NOW(US:DNOW)2023-02-16 20:01Financial Data and Key Metrics Changes - Total revenue for Q4 2022 was $547 million, down 5% or $30 million from Q3, but up 27% year-over-year, with full-year revenue reaching $2.1 billion, an increase of 31% from 2021 [18][101] - Net income for Q4 was $32 million or $0.28 per diluted share, with non-GAAP net income at $29 million or $0.25 per diluted share [26] - EBITDA for Q4 was $47 million, representing 8.6% of revenue, while full-year EBITDA was $175 million or 8.2% of revenue, marking a significant improvement from previous years [73][112] Business Line Data and Key Metrics Changes - U.S. revenue for Q4 was $414 million, down 5% sequentially, with U.S. energy centers contributing 76% of total U.S. revenues for the quarter [9][19] - Canadian revenue for Q4 was $75 million, a 13% decrease sequentially but up 4% year-over-year, with full-year Canadian revenue totaling $315 million, a 27% increase from 2021 [24][113] - International revenue for Q4 was $58 million, up $2 million sequentially, with full-year international revenue totaling $230 million, a 5% increase despite a negative foreign currency impact [78][85] Market Data and Key Metrics Changes - In the U.S. downstream sector, customer spending remained strong, particularly in refining and chemical sectors, with increased demand for fabricated equipment packages [10] - The Middle East saw increased rig activations and drilling activity, with significant investments in local pipe inventory [14] - The U.K. market returned to growth with higher order inquiries for various products, indicating a positive trend in market activity [13] Company Strategy and Development Direction - The company aims to enhance customer intimacy and improve product availability by transitioning to a more cohesive regional supercenter model [6] - Focus on acquisitions to strengthen market position, with two acquisitions completed in December 2022 to enhance pump and engineered process equipment capabilities [8][118] - Commitment to energy evolution and ESG solutions, with a focus on reducing emissions and improving supply chain efficiencies [90][138] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2023, expecting customer spending to increase year-over-year, despite potential challenges from rising costs and inflation [92][120] - The company anticipates a slight decline in gross margins in Q1 2023 due to seasonal impacts but expects strong performance throughout the year [39][125] - Management highlighted the importance of maintaining a disciplined capital allocation strategy while focusing on organic growth and M&A opportunities [28][123] Other Important Information - The company reported zero debt and a cash position of $212 million at year-end, with a focus on maintaining strong liquidity [87][134] - The company is leveraging digital technologies to streamline operations, with digital revenue accounting for 46% of total revenue in Q4 [110] - The company is actively working on integrating ESG solutions into its offerings, particularly through the EcoVapor acquisition [118][138] Q&A Session Summary Question: Plans for cash allocation between M&A and repurchase - Management indicated a focus on funding organic growth while also prioritizing M&A opportunities and share repurchase programs as cash flow increases [36][123] Question: Gross margin seasonality in 2023 - Management expects Q1 to be the lowest gross margin period due to seasonal impacts, with a potential easing of margins as the year progresses [39][125] Question: Customer activity outlook in the U.S. upstream market - Management noted that while there is pressure from lower gas prices, they are monitoring customer budgets and project pipelines closely [61][142]