Financial Data and Key Metrics Changes - The company reported total revenue of $628 million for the second quarter, up 5% from the previous quarter and twice the midpoint of the sequential guidance provided in May [11][25] - EBITDA for the quarter was $51 million, marking an 11% sequential increase and representing the best second quarter EBITDA results in the company's public history [10][25] - Gross margins remained resilient at 22.9%, consistent with expectations and better than the full year 2024 average [11][27] - Free cash flow for the quarter was $41 million, with a cash balance of $232 million and no debt [13][14][30] Business Line Data and Key Metrics Changes - U.S. revenue totaled $528 million, an increase of $54 million or 11% sequentially, driven by midstream strength [17][26] - The midstream business grew to approximately 27% of total revenue, more than doubling its contribution over the past six quarters [12] - Canadian revenue was $48 million, down $14 million primarily due to seasonal impacts [20][26] - International revenue was $52 million, down 17% sequentially, in line with guidance due to non-repeating project activity [21][27] Market Data and Key Metrics Changes - U.S. midstream project investments drove strong sequential revenue gains, while upstream production remained disciplined with limited project backlogs [12][18] - The company noted a projected 2% increase in produced water volumes and a 13% increase in produced water recycling volumes for 2025, indicating growth opportunities in water management solutions [20] - The acquisition of Natron International expanded the company's electrical products opportunities in Singapore and the Asia Pacific region [21] Company Strategy and Development Direction - The company is focused on integrating with MRC Global to enhance service offerings and capture growth opportunities in alternative energy, AI infrastructure, and other industrial markets [14][15] - The strategic combination aims to realize $70 million in annual cost synergies within three years post-closing [15] - The company plans to balance organic and inorganic growth while pursuing potential bolt-on acquisitions [23][24] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic headwinds but emphasized solid execution and customer focus as key to success [8][10] - The outlook for the third quarter anticipates relatively flat revenue compared to the second quarter, with expectations of low single-digit percentage growth for the full year [34][36] - Management reaffirmed a target of $150 million in free cash flow for 2025 [36] Other Important Information - The company has a strong balance sheet with zero debt and total liquidity of $582 million [30] - The effective tax rate for the quarter was 21.9%, favorably impacted by tax benefits associated with stock awards [29] Q&A Session Summary Question: What are the most difficult parts of the integration likely to be? - Management emphasized focusing on customer needs and aligning teams early in the integration process to ensure a smooth transition [44] Question: Is it safe to assume the year is heading towards the top half of the current guidance? - Management indicated a bias towards the top end of the guidance but acknowledged potential budget exhaustion in the fourth quarter [46][48] Question: Are there opportunities to drive synergies with vendors and customers? - Management stated that while estimating synergies is ongoing, the focus remains on growth rather than immediate cost reductions [52] Question: Do you expect increased visibility in future earnings power with less exposure to upstream? - Management confirmed that diversification is a key opportunity, allowing for growth in both upstream and other markets [54] Question: How do you think about the impact from tariffs in the back half of the year? - Management noted that while tariffs have increased product costs, most sales growth has come from volume rather than price increases [67] Question: Were there specific factors that drove the outperformance in EBITDA? - Management attributed the improved EBITDA performance primarily to growth in the midstream sector [79]

Financial Data and Key Metrics Changes - The first quarter of 2025 saw EBITDA of $46 million, up 2% sequentially and 18% year over year, marking the second-best first quarter EBITDA results in the company's history [8][10] - Total revenue for the first quarter was $599 million, an increase of 4.9% from the previous quarter and 6.4% year over year [10][26] - Gross margins remained resilient at 23.2%, better than expected [11][29] - Net income attributable to DNOW Inc. for the first quarter was $22 million, or $0.20 per fully diluted share [31] Business Line Data and Key Metrics Changes - U.S. revenue totaled $474 million, up $23 million or 5% sequentially, driven by increased midstream demand [17][27] - U.S. Process Solutions contributed approximately 31% of total U.S. revenue, marking the highest revenue dollar contribution yet for this segment [28] - Canadian revenue was $62 million, down $4 million sequentially, while international revenue was $63 million, up $9 million or 17% sequentially [22][28] Market Data and Key Metrics Changes - In the U.S., revenue growth was driven by a full quarter contribution from the Trojan acquisition and increased midstream demand [17] - Internationally, revenue growth was primarily due to increased project activity, with a notable $15 million project not expected to repeat in the second quarter [23][28] - The company reported that approximately 70% of products sold in U.S. operations are sourced domestically, reducing dependence on international sources [13] Company Strategy and Development Direction - The company is focused on diversifying its market mix and investing in core markets while capturing additional revenues from energy evolution opportunities [11] - A small but strategic acquisition in Singapore was completed to enhance the McLean International brand, allowing for increased revenue synergies [12] - The company aims to balance growth with capital returns, having repurchased $16 million in shares year-to-date under a new $160 million share repurchase program [34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the dynamic tariff situation and its potential impact on margins, stating that they are passing supplier cost increases through as quickly as possible [15][37] - The company expects second quarter growth driven by increased midstream activity, despite anticipated declines in Canadian revenue due to seasonal factors [39][68] - Full year guidance for 2025 remains flat to up in the high single-digit percentage range from 2024 levels, with EBITDA potentially approaching 8% of revenue [40] Other Important Information - The company ended the first quarter with zero debt and a cash position of $219 million, providing significant liquidity for future investments [31][32] - The company is actively pursuing opportunities in adjacent markets, including water, wastewater, and data centers, which are expected to contribute to growth [55][58] Q&A Session Summary Question: How is inflation tracking in the business? - Management noted that while normal inflationary pressures are emerging, tariff impacts have not yet significantly affected gross margins [46][47] Question: Are smaller competitors staying rational in the market? - Management indicated that while competitors are cautious about inventory, there is still intense bidding on projects, maintaining a competitive environment [50][51] Question: What are the opportunities for market share gains? - The company highlighted its global buying power as an advantage over smaller competitors, allowing for better product availability and cost management [53] Question: What is the outlook for geographic growth? - Management reaffirmed expectations for U.S. growth, particularly in midstream, while anticipating flat performance in international markets [66][68] Question: How does the company plan to navigate potential declines in drilling and completion activity? - The focus is on growing the energy transition business and leveraging gains in midstream to offset potential upstream declines [80]