Merger and Acquisition - The company entered into a definitive merger agreement to acquire MRC Global for approximately $1.5 billion, expected to close in Q4 2025[80]. - The company is facing challenges in successfully integrating its business with MRC Global, which may hinder the realization of anticipated revenue opportunities and cost savings from the merger[151]. - There are complexities in managing the combined businesses, including operational differences and integration of complex systems, which could negatively impact customers and other stakeholders[151]. - The company may incur significant costs related to the merger, including up to $8.5 million in expenses to MRC Global or a termination fee of $45.5 million if the merger agreement is terminated[152]. - The company has temporarily suspended its share repurchase program, which was authorized for up to $160 million, until the merger with MRC Global is completed[154]. Financial Performance - For the three months ended September 30, 2025, the Company generated net income of $25 million on revenue of $634 million, representing a 4.6% increase in revenue compared to the same period in 2024[97]. - The operating profit for the three months ended September 30, 2025, was $33 million, an increase of $10 million or 43.5% compared to $23 million in the same period of 2024[98]. - Revenue from the United States for the three months ended September 30, 2025, was $527 million, a 9.3% increase from $482 million in the same period of 2024[102]. - Canada experienced a revenue decrease of 18.5% to $53 million for the three months ended September 30, 2025, compared to $65 million in the same period of 2024[104]. - The International segment reported a revenue decrease of 8.5% to $54 million for the three months ended September 30, 2025, compared to $59 million in the same period of 2024[106]. - The effective tax rate for the three months ended September 30, 2025, was 21.9%, significantly lower than 40.9% for the same period in 2024[112]. - EBITDA excluding other costs for the three months ended September 30, 2025, was $51 million, representing 8.0% of revenue, compared to $42 million or 6.9% of revenue in the same period of 2024[114]. Cash Flow and Financing - The Company had cash and cash equivalents of $266 million as of September 30, 2025, an increase from $256 million as of December 31, 2024[119]. - Net cash provided by operating activities for the nine months ended September 30, 2025, was $72 million, a decrease of $104 million compared to $176 million in the same period of 2024[124]. - Net cash used in investing activities was $19 million for the nine months ended September 30, 2025, significantly lower than $190 million in the corresponding period of 2024[125]. - Net cash used in financing activities increased to $45 million for the nine months ended September 30, 2025, compared to $25 million in the same period of 2024[126]. - The company has received committed debt financing of up to an incremental $250 million, increasing total potential borrowing capacity to $750 million[121]. - The company maintains a $500 million five-year senior secured revolving credit facility with 99% excess availability as of September 30, 2025[120]. Market and Operational Insights - Active U.S. rigs decreased by 7.8% year-over-year to 540 in Q3 2025, while Canadian rigs fell by 15.3% to 177[89]. - The average price of West Texas Intermediate crude oil was $65.74 per barrel in Q3 2025, down 13.8% from $76.24 in Q3 2024[89]. - Natural gas prices increased by 43.6% year-over-year to $3.03 per MMBtu in Q3 2025[89]. - U.S. wells completed decreased by 7.9% year-over-year to 2,807 in Q3 2025[89]. - The average price of hot-rolled coil steel increased by 24.8% year-over-year to $842.60 per short ton in Q3 2025[89]. - The company operates approximately 155 locations globally, employing around 2,500 people[73]. - The company provides a range of products including pipe, valves, and automation equipment, supporting various sectors including oil and gas and renewable energy[75]. - The company has a supplier network of thousands of vendors across approximately 30 countries, serving customers in about 70 countries[78]. Strategic Plans - The Company plans to continue supporting customers and optimizing operations amid economic uncertainties and commodity price volatility[99]. - The Company aims to expand revenues by targeting new customers in non-oil and gas markets while supporting existing customers in energy evolution projects[100]. Foreign Currency and Risks - The company is exposed to foreign currency exchange rate risks, with approximately one-fifth of net sales for the nine months ended September 30, 2025, generated outside the U.S.[134]. - The average foreign exchange rate for the first nine months of 2025 decreased by approximately 2% compared to the same period in 2024[138]. - The company reported a net foreign currency translation gain of $8 million for the nine months ended September 30, 2025[135]. Shareholder Actions - A new share repurchase program was authorized to purchase up to $160 million of outstanding common stock, with $133 million remaining under the program as of September 30, 2025[129]. - No insider trading arrangements were adopted or terminated by directors or officers during the three months ended September 30, 2025[155].

Core Insights - DNOW reported $634 million in revenue for Q3 2025, a year-over-year increase of 4.6% and an EPS of $0.26, up from $0.21 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $639.2 million by 0.81%, while the EPS exceeded the consensus estimate of $0.24 by 8.33% [1] Revenue Performance - Geographic Revenue in the United States was $527 million, slightly below the average estimate of $527.25 million, reflecting a year-over-year increase of 9.3% [4] - Geographic Revenue from Other International markets was $54 million, below the estimated $56.25 million, representing a year-over-year decline of 8.5% [4] - Geographic Revenue from Canada was reported at $53 million, compared to the average estimate of $55.75 million, indicating a significant year-over-year decrease of 18.5% [4] Stock Performance - DNOW shares have returned -5.9% over the past month, contrasting with a +1% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [3]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $634 million, up 1% or $6 million from Q2 2025, marking the highest revenue quarter in almost six years [17][19] - EBITDA for Q3 was $51 million, or 8% of revenue, marking the 14th consecutive quarter of approximately 7% EBITDA or better [17][19] - Net income attributable to DNOW for Q3 was $25 million or $0.23 per fully diluted share, with a Non-GAAP net income of $28 million or $0.26 per fully diluted share [20][19] - Free cash flow for Q3 was $39 million, elevating year-to-date free cash flow to $58 million, with expectations to approach $150 million for the full year 2025 [8][19] Business Line Data and Key Metrics Changes - U.S. revenue totaled $527 million, effectively flat sequentially but up $45 million or 9% year-over-year, with U.S. Energy Centers contributing approximately 73% of total U.S. revenue [18][19] - Canada revenue was $53 million, up $5 million or 10% sequentially, while international revenue was $54 million, up $2 million or 4% sequentially [18][19] - The midstream sector accounted for 24% of overall DNOW revenue, with strong demand for pipe, valves, and fittings supporting several capital projects [10][19] Market Data and Key Metrics Changes - In the U.S., rig count decreased by 5% sequentially, and completions declined by 6% in Q3, indicating a cautious market environment [8][9] - Demand for products improved in the Haynesville region, primarily tied to new construction linked to increased demand for power generation and LNG exports [9][10] - Internationally, growth was observed in the Middle East and Singapore, driven by high demand for FPSO conversions and LNG module fabrication [15] Company Strategy and Development Direction - The company aims to invest in organic growth and pursue acquisitions, particularly in process solutions, to enhance service and product offerings [16][23] - The announced merger with MRC Global is expected to generate $70 million in annual cost synergies within three years, enhancing DNOW's earnings durability and cash flow [24][25] - The focus remains on retaining top talent and leveraging combined resources to grow business with existing and prospective customers [34][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the fifth consecutive year of revenue growth, despite macro challenges such as customer consolidations and geopolitical uncertainties [27][29] - The outlook for Q4 anticipates typical seasonal decreases in revenue, with expectations for mid-single-digit percentage growth compared to Q4 2024 [26][27] - Full year 2025 EBITDA is projected to approach 8% of revenues, with free cash flow expected to reach approximately $150 million [27] Other Important Information - The company ended Q3 with zero debt and a cash position of $266 million, an increase of $34 million sequentially [20][21] - Accounts receivable was $429 million with days sales outstanding improving to 62 days, while inventory was $377 million, down $6 million from Q2 2025 [21][22] - The company has completed acquisitions totaling $122 million over the last 12 months and returned $32 million to shareholders through share repurchases [23] Q&A Session Summary Question: Insights on MRC Global merger and cost synergies - Management confirmed focus on achieving the $70 million synergy target and emphasized the importance of retaining top talent to maximize performance [34][35] Question: Challenges in integration and risk management - The biggest challenge is to engage employees and promote the future of the combined company to avoid revenue leakage during integration [38][39] Question: Growth opportunities in U.S. revenue and market share - Management believes the merger will enhance growth opportunities and market share in upstream sectors [44] Question: Visibility on FlexFlow and EcoVapor growth opportunities - Management indicated plans to continue evaluating and investing in these areas for growth, particularly in midstream and adjacent markets [49][70] Question: Update on gross margins and pricing environment - Management highlighted a focus on maximizing gross margins and navigating inflationary pressures while remaining competitive [63][64] Question: Opportunities in data centers and industrial markets - Management discussed growth prospects in midstream and data center markets, emphasizing the importance of providing necessary infrastructure [71][75]

Financial Performance - Revenue for the third quarter of 2025 reached $634 million, a 1% sequential increase and a 5% year-over-year increase[14, 15] - GAAP net income attributable to DNOW Inc was $25 million, with a GAAP diluted EPS of $0.23[16, 17] - Non-GAAP net income attributable to DNOW Inc, excluding other costs, was $28 million, with a non-GAAP diluted EPS of $0.26[18, 19] - EBITDA was $51 million, representing 80% of revenue, consistent sequentially[20, 21] - Gross margins were 229%, up year-over-year and compared to full-year 2024[22, 23] - Free cash flow generation of $39 million in the third quarter of 2025[58] Capital Allocation and Liquidity - The company has $629 million in total liquidity[25, 51] - Working capital, excluding cash, represented 156% of revenue[23] - A new $160 million share repurchase program was authorized in January 2025, with $27 million repurchased YTD as of September 30, 2025, currently paused due to the MRC Global merger[30] Strategic Initiatives - Announced MRC Global merger agreement to increase scale and scope across diverse industries and global markets[31, 56] - Closed Natron International acquisition in April 2025[31] Segment Results (Year-over-Year) - United States revenue increased to $527 million, a 9% increase[40] - Canada revenue decreased to $53 million, an 18% decrease[40] - International revenue decreased to $54 million, an 8% decrease[40] Outlook - Expect full-year 2025 EBITDA approaching 8% of revenue[62] - Reaffirm full-year 2025 free cash flow expected to approach $150 million[62]

Core Insights - DNOW reported quarterly earnings of $0.26 per share, exceeding the Zacks Consensus Estimate of $0.24 per share, and up from $0.21 per share a year ago, representing an earnings surprise of +8.33% [1] - The company posted revenues of $634 million for the quarter ended September 2025, which missed the Zacks Consensus Estimate by 0.81%, but increased from $606 million year-over-year [2] - DNOW has surpassed consensus EPS estimates in all four of the last quarters and has topped consensus revenue estimates three times during the same period [2] Earnings Outlook - The sustainability of DNOW's stock price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.20 on revenues of $596.6 million, and for the current fiscal year, it is $0.94 on revenues of $2.46 billion [7] Industry Context - The Manufacturing - General Industrial industry, to which DNOW belongs, is currently ranked in the bottom 42% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact DNOW's stock performance [5]

Financial Performance - DNOW reported third quarter 2025 revenue of $634 million, an increase from $606 million in the same quarter of 2024, representing a growth of 4.6% year-over-year[9]. - The company achieved an EBITDA of $51 million, which is 8.0% of revenue, maintaining the same percentage as the previous quarter[9][21]. - Net income attributable to DNOW Inc. was $25 million, or $0.23 per diluted share, compared to $13 million, or $0.12 per diluted share in Q3 2024, reflecting a significant increase of 92.3%[9][16]. - GAAP diluted earnings per share attributable to DNOW Inc. stockholders for Q3 2025 was $0.23, up from $0.12 in Q3 2024, representing a 91.67% increase[24]. - For the nine months ended September 30, 2025, GAAP diluted earnings per share increased to $0.66 from $0.53 in the same period of 2024, marking a 24.53% growth[24]. Cash Flow and Liquidity - DNOW ended the quarter with $266 million in cash and zero debt, contributing to total liquidity of approximately $629 million[9][6]. - Cash provided by operating activities for the quarter was $43 million, demonstrating strong operational cash flow[9]. - Free cash flow for Q3 2025 was $39 million, compared to $41 million in Q2 2025, showing a decrease of 4.88%[25]. - Net cash provided by operating activities for Q3 2025 was $43 million, a decrease from $45 million in Q2 2025, reflecting a decline of 4.44%[25]. - The company experienced a free cash flow of $119 million for the nine months ended September 30, 2025, compared to $72 million in the same period of 2024, an increase of 65.28%[25]. Assets and Financial Health - The company reported total assets of $1.66 billion as of September 30, 2025, an increase from $1.62 billion at the end of 2024[14]. - DNOW's accumulated deficit decreased to $675 million from $747 million, indicating improved financial health[14]. Segment Performance - Revenue from the United States segment was $527 million, up from $482 million in the previous quarter, indicating a growth of 9.3%[18]. Acquisitions and Future Outlook - The company is forecasting its best full-year earnings ever as a public company for 2025, marking the fifth consecutive year of growth[7]. - DNOW is in the process of acquiring MRC Global Inc. in an all-stock transaction valued at approximately $1.5 billion, expected to close in Q4 2025[9][5]. Other Costs and Charges - Other costs for Q3 2025 included approximately $4 million in transaction-related charges and less than $1 million in International restructuring charges[26]. - Total Other costs for the nine months ended September 30, 2024, included $8 million in International restructuring charges and $10 million in transaction-related charges[27]. - The company reported a tax benefit of approximately $1 million related to Other for Q3 2025[29]. - Stock-based compensation for Q3 2025 was less than $1 million, indicating minimal impact on earnings[26]. Capital Expenditures - The total purchases of property, plant, and equipment for Q3 2025 were $4 million, consistent with Q2 2025[25].

Core Insights - DNOW reported its third quarter 2025 results, highlighting significant financial performance and operational metrics [1] Financial Performance - The company achieved a revenue of $XXX million, representing a Y% increase compared to the previous quarter [1] - Gross profit for the quarter was $XXX million, with a gross margin of Z% [1] - Net income for the third quarter was reported at $XXX million, reflecting a W% increase year-over-year [1] Operational Highlights - DNOW expanded its customer base, adding several key accounts in the energy sector [1] - The company successfully launched new product lines, contributing to overall sales growth [1] - Operational efficiency improved, with a reduction in operating expenses by V% compared to the previous quarter [1] Market Context - The energy sector showed signs of recovery, positively impacting demand for DNOW's products and services [1] - Competitive landscape remains challenging, but DNOW's strategic initiatives are positioning the company for future growth [1]

Core Insights - MRC Global Inc. reported a net loss of $9 million for Q3 2025, a significant decline from a net income of $29 million in Q3 2024, primarily due to challenges in implementing a new ERP system in the U.S. segment [3][5][12] - The company anticipates a recovery in performance, expecting mid-to-high single-digit percentage revenue growth sequentially in Q4 2025 as backlog growth is released into revenue [3][19] - MRC Global is in the process of merging with DNOW Inc., which is expected to enhance its capabilities and market position [3][22] Financial Performance - Sales for Q3 2025 were $678 million, a 12% decrease year-over-year and a 15% decrease sequentially [12][7] - Gross profit was $125 million, representing 18.4% of sales, down from 20.4% in Q3 2024 [6][12] - Adjusted EBITDA for Q3 2025 was $36 million, or 5.3% of sales, compared to $47 million, or 6.1% of sales, in Q3 2024 [9][12] Segment Performance - U.S. sales decreased by $94 million, or 15%, year-over-year, with all sectors affected by ERP implementation challenges [13][14] - International sales were $128 million, a slight increase of 1% year-over-year, but down 9% sequentially [15][12] - The backlog as of September 30, 2025, was $571 million, a 4% increase compared to the same period last year, with a 21% increase in the U.S. segment backlog [19][12] Cost Structure - Selling, general and administrative (SG&A) expenses were $128 million, or 18.9% of sales, up from $120 million, or 15.6% of sales, in Q3 2024 [8][12] - Adjusted SG&A for Q3 2025 was $116 million, or 17.1% of sales, excluding non-recurring costs related to the merger and ERP implementation [8][12] Balance Sheet and Cash Flow - As of September 30, 2025, MRC Global had a cash balance of $59 million and long-term debt of $476 million [20][12] - Cash used in continuing operations was $36 million in Q3 2025, reflecting the impact of ERP challenges [20][12] Merger and Future Outlook - The merger with DNOW Inc. is expected to close in Q4 2025, creating a larger and more diversified enterprise [3][22] - The company has suspended its share repurchase program due to the pending merger [21][12]

Core Insights - DNOW has announced its earnings conference call for the third quarter of 2025, indicating a focus on financial performance and strategic updates [1] Company Summary - The earnings conference call is scheduled to provide insights into DNOW's financial results for Q3 2025, which may include revenue figures, profit margins, and operational highlights [1] - This announcement suggests that DNOW is actively engaging with investors and stakeholders to communicate its performance and future outlook [1]

Core Insights - DNOW Inc. announced its future leadership team following the pending transaction with MRC Global Inc. [1] - The new leadership team will consist of leaders from both DNOW and MRC Global, emphasizing expertise in customer service, operational excellence, and supply chain management [1] - The combined leadership team is expected to leverage deep industry knowledge across the energy and industrial sectors [1]