Core Insights - DNOW's international revenue performance is crucial for assessing its financial resilience and growth prospects [1][2] - The company's total revenue for the recent quarter reached $571 million, reflecting a 2.9% increase year-over-year [4] International Revenue Breakdown - Canada contributed $66 million, accounting for 11.56% of total revenue, with a surprise increase of 7.67% compared to analyst expectations [5] - International revenue was $54 million, representing 9.46% of total revenue, which was a 15.09% miss against the consensus estimate [6] - In the previous quarter, international revenue was $59 million (9.74%), and in the same quarter last year, it was $72 million (12.97%) [6] Future Projections - Analysts project total revenue of $583.5 million for the current fiscal quarter, a 3.6% increase year-over-year, with expected contributions of 11% from Canada ($64.2 million) and 9.7% from International ($56.6 million) [7] - For the full year, total revenue is anticipated to be $2.48 billion, a 4.6% increase from last year, with Canada and International expected to contribute 10.1% ($250.9 million) and 9.4% ($234.2 million) respectively [8] Market Performance - DNOW's stock has gained 25.2% over the past month, outperforming the S&P 500's 4.7% increase, and has increased 14.9% over the past three months compared to the S&P 500's 3.1% increase [12]

Group 1: Oportun Financial Corporation (OPRT) - Oportun Financial Corporation is a financial services provider with a Zacks Rank 1 [1] - The Zacks Consensus Estimate for its current year earnings has increased by 9.2% over the last 60 days [1] - The company has a price-to-earnings ratio (P/E) of 7.11, significantly lower than the S&P's 22.11, and possesses a Value Score of A [1] Group 2: Priority Technology Holdings, Inc. (PRTH) - Priority Technology Holdings, Inc. is a payment technology company with a Zacks Rank 1 [2] - The Zacks Consensus Estimate for its next year earnings has increased by 4.1% over the last 60 days [2] - The company has a price-to-earnings ratio (P/E) of 15.04, compared to the S&P's 24.81, and possesses a Value Score of A [2] Group 3: DNOW Inc. (DNOW) - DNOW Inc. is a downstream energy services provider with a Zacks Rank 1 [3] - The Zacks Consensus Estimate for its next year earnings has increased by 18.6% over the last 60 days [3] - The company has a price-to-earnings ratio (P/E) of 22.03, which is slightly lower than the industry average of 22.90, and possesses a Value Score of B [3]

Company Overview - DNOW operates approximately 165 locations globally with around 2,575 employees, providing products and services to the energy and industrial markets[11]. - The company has a supplier network consisting of thousands of vendors across approximately 30 countries, selling to customers in around 80 countries[17]. - The company serves key markets including the U.S., Canada, UK, Norway, Australia, and the Middle East, with a focus on energy transition markets[15]. - As of December 31, 2024, the company had approximately 2,575 employees, with about 180 being temporary employees[44]. - The company operates approximately 110 locations in the United States, 40 in Canada, and 15 internationally, with 85% of properties leased[132]. Financial Performance - For the year ended December 31, 2024, the company generated net income of $81 million, or $0.74 per fully diluted share, on revenue of $2,373 million, representing a revenue increase of $52 million or 2.2% compared to 2023[161]. - Operating profit for 2024 was $113 million, a decline of $27 million compared to $140 million in 2023[164]. - Revenue from the U.S. segment was $1,880 million, an increase of $131 million or 7.5% compared to 2023, primarily driven by acquisitions[165]. - Canadian revenue was $253 million, a decline of $29 million or 10.3% compared to 2023, impacted by lower project activity and unfavorable foreign exchange rates[167]. - International revenue was $240 million, a decline of $50 million or 17.2% compared to 2023, primarily due to weaker project activity[170]. - The worldwide average rig count declined 4.4% in 2024, with U.S. rigs down 13.1% and Canadian rigs up 6.2% compared to 2023[159]. - The average price of West Texas Intermediate crude oil decreased by 1.4% to $76.55 per barrel in 2024 compared to 2023[159]. - Natural gas prices fell by 13.8% to $2.19 per MMBtu in 2024 compared to 2023[159]. Strategic Initiatives - The company began a restructuring plan in the International segment to optimize efficiencies and improve operating margins, indicating a strategic focus on cost management[27]. - DNOW's DigitalNOW® platform allows customers to leverage technology for operational challenges, enhancing their return on assets[11]. - The company plans to expand revenues by targeting new customers in non-oil and gas markets while supporting existing customers in energy transition projects[163]. Market Conditions - The distribution industry in which DNOW operates is highly fragmented, with a mix of large global companies and numerous small regional competitors[28]. - DNOW's operations are influenced by global supply and demand for energy, as well as geopolitical factors affecting the oil and gas industry[19]. - The company may face significant adverse effects from geopolitical tensions and military conflicts impacting the global economy and capital markets[65]. - Future inflationary pressures could lead to increased operating and capital costs, which may not be fully offset by price increases[66]. Risks and Challenges - Cyber incidents pose risks to the company's operations, potentially leading to operational disruptions and financial losses[87]. - A shift in purchasing behavior by customers towards direct purchases from manufacturers could significantly decrease the company's profitability[68]. - The company lacks long-term contracts with many customers, making it vulnerable to significant customer loss or reduced purchasing volumes[71]. - Changes in customer and product mix could lead to fluctuations in product margins, adversely affecting the company's financial condition[74]. - Supply chain disruptions may lead to unexpected product shortages, adversely affecting the company's ability to meet customer demand[92]. - The absence of contracts with most suppliers increases reliance on existing suppliers and may lead to higher prices if significant suppliers are lost[94]. - Changes in trade policies could increase material input costs and limit availability of raw materials, negatively impacting competitive position[100]. - The company is subject to strict environmental regulations that may lead to significant liabilities and affect financial results[101]. Employee and Corporate Governance - Approximately 25% of the U.S. workforce is female, and about 33% are racial minorities as of December 31, 2024[49]. - The company emphasizes employee development through training programs, including a growing online learning platform[45]. - The company has a commitment to safety, driven by its health, safety, and environment (HSE) management system[51]. - The company recognizes individual achievements through programs like Milestone Service Awards for years of service[47]. - The company has established policies and procedures to comply with U.S. and international anti-corruption and trade control laws, but acknowledges the risk of violations[119]. Financial Position and Capital Management - The company maintained a $500 million revolving credit facility with approximately $433 million available as of December 31, 2024, with no borrowings against it[187]. - The company expects capital expenditures for fiscal year 2025 to approximate $20 million, primarily for property, plant, and equipment purchases[195]. - The share repurchase program authorized up to $80 million was fully utilized by December 31, 2024, with 1,823,249 shares repurchased for $23 million[196]. - As of December 31, 2024, the allowance for credit losses totaled $15 million, representing 3.7% of gross accounts receivable, down from $26 million or 6.3% in 2023[199]. - Inventory reserves amounted to $17 million as of December 31, 2024, which is 4.6% of gross inventory, compared to $21 million or 5.4% in 2023[200]. - The company recorded $230 million of goodwill as of December 31, 2024, with no impairment testing required as fair values were determined to be greater than carrying amounts[202]. Tax and Compliance - The effective tax rate for 2024 was 28.1%, significantly impacted by foreign currency translation losses and other charges, compared to a benefit of (79.7%) in 2023 driven by a $148 million deferred tax benefit[178]. - A valuation allowance of $21 million was recognized on certain deferred tax assets, with a reduction of $3 million in the U.S. and $1 million in other foreign jurisdictions during the year[209]. - The company utilizes a two-step process to record unrecognized tax benefits, ensuring that tax positions are more-likely-than-not to be sustained based on technical merits[210].

Key Takeaways Fourth Quarter and Full-Year 2024 © 2025 DNOW. All Rights Reserved Disclosure Statement Statements made in the course of this presentation that state the Company's or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. It is important to note that the Company's actual results could differ materially from those projected in such forward-looking statements. Additional information concerning factors that could cause actual results to ...

Financial Data and Key Metrics Changes - Fourth quarter revenue was $571 million, down 6% sequentially, but beat previous guidance [28][40] - Full year 2024 revenue was $2.373 billion, up 2% year-over-year, marking the highest revenue year since 2019 [29][40] - Fourth quarter gross margin improved to 23.3%, up 100 basis points sequentially [28][44] - Full year 2024 gross margin was 22.5%, lower than 2023 due to pricing deflation in steel products [30][44] - Fourth quarter EBITDA was $45 million, or 7.9% of revenue, exceeding expectations [30][68] - Full year 2024 generated $289 million in free cash flow, a 165% conversion rate [31][58] Business Line Data and Key Metrics Changes - US revenue for Q4 2024 totaled $451 million, a decrease of 6% from Q3 2024 [41] - US energy centers contributed approximately 73% of total US revenue in Q4 [41] - Canadian revenue for Q4 was $66 million, up 2% sequentially, but down 10% year-over-year [42] - International revenue for Q4 was $54 million, down 8% sequentially, with a full year total of $240 million, down 17% year-over-year [43] Market Data and Key Metrics Changes - The company noted that US completions and rigs declined by 9% and 13% respectively, impacting revenue [21] - The demand for horizontal trailer-mounted pumping solutions remained strong, particularly in water disposal applications [33] - Revenue in the energy evolution space grew over 60% year-over-year, indicating a shift towards decarbonization and non-oil and gas energy sources [34] Company Strategy and Development Direction - The company aims for growth in 2025 despite expected declines in market activity, focusing on midstream and industrial adjacent markets [9][61] - The strategy includes a strong emphasis on mergers and acquisitions (M&A), with 23 acquisitions since going public in 2014 [16][17] - The recent acquisition of Trojan is expected to enhance the company's water management solutions and expand its market reach [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in overcoming upstream sector headwinds and achieving growth in 2025 [10][61] - The outlook for 2025 includes expectations of flat to high single-digit revenue growth, with a focus on capturing market share [67] - Management acknowledged potential challenges from upstream spending reductions but highlighted opportunities in midstream infrastructure [61][64] Other Important Information - The company completed an $80 million share repurchase program and announced a new $160 million program [59][60] - The company ended the year with zero debt and a cash position of $256 million [51][52] - The effective tax rate for 2024 was 28.1%, with expectations for 2025 to be around 27% to 29% [48] Q&A Session Summary Question: Discussion on tariffs and their impact on guidance - Management indicated that tariffs are expected to be constructive to gross margins and revenues, with a mix of products to mitigate costs [73][74] Question: Insights on upstream production intentions - Management noted mixed sentiments from customers regarding upstream investments, with some planning to increase budgets while others remain cautious [82][84] Question: Trojan acquisition and its impact on water transfer business - Management highlighted that the Trojan acquisition fills a gap in the water solutions market and is expected to create revenue synergies [90][96] Question: Outlook for Canada and international markets - Management expects flat activity in Canada and internationally, with a focus on improving profitability in international segments [110][112]

Revenue Performance - DNOW reported fourth quarter revenue of $571 million, a 2.9% increase from $555 million in the same quarter of 2023[7]. - Full-year revenue for 2024 was $2,373 million, up 2.2% from $2,321 million in 2023[7]. Cash Flow and Liquidity - Free cash flow for 2024 was $289 million, nearly double the projections from the previous year[4]. - Cash provided by operating activities was $122 million for the fourth quarter and $298 million for the full year[7]. - As of December 31, 2024, DNOW had cash and cash equivalents of $256 million and zero long-term debt, with total liquidity of approximately $556 million[7]. - Net cash provided by operating activities for Q4 2024 was $122 million, up from $81 million in Q4 2023, resulting in a free cash flow of $119 million[24]. - For the year ended December 31, 2024, total free cash flow reached $289 million, compared to $171 million in 2023, indicating a significant increase[24]. - Free cash flow for Q3 2024 was $72 million, an increase from $18 million in Q2 2024[24]. - The company’s net cash used in operating activities for Q3 2024 was $74 million, compared to $105 million in Q3 2023[24]. Profitability Metrics - Fourth quarter EBITDA was $45 million, representing 7.9% of revenue, exceeding expectations due to improved gross margins and cost control[4]. - Net income for the fourth quarter was $23 million, or $0.21 per diluted share, compared to $147 million, or $1.35 per diluted share in the same quarter of 2023[7]. Acquisitions and Investments - The company completed the acquisition of Trojan Rentals, LLC for $114 million in cash, enhancing its pump rental and industrial automation capabilities[7]. - DNOW announced a new $160 million share repurchase authorization, double the size of the previous program, reflecting confidence in its cash generation capabilities[5]. Expenses and Tax Benefits - Other expenses for Q4 2024 included transaction-related charges of approximately $2 million and international restructuring charges of about $1 million[25]. - For the year ended December 31, 2024, Other expenses totaled $9 million, with $6 million attributed to foreign currency translation losses[28]. - The company incurred approximately $12 million in transaction-related charges for the year ended December 31, 2024, with $5 million included in cost of products[28]. - The company reported a tax benefit of $126 million for Q4 2023 from the release of valuation allowances against deferred tax assets[30]. - For the year ended December 31, 2023, the tax benefit from the release of valuation allowances was $149 million[33]. - Other expenses for Q3 2024 included international restructuring charges of $8 million, with $5 million related to foreign currency translation losses[27]. Future Outlook - The company aims for continued growth in 2025, potentially marking the fifth consecutive year of growth[6].

Core Viewpoint - Analyzing DNOW's international operations is crucial for understanding its financial strength and growth potential, especially given its global presence [1][2][3] Group 1: Financial Performance - DNOW's total revenue for the quarter ending September 2024 was $606 million, reflecting a 3.1% increase from the previous year [4] - Revenue from Canada was $65 million, accounting for 10.73% of total revenue, which was a surprise increase of 9.06% compared to the expected $59.6 million [5] - International revenue was $59 million, making up 9.74% of total revenue, which was an 11.28% decline from the projected $66.5 million [6] Group 2: Future Projections - Analysts predict DNOW will report $544 million in total revenue for the current fiscal quarter, a 2% decline from the previous year, with Canada and International expected to contribute 11.3% ($61.2 million) and 12.7% ($69.1 million) respectively [7] - For the full year, total annual revenue is expected to reach $2.34 billion, a 0.9% increase from last year, with Canada and International projected to contribute 10.4% ($242.8 million) and 11.2% ($262.5 million) respectively [8] Group 3: Market Dynamics - The reliance on international markets presents both opportunities and challenges for DNOW, making it essential to monitor international revenue trends for future projections [9] - In the context of increasing global interconnections and geopolitical tensions, analysts are closely observing these trends to adjust earnings predictions [10]

Financial Performance - For the three months ended September 30, 2024, the company generated net income of $13 million on revenue of $606 million, representing a revenue increase of $18 million or 3.1% compared to the same period in 2023[55]. - The company reported an operating profit of $23 million for the three months ended September 30, 2024, down from $37 million in the same period of 2023[55]. - For the three months ended September 30, 2024, total revenue was $606 million, an increase of $18 million or 3.1% compared to $588 million in 2023[59]. - The U.S. segment generated revenue of $482 million for the three months ended September 30, 2024, up $34 million or 7.6% from $448 million in 2023[58]. - The International segment reported a revenue decrease of $13 million or 18.1% to $59 million for the three months ended September 30, 2024, compared to $72 million in 2023[61]. - Operating profit for the total company was $23 million for the three months ended September 30, 2024, down from $37 million in 2023, reflecting a decline of $14 million or 37.8%[59]. - The effective tax rate for the three months ended September 30, 2024, was 40.9%, significantly higher than 5.4% in the same period of 2023[65]. Cash Flow and Investments - For the nine months ended September 30, 2024, net cash provided by operating activities was $176 million, an increase from $83 million in the same period of 2023, driven by improved inventory efficiency and better collections[70]. - Net cash used in investing activities for the same period was $190 million, significantly higher than $47 million in 2023, primarily due to business acquisitions totaling $185 million[70]. - Net cash used in financing activities decreased to $25 million from $54 million in the prior year, with $18 million allocated for share repurchases compared to $49 million in 2023[70]. - The company repurchased 1,379,020 shares for approximately $18 million during the nine months ended September 30, 2024, with $6 million remaining under the share repurchase program[74]. - The company plans to fund future cash acquisitions primarily with cash on hand, cash flow from operations, and the available portion of the revolving credit facility[73]. Operational Highlights - The company operates approximately 165 locations globally, with around 2,550 employees[42]. - The company has expanded its operations through acquisitions and organic investments in several countries, including Australia, Canada, and the UAE[43]. - The company provides a suite of digital procurement channels through its DigitalNOW® platform to enhance supply chain optimization[42]. - The company serves customers in approximately 80 countries, supported by a supplier network of thousands of vendors across 40 countries[42]. Market Conditions - The average price of West Texas Intermediate Crude declined by 7.4% to $76.24 per barrel in Q3 2024 compared to Q3 2023[49]. - The U.S. rig count decreased by 10.0% to 586 rigs in Q3 2024 compared to 651 rigs in Q3 2023[49]. - The average natural gas price increased by 1.4% to $2.11 per MMBtu in Q3 2024 compared to Q2 2024[53]. Foreign Currency Impact - The company recognized $8 million in charges related to the restructuring of its International segment, including $5 million in foreign currency translation losses[47]. - A net foreign currency translation gain of $4 million was reported for the nine months ended September 30, 2024, following the liquidation of certain foreign subsidiaries[77]. - The company experienced foreign currency transaction losses of $1 million for both the nine months ended September 30, 2024, and 2023, primarily due to exchange rate fluctuations[77]. - The average foreign exchange rate for the first nine months of 2024 remained flat compared to the same period in 2023, with the Canadian dollar and Australian dollar decreasing by 1% against the U.S. dollar[77]. - The company reported a favorable effect of $1 million from changes in exchange rates on cash and cash equivalents for the nine months ended September 30, 2024[72].

Financial Data and Key Metrics Changes - In Q3 2024, the company reported total revenue of $606 million, a year-over-year increase of 3% or $18 million [29] - EBITDA for the quarter was $42 million, representing 6.9% of revenue, with year-to-date EBITDA at $131 million or 7.3% of revenue [29] - Free cash flow for the quarter was $72 million, totaling $273 million over the trailing four quarters [8][39] - The company raised its full-year 2024 free cash flow forecast to approximately $215 million [8] Business Line Data and Key Metrics Changes - U.S. revenue for Q3 2024 was $482 million, an increase of $34 million or 8% year-over-year [30] - U.S. Process Solutions had its best financial performance ever, contributing significantly to overall results [14] - Canadian revenue for Q3 2024 was $65 million, down $3 million or 4% year-over-year but up 16% sequentially [30][21] - International revenue decreased to $59 million, down $6 million or 9% sequentially, impacted by location closures and lower project activity [22][30] Market Data and Key Metrics Changes - The number of active rigs and completions in the U.S. declined more than 12% year-over-year, affecting revenue opportunities [10] - The company noted a 60% increase in CCUS projects, with 628 facilities now in development [23] - The company experienced project delays due to customer consolidations, impacting revenue timing [15][56] Company Strategy and Development Direction - The company is focusing on expanding its midstream business, which currently accounts for approximately 20% of revenues [44][64] - There is a strategic emphasis on energy evolution and adjacent industrial markets, including mining and chemical processing [44][24] - The company plans to continue pursuing acquisitions as a key growth strategy, leveraging its strong cash position and lack of debt [27][37] Management's Comments on Operating Environment and Future Outlook - Management expects lower sequential oil and gas activity in Q4 2024 due to customer budget exhaustion and normal seasonality [42] - The company anticipates modest full-year revenue growth for 2024 compared to 2023 [42] - Management highlighted the resilience of revenue despite project delays, attributing this to strong operational execution and market positioning [45] Other Important Information - The company reported a cash position of $261 million and total liquidity of $622 million at the end of Q3 2024 [37] - The company continues to execute its share repurchase program, with cumulative repurchases totaling $74 million under an $80 million authorization [40] Q&A Session Summary Question: Impact of the election on M&A environment - Management believes a more business-friendly climate from a Republican administration could facilitate acquisitions and benefit the company [48][49] Question: Pipeline maturity and actionable deals - Management indicated ongoing negotiations for several potential acquisitions, focusing on growing process solutions [50][51] Question: Project deferrals and their timing - Approximately $10 million in projects were deferred in Q3, primarily due to product availability, with expectations for these to ship in Q4 [52][53] Question: Customer consolidation effects - Management noted that customer consolidations can disrupt operations but may ultimately benefit the company in the long term due to its unique capabilities [58][60] Question: Working capital and inventory turns - Management stated that while current inventory turns are strong at 5.2, further improvement may be limited without risking product availability [61][62] Question: Midstream revenue expectations - Management expects midstream revenue to potentially increase in 2025, benefiting from favorable market conditions and acquisitions [64] Question: Share repurchase versus dividends - Management favors share repurchases over dividends, prioritizing organic growth and M&A as primary uses of cash [71][72]

DNOW (DNOW) came out with quarterly earnings of $0.21 per share, beating the Zacks Consensus Estimate of $0.19 per share. This compares to earnings of $0.25 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 10.53%. A quarter ago, it was expected that this energy and industrial distribution company would post earnings of $0.26 per share when it actually produced earnings of $0.25, delivering a surprise of -3.85%.Over the last fou ...