Market Overview - The Hang Seng Index (HSI) experienced a slight decline of 0.12%, closing at 23,864.2 points, while the Tech Index rose by 0.15%, ending at 5,247.45 points [1] Sector Performance - The energy equipment and services sector continued its upward trend, with shale gas and natural gas sectors showing significant gains [1] - The real estate services sector faced a downturn, and pharmaceutical stocks also saw declines [1] Notable Stock Movements - Shandong Molong (00568.HK) surged by 33.66% - Jinhui Holdings (09993.HK) increased by 68% - Baikin Oilfield Services (02178.HK) rose by 55% - Hongye Futures (03678.HK) gained 14.4% - Kingsoft Corporation (03888.HK) climbed by 10.8% - Chow Tai Fook (01929.HK) increased by 6.5% - Xiaomi Group (01810.HK) rose by 3.85% - WuXi Biologics (02269.HK) fell by 6.4% [1]

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 [9][10] - Revenue for Q1 2025 was $599 million, an increase of 4.9% from Q4 2024 and 6.4% year over year [10][26] - Gross margins remained resilient at 23.2%, better than expected [11][28] - Net income attributable to DNOW Inc. for Q1 was $22 million or $0.20 per fully diluted share [30] Business Line Data and Key Metrics Changes - U.S. revenue totaled $474 million, up $23 million or 5% sequentially, with U.S. energy centers contributing approximately 69% of total U.S. revenue [26][27] - U.S. Process Solutions achieved a new quarterly revenue record, contributing approximately 31% to total U.S. revenue [27] - Canadian revenue was $62 million, down $4 million sequentially, while international revenue was $63 million, up $9 million or 17% sequentially [22][27] Market Data and Key Metrics Changes - In the U.S., revenue growth was driven by increased midstream demand, particularly from the Witco business [18] - Internationally, revenue growth was attributed to increased project activity, with a notable $15 million project not expected to repeat in Q2 [23][27] - 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 international acquisition was completed in April to enhance the McLean International brand, expanding its market presence in Singapore and the Asia Pacific region [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 impact of tariffs and macroeconomic uncertainties but noted that customer spending has not significantly declined [35][36] - For Q2, the company expects flat to mid-single-digit percentage growth in revenues, driven by increased midstream activity [37] - 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 [38] Other Important Information - The company has zero debt and a cash position of $219 million, with total liquidity of $567 million [30][31] - The effective tax rate for 2025 is estimated to be approximately 26% to 29%, with no material U.S. Federal cash income taxes expected due to available NOL carryforwards [29] Q&A Session Summary Question: How is inflation tracking in the business? - Management noted that inventory costs are currently low, but normal inflationary pressures are resuming, with some products seeing price increases of 3% to 35% due to tariffs [43][44][46] Question: Are smaller competitors staying rational in the market? - Management indicated that competitors are being careful with inventory, but there is still intense bidding on projects, maintaining a competitive environment [47][48] Question: What are the opportunities for market share gains? - The company has significant global buying power, allowing it to leverage volume for better product availability and cost advantages against smaller competitors [50][51] Question: What is the outlook for geographic growth? - Management expects flat growth internationally, with stronger performance anticipated in the U.S. driven by midstream activity and the Trojan acquisition [66][67] Question: How does the company plan to navigate potential drilling and completion activity curtailments? - The focus is on growing with E&C customers and expanding the energy transition business, which is expected to offset upstream declines [80] Question: What is the current state of the M&A landscape? - Management reported active conversations regarding potential acquisitions, with some caution expected due to oil price volatility [101][102]

Financial Data and Key Metrics Changes - First quarter sales reached $741 million, exceeding guidance by nearly $20 million, with adjusted EPS increasing 4% to $0.77, above the guidance range of $0.71 to $0.74 [15][16] - Adjusted operating profit margin decreased by 40 basis points year-over-year but increased by 30 basis points compared to the full year 2024 [15][16] - Free cash flow of $96 million increased over 20% year-over-year, reflecting an 83% conversion to adjusted net income [16] Business Line Data and Key Metrics Changes - Environmental and Fueling Solutions achieved core growth of approximately 1%, or up 11% on a two-year stack basis, with strong demand for both above-ground and underground retail fueling equipment [17] - Mobility Technologies saw core sales increase nearly 13% year-over-year, driven by strong performance at Invenco, which grew over 20% for the third consecutive quarter [18] - Repair Solutions experienced a decline in sales due to a timing shift of Matco Expo from Q1 to Q2, with expectations of mid-single-digit declines for the year [20][47] Market Data and Key Metrics Changes - The convenience retail and fueling market, which accounts for about two-thirds of sales, has historically grown above GDP and has shown resilience during downturns [7][13] - Channel checks indicate that larger national and regional operators are confident in their capital expenditure plans, with no evidence of price delays or deferrals [13][56] Company Strategy and Development Direction - The company is focused on its connected mobility strategy, which positions it at the forefront of customers' digital transformation journeys [5] - A $500 million share repurchase authorization was approved, reflecting confidence in the business and a commitment to returning capital to shareholders [8][21] - The company is actively managing tariff exposures and has diversified its supply chain to reduce reliance on China [9][10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the convenience retail and fueling markets, with expectations of continued growth despite macroeconomic uncertainties [7][24] - The company is taking a cautious view of second-half demand, embedding contingency into its guidance while maintaining a positive outlook for the full year [23][24] - Management highlighted the importance of controlling internal factors and executing on strategic initiatives to optimize core operations [12][26] Other Important Information - The company has significantly strengthened its global supply chain agility and resiliency over the past four years [9] - The estimated tariff impact for the year is approximately $50 million, with ongoing efforts to mitigate these costs through supply chain optimization and price adjustments [10][11] Q&A Session Summary Question: Evidence of contingency in the second half of the year - Management noted no demand destruction observed, with resilient markets and effective management of tariff impacts through price adjustments [30][32] Question: Mobility Tech sales growth and margin outlook - Management expects good margin expansion for Mobility Tech year-on-year, with margins projected to increase close to 100 basis points for the full year [42] Question: Environmental and fueling solutions project hesitancy - Management reported confidence in customer capital planning, with no signs of hesitancy in moving forward with projects [54][56]

Financial Data and Key Metrics Changes - First quarter sales reached $741 million, exceeding guidance by nearly $20 million, with adjusted EPS increasing 4% to $0.77, above the guidance range of $0.71 to $0.74 [15][22] - Adjusted operating profit margin decreased by 40 basis points year-over-year but increased by 30 basis points compared to the full year 2024 [15][22] - Free cash flow increased over 20% year-over-year to $96 million, reflecting an 83% conversion to adjusted net income [15][22] Business Line Data and Key Metrics Changes - Environmental and Fueling Solutions achieved core growth of approximately 1%, or up 11% on a two-year stack basis, with segment operating profit margin expanding by 20 basis points [16] - Mobility Technologies saw core sales increase nearly 13% year-over-year, driven by strong performance at Invenco, which grew over 20% for the third consecutive quarter [17] - Repair Solutions experienced a decline in sales due to a timing shift of Matco Expo from Q1 to Q2, with expectations of mid-single-digit declines for the year [19][46] Market Data and Key Metrics Changes - The convenience retail and fueling market, which accounts for about two-thirds of sales, has historically grown above GDP and has shown resilience during downturns [7][12] - There is no discernible demand destruction observed, with strong capital expenditure plans from larger national and regional operators [6][30] - The company has reduced its exposure to China significantly, with current sales exposure to China being less than 1% [24][25] Company Strategy and Development Direction - The company is focused on its connected mobility strategy, which positions it at the forefront of customers' digital transformation journeys [5] - A $500 million share repurchase authorization was approved, indicating confidence in the business and a commitment to returning capital to shareholders [8][20] - The company is actively managing tariff exposures and has implemented measures to mitigate estimated costs of approximately $50 million [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's resilience despite macroeconomic uncertainties, with a cautious outlook for the second half of the year [22][23] - The company is monitoring demand signals closely and has not seen any significant impacts from tariffs or trade policy uncertainties [6][30] - Management highlighted the importance of controlling internal factors and executing on strategic initiatives to optimize core operations [11][26] Other Important Information - The company is leveraging its supply chain agility and has diversified its supply base to reduce exposure to tariffs [9][10] - The Matco Expo event was successful, but there may have been some pre-buying due to tariff uncertainties, which could affect future demand [35][46] - The company is focused on self-help opportunities and has engaged in product line simplification and strategic pricing initiatives [11][64] Q&A Session Summary Question: Evidence of demand destruction and price vs. volume dynamics - Management noted no evidence of demand destruction and indicated that the markets remain resilient, with price increases being implemented to offset tariff impacts [30][31] Question: Mobility Tech sales growth and margin outlook - Management expects good margin expansion for Mobility Tech year-on-year, with margins projected to increase by close to 100 basis points for the full year [41] Question: Repair Solutions sales outlook - Management anticipates mid-single-digit declines for Repair Solutions due to current macro conditions, but overall strength in other segments may offset this [46] Question: Environmental and Fueling Solutions customer hesitancy - Management expressed confidence that customers are moving forward with projects, indicating resilience in the convenience retail space [54][56] Question: Progress on simplification initiatives and margin improvement - Management highlighted ongoing simplification efforts and expressed confidence in achieving the targeted margin improvement by 2026 [63][66]