Financial Data and Key Metrics Changes - Revenue for Q4 2025 was $959 million, up 51% or $325 million from Q3 2025, driven by $388 million from MRC Global contributions during the stub period [22] - Full year 2025 revenue totaled $2.8 billion, an increase of $447 million or 19% from 2024, marking the fifth consecutive year of growth for DNOW [22] - Adjusted EBITDA for Q4 was $61 million, or 6.4% of revenue, while full year EBITDA was $209 million, or 7.4% of revenue [22][23] - Legacy DNOW achieved a record full-year EBITDA of $199 million in 2025, with EBITDA as a percentage of revenue reaching 8.2% [8][9] Business Line Data and Key Metrics Changes - U.S. revenue for Q4 2025 was $765 million, with MRC Global contributing $298 million; legacy DNOW's revenue was $467 million, down approximately 10% sequentially [23] - Canadian revenue for Q4 was $51 million, down 4% sequentially, while full year Canadian revenue was $214 million [23] - International revenue for Q4 was $143 million, with legacy DNOW International revenue at $53 million, down 7.5% year-over-year [24] Market Data and Key Metrics Changes - Upstream market activity is expected to remain flat to down, focusing on maintenance and efficiency rather than growth [16] - Midstream sector benefits from structural growth drivers, including natural gas infrastructure expansion and LNG development [16] - Gas utility market is expected to grow in 2026, supported by modernization efforts [16] Company Strategy and Development Direction - The merger with MRC Global enhances scale, diversifies sector reach, and expands the addressable market, solidifying DNOW's competitive position [10] - The company aims to achieve $70 million in cost synergies within three years, with $23 million expected by the end of the first year [11] - Focus on integrating operations, optimizing supply chains, and capturing identified cost synergies while maintaining customer service [38] Management's Comments on Operating Environment and Future Outlook - Management acknowledges ERP challenges impacting U.S. MRC Global operations but is optimistic about resolving these issues [12][14] - The company plans to reinstate guidance once operational stability is achieved, emphasizing the importance of integration and customer service [40][41] - Long-term growth is expected through improved competitiveness, better product availability, and enhanced relationships with suppliers [70] Other Important Information - The company changed its inventory valuation method to LIFO, which better reflects current costs due to commodity price fluctuations [26] - Transaction-related costs and foreign currency translation adjustments negatively impacted net loss in Q4, totaling $147 million [31] - The balance sheet remains healthy with $588 million in liquidity and a leverage ratio of 1.2x [32][33] Q&A Session Summary Question: Impact of MRC's ERP transition on Q4 and resolution timeline - Management indicated that ERP issues are limited to U.S. MRC only and have caused notable revenue declines in Q3 and Q4; efforts are underway to resolve these issues [47][48] Question: Growth expectations for 2026 - Management expects upstream markets to remain flat to down, while midstream and gas utilities are anticipated to grow; overall revenue is expected to be flattish [52][54] Question: Cost synergy targets and drivers - Improved cost synergy targets are driven by urgency to resolve ERP issues, with potential for exceeding initial savings projections [55][59] Question: Long-term vision for revenue growth and profit margins - Management envisions long-term growth through better competitiveness and improved supplier relationships, aiming for EBITDA margins in the 8% range [66][70] Question: Retaining key employees during ERP challenges - The company is focused on rewarding top talent and ensuring they are involved in decision-making to retain key employees during the transition [71][73]

Financial Data and Key Metrics Changes - Revenue for Q4 2025 was $959 million, up 51% or $325 million from Q3 2025, driven by $388 million from MRC Global contributions during the stub period [22] - Full year 2025 revenue totaled $2.8 billion, an increase of $447 million or 19% from 2024, marking the fifth consecutive year of growth for DNOW [22] - Adjusted EBITDA for Q4 was $61 million, or 6.4% of revenue, while full year EBITDA was $209 million, or 7.4% of revenue [22][23] - Net loss for Q4 was $147 million, impacted by merger-related costs, including $135 million in inventory step-up charges [31] Business Line Data and Key Metrics Changes - U.S. revenue for Q4 2025 was $765 million, with MRC Global contributing $298 million; legacy DNOW revenue was $467 million, down approximately 10% sequentially [23] - Canadian revenue for Q4 was $51 million, down 4% sequentially, while full year revenue was $214 million [23] - International revenue for Q4 was $143 million, with legacy DNOW International revenue at $53 million, down 7.5% year-over-year [24] Market Data and Key Metrics Changes - Upstream market activity is expected to remain flat to down, focusing on maintenance and reliability initiatives [16] - Midstream sector is benefiting from structural growth drivers, including natural gas infrastructure expansion and LNG development [16] - Gas utility market is expected to grow in 2026, with new solutions like M-Tech gas meters being introduced [17] Company Strategy and Development Direction - The merger with MRC Global aims to increase scale, diversify sector reach, and solidify DNOW's position as a premier distributor [10] - The company is focused on generating cost synergies, targeting $70 million in savings within three years, with an accelerated target of $23 million in the first year [11] - Strategic investments will continue in growing sectors like water management, midstream, gas utilities, and data centers [21] Management's Comments on Operating Environment and Future Outlook - Management acknowledges ERP challenges impacting U.S. MRC Global operations but is optimistic about resolving these issues [12][40] - The company plans to delay guidance until operational stability is achieved, emphasizing the importance of integration and customer service [40] - Management expresses confidence in overcoming current challenges and highlights the potential for long-term growth through the merger [41] Other Important Information - The company changed its inventory valuation method to LIFO, which better reflects current costs due to commodity price fluctuations [25] - Cash flow from operating activities for the full year was $155 million, with $25 million in capital expenditures [36] - The balance sheet remains healthy with $588 million in liquidity and a leverage ratio of 1.2x [32] Q&A Session Summary Question: Impact of MRC's ERP transition on Q4 and resolution timeline - ERP issues are limited to U.S. MRC Global, with notable revenue loss in Q3 and Q4 due to implementation challenges; resolution timeline is uncertain but efforts are underway to mitigate impacts [47][48] Question: Growth expectations for 2026 - Upstream is expected to remain flat to down, while midstream and gas utilities are anticipated to grow; management is confident in recovering lost revenue momentum [53][55] Question: Cost synergy targets and drivers - Improved cost synergy targets are driven by urgency to resolve ERP issues, with potential for exceeding initial savings projections [56][58] Question: Long-term vision for revenue growth and profit margins - The long-term strategy focuses on leveraging combined strengths for better competitiveness and improved margins, aiming for an EBITDA range of 8% [66][70] Question: Retaining key employees during ERP challenges - The company is focused on incentivizing top talent through financial rewards and leadership opportunities to ensure retention during the transition [71][73]