NOW(US:DNOW)2023-11-01 16:00Financial Performance - For the three months ended September 30, 2023, the company generated net income of $35 million on revenue of $588 million, representing a revenue increase of $11 million or 1.9% compared to the same period in 2022[82]. - For the nine months ended September 30, 2023, net income attributable to the company was $100 million on revenue of $1,766 million, reflecting an increase in revenue of $177 million or 11.1% year-over-year[82]. - The company reported an operating profit of $37 million for the three months and $108 million for the nine months ended September 30, 2023, compared to $44 million and $96 million for the same periods in 2022, respectively[83]. - Total revenue for the three months ended September 30, 2023, was $588 million, an increase of $11 million or 1.9% compared to $577 million in the same period of 2022[86]. - U.S. revenue for the three months ended September 30, 2023, was $448 million, up $13 million or 3.0% from $435 million in 2022, driven by acquisitions[87]. - Canada revenue decreased by $18 million or 20.9% to $68 million for the three months ended September 30, 2023, primarily due to a decrease in rig count[89]. - International revenue increased by $16 million or 28.6% to $72 million for the three months ended September 30, 2023, driven by stronger project activity[91]. - Total operating profit for the three months ended September 30, 2023, was $37 million, a decrease of $7 million or 15.9% compared to $44 million in 2022[86]. - U.S. operating profit for the three months ended September 30, 2023, was $29 million, down $2 million from $31 million in 2022, primarily due to decreased product margins[88]. - Canada generated an operating profit of $6 million for the three months ended September 30, 2023, a decline of $4 million from $10 million in 2022[90]. - International segment operating profit was $2 million for the three months ended September 30, 2023, a decrease of $1 million from $3 million in 2022[92]. Cash Flow and Investments - Net cash provided by operating activities for the nine months ended September 30, 2023, was $83 million, compared to a cash outflow of $6 million in the same period of 2022[106]. - Net cash used in investing activities for the nine months ended September 30, 2023, was $47 million, primarily related to business acquisitions of approximately $33 million[107]. - The company intends to pursue additional acquisition candidates, funding future cash acquisitions primarily with cash on hand, cash flow from operations, and the revolving credit facility[110]. - The share repurchase program approved on August 3, 2022, allows for the purchase of up to $80 million of common stock through December 31, 2024; as of September 30, 2023, $49 million worth of shares have been repurchased, with approximately $24 million remaining[111]. Market Conditions and Outlook - The average price of West Texas Intermediate Crude was $82.30 per barrel in Q3 2023, down 11.7% from $93.18 in Q3 2022, while natural gas prices fell 67.6% to $2.59 per MMBtu from $7.99[77]. - The worldwide active drilling rig count decreased by 0.4% to 1,790 rigs in Q3 2023 compared to Q2 2023, with the U.S. rig count declining by 9.8% to 651 rigs[79]. - The company expects oil and gas demand to grow over the next several years, despite recent volatility in commodity prices due to geopolitical instability and economic uncertainty[84]. - The company aims to support energy evolution investments by expanding its product and solution offerings to meet changing customer requirements[85]. Global Operations - The company operates through three reportable segments: U.S., Canada, and International, with approximately 110 locations in the U.S. and 40 in Canada[70][73]. - The company has a global presence with operations in approximately 20 countries and serves customers in about 80 countries, enhancing its value proposition[66]. Currency and Commodity Sensitivity - For the nine months ended September 30, 2023, approximately 25% of net sales were generated outside the U.S., exposing the company to foreign currency exchange rate fluctuations[116]. - The average foreign exchange rate for the first nine months of 2023 decreased by approximately 4% compared to the same period in 2022, with the Canadian dollar, British pound, and Australian dollar decreasing by approximately 5%, 1%, and 5% respectively[120]. - A hypothetical 10% change in foreign currency rates would have resulted in a $2 million change in net income for the nine months ended September 30, 2023[121]. - The company reported foreign currency transaction losses of $1 million for both the nine months ended September 30, 2023, and 2022, primarily due to exchange rate fluctuations[118]. - The company is sensitive to steel prices, which can impact product pricing, particularly steel tubular prices[122].