Part I [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for the quarter ended March 31, 2022, detailing the company's financial position, performance, and cash flows, alongside explanatory notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2022, the balance sheet reflects total assets of **$1,162 million**, driven by increased receivables and inventories, with total stockholders' equity growing to **$746 million** Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total current assets** | $946 | $883 | | Inventories, net | $296 | $250 | | **Total assets** | **$1,162** | **$1,104** | | **Total current liabilities** | $395 | $369 | | **Total liabilities** | $416 | $392 | | **Total stockholders' equity** | $746 | $712 | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) For Q1 2022, the company reported a significant turnaround to **$30 million** net income from a **$10 million** net loss in Q1 2021, driven by a **31%** revenue increase to **$473 million** Q1 2022 vs Q1 2021 Statement of Operations (in millions, except per share data) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | **Revenue** | **$473** | **$361** | | Cost of products | $366 | $286 | | Operating profit (loss) | $23 | $(8) | | **Net income (loss)** | **$30** | **$(10)** | | Diluted earnings (loss) per share | $0.27 | $(0.09) | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities for Q1 2022 increased to **$22 million**, primarily due to investments in working capital to support revenue growth Q1 2022 vs Q1 2021 Cash Flow Summary (in millions) | Cash Flow Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(22) | $(4) | | Net cash provided by (used in) investing activities | $2 | $(7) | | Net cash provided by (used in) financing activities | $(1) | $(2) | | **Net change in cash and cash equivalents** | **$(20)** | **$(13)** | | Cash and cash equivalents, end of period | $293 | $374 | [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) These notes provide critical context to the financial statements, detailing the company's business, accounting policies, segment performance, debt structure, and significant non-recurring income items - The company operates as a global distributor of energy and industrial products under the DistributionNOW and DNOW brands, serving upstream, midstream, and downstream sectors in approximately 80 countries[15](index=15&type=chunk) - The company has a **$500 million** senior secured revolving credit facility maturing in December 2026, with no borrowings and approximately **$436 million** availability as of March 31, 2022[28](index=28&type=chunk) - A contingent consideration liability of approximately **$13 million** from a 2021 acquisition was removed in Q1 2022 as the performance target was not met, resulting in a benefit recognized in other income[40](index=40&type=chunk) Revenue and Operating Profit by Segment (in millions) | Segment | Revenue Q1 2022 | Revenue Q1 2021 | Operating Profit (Loss) Q1 2022 | Operating Profit (Loss) Q1 2021 | | :--- | :--- | :--- | :--- | :--- | | United States | $334 | $252 | $14 | $(13) | | Canada | $82 | $58 | $7 | $4 | | International | $57 | $51 | $2 | $1 | | **Total** | **$473** | **$361** | **$23** | **$(8)** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=14&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the strong Q1 2022 performance, including a **31%** revenue increase and return to profitability, to improved market conditions, while highlighting strong liquidity and discussing market uncertainties and energy transition opportunities - For Q1 2022, the company generated net income of **$30 million** on **$473 million** in revenue, a **$40 million** improvement in net income compared to the same period in 2021[59](index=59&type=chunk) - The company's outlook remains tied to commodity prices and drilling activity, with noted uncertainty from the COVID-19 pandemic and the Russia-Ukraine conflict, and the company is winding down its operations in Russia[48](index=48&type=chunk)[60](index=60&type=chunk) - The company views the energy transition as an opportunity to supply existing and new products to both traditional and new customers involved in these projects[60](index=60&type=chunk) Key Industry Indicators (Q1 2022 vs. Q1 2021) | Indicator | 1Q22 | 1Q21 | % Change | | :--- | :--- | :--- | :--- | | U.S. Active Drilling Rigs | 633 | 392 | 61.5% | | Canada Active Drilling Rigs | 198 | 139 | 42.4% | | WTI Crude Price (per barrel) | $94.45 | $57.79 | 63.4% | [Results of Operations by Segment](index=18&type=section&id=Results%20of%20Operations) All operating segments reported significant year-over-year revenue growth in Q1 2022, with the U.S. segment's revenue increasing by **32.5%** and operating profit improving by **$27 million**, while Canada and International segments also saw strong growth - U.S. revenue increased by **$82 million** (**32.5%**) YoY, with operating profit improving by **$27 million**, driven by drilling activity and improved product margins[61](index=61&type=chunk) - Canada revenue increased by **$24 million** (**41.4%**) YoY, driven by a higher rig count[64](index=64&type=chunk) - International revenue increased by **$6 million** (**11.8%**) YoY, driven by increased rig count and project activity[65](index=65&type=chunk) [Non-GAAP Financial Measure and Reconciliation](index=21&type=section&id=Non-GAAP%20Financial%20Measure%20and%20Reconciliation) The company reconciles GAAP Net Income to non-GAAP EBITDA excluding other costs, which significantly increased to **$28 million** in Q1 2022 from **$3 million** in Q1 2021, reflecting improved economic performance Reconciliation to EBITDA excluding other costs (in millions) | Line Item | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | GAAP net income (loss) | $30 | $(10) | | Interest, net | — | — | | Income tax provision (benefit) | 3 | 1 | | Depreciation and amortization | 4 | 6 | | Stock-based compensation | 2 | 2 | | Other | (11) | 4 | | **EBITDA excluding other costs** | **$28** | **$3** | [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with **$293 million** in cash and **$436 million** available on its **$500 million** credit facility, despite **$22 million** in cash used for operating activities to fund working capital growth - As of March 31, 2022, the company had cash and cash equivalents of **$293 million**[77](index=77&type=chunk) - The company had no borrowings against its **$500 million** revolving credit facility and approximately **$436 million** in availability[77](index=77&type=chunk) - Net cash used in operating activities was **$22 million**, primarily due to an increase in working capital resulting from growing market activity[78](index=78&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks include foreign currency exchange rate fluctuations, particularly for its **30%** international sales, and commodity steel pricing, which it manages through inventory control - The company is exposed to foreign currency risk as approximately **30%** of its net sales for Q1 2022 were outside the U.S[86](index=86&type=chunk) - A hypothetical **10%** change in foreign currency rates would have resulted in a **$1 million** change in net income for the first three months of 2022[86](index=86&type=chunk) - The business is sensitive to steel prices, particularly for tubular products, and mitigates this risk by managing inventory levels[87](index=87&type=chunk) [Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2022, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures are effective at a reasonable assurance level as of the end of the reporting period[89](index=89&type=chunk) - No change in internal control over financial reporting occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, internal controls[90](index=90&type=chunk) Part II [Exhibits](index=26&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q report, including key corporate documents, credit agreements, executive compensation forms, and Sarbanes-Oxley Act certifications - The report includes exhibits such as the Amended and Restated Certificate of Incorporation, Bylaws, Credit Agreement, and various executive compensation and award agreements[92](index=92&type=chunk)[93](index=93&type=chunk)[99](index=99&type=chunk) - Certifications from the CEO and CFO pursuant to Rule 13a-14(a) and Section 906 of the Sarbanes-Oxley Act of 2002 are filed as exhibits[100](index=100&type=chunk)[101](index=101&type=chunk)

NOW Inc. (NYSE:DNOW) Q4 2021 Earnings Conference Call February 17, 2022 9:00 AM ET Company Participants Brad Wise - Vice President of Digital Strategy and Investor Relations David Cherechinsky - President and Chief Executive Officer Mark Johnson - Senior Vice President and Chief Financial Officer Conference Call Participants Adam Farley - Stifel Tommy Moll - Stephens Jon Hunter - Cowen & Company Operator Welcome to the NOW Incorporated Fourth Quarter and Full Year 2021 Earnings Conference Call. My name is ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark one) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE YEAR ENDED DECEMBER 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-36325 NOW INC. (Exact name of registrant as specified in its charter) Delaware 46-4191184 (State of Incorporation) (IRS Identification No.) 7402 North Eldridge Parkway, Houst ...

NOW Inc. (NYSE:DNOW) Q3 2021 Earnings Conference Call November 3, 2021 9:00 AM ET Company Participants Brad Wise - Investor Relations David Cherechinsky - President and Chief Executive Officer Mark Johnson - Senior Vice President and Chief Financial Officer Conference Call Participants Doug Becker - Northland Capital Jon Hunter - Cowen Nathan Jones - Stifel Operator Good morning and welcome to the Third Quarter 2021 DistributionNOW Earnings Conference. My name is Brandon and I will be your operator for toda ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 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 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-36325 NOW INC. (Exa ...

NOW Inc. (NYSE:DNOW) Q2 2021 Earnings Conference Call August 4, 2021 9:00 AM ET Company Participants Brad Wise - VP, Marketing & IR David Cherechinsky - President & CEO Mark Johnson - SVP & CFO Conference Call Participants Jon Hunter - Cowen Doug Becker - Northland Capital Adam Farley - Stifel Operator Welcome to the Second Quarter 2021 Earnings Call. My name is John, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-36325 NOW INC. (Exact name of registrant as specified in its charter) Delaware 46-4191184 (State or other jurisdiction of (I.R.S. Employer incorporation or organiz ...

NOW Inc. (NYSE:DNOW) Q1 2021 Earnings Conference Call May 5, 2021 9:00 AM ET Company Participants Brad Wise - Vice President, Marketing & Investor Relations David Cherechinsky - President & Chief Executive Officer Mark Johnson - Senior Vice President & Chief Financial Officer Conference Call Participants Jon Hunter - Cowen Doug Becker - Northland Capital Operator Good morning, and welcome to the First Quarter Earnings Conference Call. My name is Brandon, and I will be your operator for today. At this time, ...

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the company's unaudited consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for the quarter [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements of NOW Inc. for the quarter ended March 31, 2021, including balance sheets, statements of operations, comprehensive income (loss), cash flows, and stockholders' equity, along with detailed notes explaining accounting policies, revenue recognition, segment information, and other financial disclosures [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time **Consolidated Balance Sheet Highlights (in millions):** | Metric | March 31, 2021 | December 31, 2020 | | :---------------------- | :------------- | :---------------- | | Cash and cash equivalents | $374 | $387 | | Receivables, net | $245 | $198 | | Inventories, net | $247 | $262 | | Total current assets | $882 | $861 | | Property, plant and equipment, net | $89 | $98 | | Goodwill | $7 | — | | Total assets | $1,026 | $1,008 | | Accounts payable | $200 | $172 | | Accrued liabilities | $92 | $95 | | Total current liabilities | $298 | $272 | | Total liabilities | $334 | $309 | | Total stockholders' equity | $692 | $699 | - Total assets increased by **$18 million**, primarily driven by an increase in receivables, net, partially offset by decreases in cash and inventories. Goodwill increased by **$7 million** due to an acquisition[7](index=7&type=chunk) - Total liabilities increased by **$25 million**, mainly due to an increase in accounts payable. Total stockholders' equity decreased by **$7 million**[7](index=7&type=chunk) [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) This statement details the company's revenues, expenses, and net loss over a specific reporting period **Consolidated Statements of Operations Highlights (Three Months Ended March 31, in millions, except per share data):** | Metric | 2021 | 2020 | | :-------------------------- | :------ | :------ | | Revenue | $361 | $604 | | Cost of products | $286 | $487 | | Warehousing, selling and administrative | $79 | $130 | | Impairment charges | $4 | $320 | | Operating loss | $(8) | $(333) | | Loss before income taxes | $(9) | $(333) | | Income tax provision (benefit) | $1 | $(2) | | Net loss | $(10) | $(331) | | Basic loss per common share | $(0.09) | $(3.03) | | Diluted loss per common share | $(0.09) | $(3.03) | - Revenue decreased by **$243 million (40.2%)** year-over-year. Net loss significantly improved by **$321 million**, from **$(331) million** in Q1 2020 to **$(10) million** in Q1 2021[10](index=10&type=chunk) - Operating loss improved from **$(333) million** in Q1 2020 to **$(8) million** in Q1 2021, primarily due to a substantial reduction in impairment charges from **$320 million** to **$4 million**[10](index=10&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This statement presents the net loss and other comprehensive income (loss) components for the period **Consolidated Statements of Comprehensive Income (Loss) Highlights (Three Months Ended March 31, in millions):** | Metric | 2021 | 2020 | | :--------------------------------- | :---- | :----- | | Net loss | $(10) | $(331) | | Foreign currency translation adjustments | $1 | $(39) | | Comprehensive loss | $(9) | $(370) | - Comprehensive loss improved significantly from **$(370) million** in Q1 2020 to **$(9) million** in Q1 2021, driven by the improved net loss and a positive shift in foreign currency translation adjustments[14](index=14&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities **Consolidated Statements of Cash Flows Highlights (Three Months Ended March 31, in millions):** | Metric | 2021 | 2020 | | :-------------------------------------- | :---- | :--- | | Net cash provided by (used in) operating activities | $(4) | $6 | | Net cash provided by (used in) investing activities | $(7) | $22 | | Net cash provided by (used in) financing activities | $(2) | $(2) | | Net change in cash and cash equivalents | $(13) | $19 | | Cash and cash equivalents, end of period | $374 | $202 | - Net cash from operating activities shifted from **$6 million** provided in Q1 2020 to **$4 million** used in Q1 2021, primarily due to an increase in working capital[17](index=17&type=chunk) - Net cash used in investing activities was **$7 million** in Q1 2021, compared to **$22 million** provided in Q1 2020, mainly due to a **$6 million** business acquisition[17](index=17&type=chunk) [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This statement outlines changes in the company's equity accounts over the reporting period **Changes in Stockholders' Equity (Three Months Ended March 31, 2021, in millions):** | Item | Amount | | :--------------------------- | :----- | | Balance at December 31, 2020 | $699 | | Net loss | $(10) | | Stock-based compensation | $2 | | Exercise of stock options | $1 | | Shares withheld for taxes | $(1) | | Other comprehensive income | $1 | | Balance at March 31, 2021 | $692 | - Total stockholders' equity decreased by **$7 million** from December 31, 2020, to March 31, 2021, primarily due to the net loss, partially offset by stock-based compensation and other comprehensive income[21](index=21&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the accounting policies, significant estimates, and other disclosures supporting the financial statements - NOW Inc. is a global distributor of energy and industrial products, operating under the DistributionNOW and DNOW brands, serving approximately 80 countries. The company also offers a DigitalNOW® platform for e-commerce, data management, and supply chain optimization[24](index=24&type=chunk) - The unaudited consolidated financial information is prepared in accordance with GAAP for interim financial information and Article 10 of SEC Regulation S-X, and should be read with the latest Form 10-K[25](index=25&type=chunk) - Revenue is primarily from product sales, recognized at a point in time when the customer obtains control. The allowance for doubtful accounts totaled **$26 million** as of March 31, 2021, down from **$28 million** at December 31, 2020[31](index=31&type=chunk)[35](index=35&type=chunk) - Contract liabilities, primarily deferred revenues, totaled **$17 million** as of March 31, 2021, a decrease from **$19 million** at December 31, 2020, with approximately **$7 million** of deferred revenue recognized in Q1 2021[37](index=37&type=chunk) - Property, plant and equipment, net, decreased to **$89 million**. The company reclassified **$3 million** of assets as held-for-sale and recognized a **$4 million** impairment charge in Q1 2021[39](index=39&type=chunk) - Accrued liabilities totaled **$92 million** as of March 31, 2021, down from **$95 million** at December 31, 2020[40](index=40&type=chunk) - The company had no borrowings against its **$750 million** revolving credit facility as of March 31, 2021, with approximately **$224 million** in availability and **97% excess availability**. All debt covenants were in compliance[42](index=42&type=chunk) - Accumulated other comprehensive loss improved from **$(145) million** at December 31, 2020, to **$(144) million** at March 31, 2021, due to **$1 million** in other comprehensive income[45](index=45&type=chunk) **Segment Revenue and Operating Profit (Three Months Ended March 31, in millions):** | Segment | 2021 Revenue | 2020 Revenue | 2021 Operating Profit (Loss) | 2020 Operating Profit (Loss) | | :------------ | :----------- | :----------- | :--------------------------- | :--------------------------- | | United States | $252 | $441 | $(13) | $(204) | | Canada | $58 | $78 | $4 | $(58) | | International | $51 | $85 | $1 | $(71) | | Total | $361 | $604 | $(8) | $(333) | - The effective tax rate for Q1 2021 was **(5.5%)**, compared to **0.6%** for Q1 2020, influenced by foreign tax rates, non-deductible expenses, state income taxes, and changes in valuation allowance[48](index=48&type=chunk) - Basic and diluted loss per share was **$(0.09)** for Q1 2021, a significant improvement from **$(3.03)** for Q1 2020[52](index=52&type=chunk) - Stock-based compensation expense was **$2 million** in Q1 2021, up from less than **$1 million** in Q1 2020. The company granted **750,296 stock options** and **332,326 RSAs/RSUs** in Q1 2021[54](index=54&type=chunk)[56](index=56&type=chunk) - The company completed an acquisition in Q1 2021 for an estimated net purchase price of **$10 million**, recognizing **$7 million goodwill** and **$2 million intangible assets**, expanding engineering and construction services[67](index=67&type=chunk) - Subsequent to March 31, 2021, the company acquired the Flex Flow business from GR Energy Services for an initial cash consideration of **$90 million** plus contingent consideration[71](index=71&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations for the quarter ended March 31, 2021, discussing industry trends, segment performance, liquidity, and capital resources, alongside an executive summary and outlook [Forward-Looking Statements](index=15&type=section&id=Forward-Looking%20Statements) This section cautions investors about risks and uncertainties that could cause actual results to differ from projections - Actual results may differ materially from forward-looking statements due to various factors, including changes in oil and gas prices, energy markets, customer demand, M&A integration, capital market volatility, COVID-19 disruptions, regulatory changes, and competition[73](index=73&type=chunk) - Investors are cautioned to review 'Risk Factors' in the company's Form 10-K for additional factors that could cause actual results to differ[73](index=73&type=chunk) [Company Overview](index=15&type=section&id=Company%20Overview) This section describes NOW Inc.'s global distribution business, operational scope, and digital platform offerings - NOW Inc. is a global distributor to the oil and gas and industrial markets, operating under the DistributionNOW and DNOW brands with a legacy of over 150 years[74](index=74&type=chunk) - The company operates through approximately 195 locations and 2,400 employees worldwide, offering digital procurement channels and a broad product range including MRO supplies, pipe, valves, and various equipment[74](index=74&type=chunk)[77](index=77&type=chunk) - The DigitalNOW® platform provides e-commerce, data management, and supply chain optimization, supporting operations in major oil and gas regions globally and serving customers in approximately 80 countries[75](index=75&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) [Summary of Reportable Segments](index=16&type=section&id=Summary%20of%20Reportable%20Segments) This section outlines the company's operational structure across its U.S., Canada, and International business segments - The company operates through three reportable segments: U.S., Canada, and International[85](index=85&type=chunk) - The U.S. segment has approximately 130 locations, offering high-value solutions and engineering/design services to upstream, midstream, downstream energy, and industrial markets[86](index=86&type=chunk)[87](index=87&type=chunk) - The Canada segment has about 40 locations, primarily serving energy exploration, production, mining, and drilling, including composite pipe installation expertise. The International segment operates in approximately 20 countries with 25 locations, providing products and supply chain solutions in major oil and gas development areas[88](index=88&type=chunk)[89](index=89&type=chunk) [Operating Environment Overview](index=17&type=section&id=Operating%20Environment%20Overview) This section discusses the key external factors influencing the company's performance, including oil and gas market indicators - Company results are dependent on worldwide oil and gas drilling and completions, well remediation activity, crude oil and natural gas prices, capital spending by oilfield service companies, and global oil and gas inventory levels[92](index=92&type=chunk) **Key Industry Indicators (Averages for the Quarters Indicated):** | Indicator | 1Q21 | 1Q20 | % 1Q21 v 1Q20 | 4Q20 | % 1Q21 v 4Q20 | | :-------------------------------------- | :------ | :------ | :------------ | :------ | :------------ | | Active Drilling Rigs: | | | | | | | U.S. | 392 | 785 | (50.1%) | 310 | 26.5% | | Canada | 139 | 195 | (28.7%) | 92 | 51.1% | | International | 698 | 1,074 | (35.0%) | 663 | 5.3% | | Worldwide | 1,229 | 2,054 | (40.2%) | 1,065 | 15.4% | | West Texas Intermediate Crude Prices (per barrel) | $57.79 | $45.76 | 26.3% | $42.45 | 36.1% | | Natural Gas Prices ($/MMBtu) | $3.56 | $1.91 | 86.4% | $2.53 | 40.7% | | Hot-Rolled Coil Prices ($/short ton) | $1,113.52 | $580.32 | 91.9% | $701.34 | 58.8% | [Industry Trends](index=18&type=section&id=Industry%20Trends) This section analyzes recent movements in key industry indicators such as rig counts and commodity prices - Worldwide quarterly average rig count increased **15.4%** in Q1 2021 compared to Q4 2020, with U.S. rigs up **26.5%** and Canada up **51.1%**[103](index=103&type=chunk) - Average West Texas Intermediate Crude prices increased **36.1%** to **$57.79** per barrel, natural gas prices increased **40.7%** to **$3.56** per MMBtu, and Hot-Rolled Coil prices increased **58.8%** to **$1,113.52** per short ton in Q1 2021 compared to Q4 2020[103](index=103&type=chunk) - As of April 2021, U.S. rig count continued to rise to **439 rigs**, WTI Crude to **$63.16** per barrel, and Hot-Rolled Coil to **$1,320.00** per short ton, indicating continued market recovery[104](index=104&type=chunk) [Executive Summary](index=19&type=section&id=Executive%20Summary) This section provides a high-level overview of the company's financial performance for the quarter - For the three months ended March 31, 2021, NOW Inc. generated a net loss of **$10 million** on **$361 million** in revenue[106](index=106&type=chunk) - Compared to Q1 2020, revenue decreased by **$243 million (40.2%)**, but net loss improved significantly by **$321 million**, and operating loss improved from **$333 million** to **$8 million**[106](index=106&type=chunk) [Outlook](index=19&type=section&id=Outlook) This section discusses the company's future expectations, strategic initiatives, and market dependencies - The company's outlook remains tied to crude oil and natural gas commodity prices, global drilling and completions activity, and overall oil and gas spending[107](index=107&type=chunk) - Significant uncertainty persists regarding the impact and duration of the COVID-19 pandemic on the economy and global oil and gas demand, with recovery dependent on vaccine administration[108](index=108&type=chunk) - The company plans to continue optimizing operations, advancing strategic goals, and managing costs through structural changes and technology to increase productivity and grow revenue, including expanding into energy transition investments[109](index=109&type=chunk)[110](index=110&type=chunk) [Results of Operations](index=19&type=section&id=Results%20of%20Operations) This section analyzes the company's revenue, expenses, and profitability across its segments for the reporting period **Segment Revenue and Operating Profit (Three Months Ended March 31, in millions):** | Segment | 2021 Revenue | 2020 Revenue | 2021 Operating Profit (Loss) | 2020 Operating Profit (Loss) | | :------------ | :----------- | :----------- | :--------------------------- | :--------------------------- | | United States | $252 | $441 | $(13) | $(204) | | Canada | $58 | $78 | $4 | $(58) | | International | $51 | $85 | $1 | $(71) | | Total | $361 | $604 | $(8) | $(333) | - U.S. segment revenue declined **42.9%** to **$252 million** due to decreased drilling and completions activity, but operating loss improved by **$191 million** to **$(13) million**, largely due to a **$184 million** reduction in impairment charges[111](index=111&type=chunk)[112](index=112&type=chunk) - Canada segment revenue declined **25.6%** to **$58 million**. Operating profit improved by **$62 million** to **$4 million**, primarily due to **$60 million** fewer impairment charges in Q1 2021[115](index=115&type=chunk)[116](index=116&type=chunk) - International segment revenue declined **40.0%** to **$51 million**. Operating profit improved by **$72 million** to **$1 million**, mainly due to **$72 million** fewer impairment charges in Q1 2021[117](index=117&type=chunk)[118](index=118&type=chunk) - Cost of products decreased to **$286 million** in Q1 2021 from **$487 million** in Q1 2020, primarily reflecting lower revenue. Warehousing, selling and administrative expenses decreased to **$79 million** from **$130 million** due to improved operating efficiencies[119](index=119&type=chunk)[120](index=120&type=chunk) - Impairment charges were significantly reduced to **$4 million** in Q1 2021 from **$320 million** in Q1 2020. Other expense increased to **$1 million** due to unfavorable foreign exchange rate impacts[121](index=121&type=chunk)[122](index=122&type=chunk) - The effective tax rate was **(5.5%)** for Q1 2021, compared to **0.6%** for Q1 2020, influenced by various tax-related items[123](index=123&type=chunk) [Non-GAAP Financial Measure and Reconciliation](index=22&type=section&id=Non-GAAP%20Financial%20Measure%20and%20Reconciliation) This section presents and reconciles non-GAAP financial measures used to assess the company's performance - The company discloses EBITDA excluding other costs as a non-GAAP financial measure to provide supplemental information regarding ongoing economic performance and facilitate comparisons[125](index=125&type=chunk)[126](index=126&type=chunk) **EBITDA Excluding Other Costs Reconciliation (Three Months Ended March 31, in millions):** | Metric | 2021 | 2020 | | :--------------------------------- | :---- | :--- | | GAAP net loss | $(10) | $(331) | | Interest, net | — | — | | Income tax provision (benefit) | $1 | $(2) | | Depreciation and amortization | $6 | $10 | | Other costs (primarily impairment) | $4 | $325 | | **EBITDA excluding other costs** | **$1**| **$2** | | EBITDA % excluding other costs | 0.3% | 0.3% | [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) This section details the company's financial flexibility, cash position, and funding sources for its operations and investments - The company expects cash on hand, cash from operations, and its revolving credit facility to be sufficient to fund operating, investing, and financing activities[128](index=128&type=chunk) - Cash and cash equivalents were **$374 million** as of March 31, 2021, with **$94 million** held by foreign subsidiaries, which are generally indefinitely reinvested[129](index=129&type=chunk) - No borrowings were outstanding against the revolving credit facility, with approximately **$224 million** in availability and **97% excess availability**. All debt covenants were in compliance[130](index=130&type=chunk) **Net Cash Flows (Three Months Ended March 31, in millions):** | Activity | 2021 | 2020 | | :---------------------------------------- | :---- | :--- | | Net cash provided by (used in) operating activities | $(4) | $6 | | Net cash provided by (used in) investing activities | $(7) | $22 | | Net cash provided by (used in) financing activities | $(2) | $(2) | - Net cash used in operating activities was **$4 million** in Q1 2021, driven by increased working capital. Net cash used in investing activities was **$7 million**, primarily due to a **$6 million** acquisition[131](index=131&type=chunk)[132](index=132&type=chunk) [Capital Spending](index=24&type=section&id=Capital%20Spending) This section outlines the company's investment activities, including acquisitions and future capital expenditure plans - Subsequent to March 31, 2021, the company completed the Flex Flow business acquisition for an initial cash consideration of **$90 million**, expanding its offering in surface-mounted horizontal pumping systems[137](index=137&type=chunk) - The company intends to pursue additional acquisitions, primarily funded by cash flow from operations and the revolving credit facility[138](index=138&type=chunk) [Off-Balance Sheet Arrangements](index=24&type=section&id=Off-Balance%20Sheet%20Arrangements) This section describes the company's contractual obligations and commitments not recorded on the balance sheet - The company is party to off-balance sheet arrangements such as standby letters of credit and performance bonds, which are not expected to have a material adverse effect on its financial condition or results[139](index=139&type=chunk) [Critical Accounting Policies and Estimates](index=24&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section highlights the significant accounting judgments and assumptions that impact the financial statements - Key accounting estimates include allowance for doubtful accounts, inventory reserves, goodwill, purchase price allocation of acquisitions, vendor consideration, stock-based compensation, and income taxes[140](index=140&type=chunk) - Actual results may differ materially from these estimates, which are based on historical experience and future expectations[140](index=140&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to market risks, primarily from changes in interest rates and foreign currency exchange rates, and its strategies for managing these risks, including the use of derivative instruments [Foreign Currency Exchange Rate Risk](index=25&type=section&id=Foreign%20Currency%20Exchange%20Rate%20Risk) This section assesses the company's exposure to fluctuations in foreign currency exchange rates and its mitigation strategies - The company is exposed to foreign currency exchange rate fluctuations due to global operations, with approximately **30%** of net sales outside the U.S. and significant exposure to the Canadian dollar, British pound, and Australian dollar[144](index=144&type=chunk) - A weakening U.S. dollar benefits the company, while a strengthening U.S. dollar adversely affects it. Foreign currency translation adjustments resulted in a **$1 million** gain in Q1 2021[144](index=144&type=chunk)[145](index=145&type=chunk) - Foreign currency transaction losses of less than **$1 million** were reported in Q1 2021. The company may use foreign currency forward contracts to economically hedge risk but does not hedge net investments in foreign operations[146](index=146&type=chunk)[147](index=147&type=chunk) - A hypothetical **10%** change in foreign currency rates would result in a less than **$1 million** change in net loss for Q1 2021[149](index=149&type=chunk) [Commodity Steel Pricing](index=25&type=section&id=Commodity%20Steel%20Pricing) This section addresses the company's sensitivity to steel price volatility and its inventory management approach - The business is sensitive to steel prices, particularly steel tubular prices, which impact product pricing[150](index=150&type=chunk) - This risk is mitigated by actively managing inventory levels to meet demand while limiting overstocking[150](index=150&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the quarter [Evaluation of Disclosure Controls and Procedures](index=27&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's controls designed to ensure timely and accurate financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2021[153](index=153&type=chunk) [Changes in Internal Control Over Financial Reporting](index=27&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports on any material modifications to the company's internal controls during the quarter - There were no changes in internal control over financial reporting during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[154](index=154&type=chunk) [PART II - OTHER INFORMATION](index=28&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section includes additional information such as exhibits filed with the quarterly report [Item 6. Exhibits](index=28&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including various agreements, corporate documents, incentive plans, and certifications - Exhibits include the Separation and Distribution Agreement, Amended and Restated Certificate of Incorporation and Bylaws, Tax Matters Agreement, Employee Matters Agreement, Master Distributor and Service Agreements, Employment Agreements for Executive Officers, Incentive Compensation Plan documents, Credit Agreement, and various certifications (e.g., Rule 13a-14a, Section 906 Sarbanes-Oxley Act, XBRL documents)[156](index=156&type=chunk)

NOW Inc. (NYSE:DNOW) Q4 2020 Results Conference Call February 17, 2021 9:00 AM ET Company Participants Brad Wise - Vice President, Marketing and Investor Relations David Cherechinsky - President and Chief Executive Officer Mark Johnson - Senior Vice President and Chief Financial Officer Conference Call Participants Jon Hunter - Cowen Sean Meakim - JPMorgan Nathan Jones - Stifel Operator Hello, and welcome to the Fourth Quarter and Full Year 2020 Earnings Conference Call. My name is Cheryl, and I will be you ...