107        107        108  
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

  

Weighted-average common shares outstanding, diluted

      107       108        108        107        109  
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

  

DNOW INC.

SUPPLEMENTAL INFORMATION

BUSINESS SEGMENTS (UNAUDITED)

(In millions)

 

     Three Months Ended      Nine Months Ended  
     September 30,      June 30,      September 30,  
     2024      2023      2024      2024      2023  

Revenue:

               

United States

    $ 482      $ 448      $ 512      $ 1,429      $ 1,331  

Canada

      65        68        56        187        217  

International

      59        72        65        186        218  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total revenue

    $ 606      $ 588      $ 633      $ 1,802      $ 1,766  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

3

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     Nine Months Ended  
     September 30,     June 30,     September 30,  
     2024     2023     2024     2024     2023  

GAAP net income attributable to DNOW Inc. (1)

   $ 13     $ 35     $ 24     $ 58     $ 100  

Net income attributable to noncontrolling interest (2)

     —        —        1       1       1  

Interest expense (income), net

      (1 )      (2 )      (1 )      (4 )      (3 ) 

Income tax provision

      9       2       8       25       6  

Depreciation and amortization

      8       7       9       24       19  

Other costs:

           

Stock-based compensation

      3       4       4       9       11  

Other (3)

     10       —        5       18       6  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

EBITDA excluding other costs

    $ 42     $ 46     $ 50     $ 131     $ 140  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

EBITDA % excluding other costs (4)

     6.9 %      7.8 %      7.9 %      7.3 %      7.9 % 

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

(In millions)

 

     Three Months Ended      Nine Months Ended  
     September 30,     June 30,      September 30,  
     2024      2023     2024      2024      2023  

GAAP net income attributable to DNOW Inc. (1)

   $ 13      $ 35     $ 24      $ 58      $ 100  

Other, net of tax(5)(6)

     9        (7 )      4        15        (17 ) 
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

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

   $ 22      $ 28     $ 28      $ 73      $ 83  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

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      Nine Months Ended  
     September 30,     June 30,      September 30,  
     2024      2023     2024      2024      2023  

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

   $ 0.12      $ 0.32     $ 0.21      $ 0.53      $ 0.90  

Other, net of tax(5)(6)

     0.09        (0.07 )      0.04        0.14        (0.15 ) 
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

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

   $ 0.21      $ 0.25     $ 0.25      $ 0.67      $ 0.75  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

 

(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.

 

4

(3)

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

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.

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.

 

(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 nine months ended September 30, 2024, Other, net of tax, included approximately $9 million and $15 million, respectively, related to transaction-related and International restructuring charges.

 

(6)

Totals may not foot due to rounding.

 

5

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Nov. 07, 2024
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Entity Central Index Key 0001599617
Document Type 8-K
Document Period End Date Nov. 07, 2024
Entity Registrant Name DNOW INC.
Entity Incorporation State Country Code DE
Entity File Number 001-36325
Entity Tax Identification Number 46-4191184
Entity Address, Address Line One 7402 North Eldridge Parkway
Entity Address, City or Town Houston
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Entity Address, Postal Zip Code 77041
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Security 12b Title Common Stock, par value $0.01
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