Financial Data and Key Metrics Changes - Fourth quarter revenue was 2.373 billion, up 2% year-over-year, marking the highest revenue year since 2019 [29][40] - Fourth quarter gross margin improved to 23.3%, up 100 basis points sequentially [28][44] - Full year 2024 gross margin was 22.5%, lower than 2023 due to pricing deflation in steel products [30][44] - Fourth quarter EBITDA was 289 million in free cash flow, a 165% conversion rate [31][58] Business Line Data and Key Metrics Changes - US revenue for Q4 2024 totaled 66 million, up 2% sequentially, but down 10% year-over-year [42] - International revenue for Q4 was 240 million, down 17% year-over-year [43] Market Data and Key Metrics Changes - The company noted that US completions and rigs declined by 9% and 13% respectively, impacting revenue [21] - The demand for horizontal trailer-mounted pumping solutions remained strong, particularly in water disposal applications [33] - Revenue in the energy evolution space grew over 60% year-over-year, indicating a shift towards decarbonization and non-oil and gas energy sources [34] Company Strategy and Development Direction - The company aims for growth in 2025 despite expected declines in market activity, focusing on midstream and industrial adjacent markets [9][61] - The strategy includes a strong emphasis on mergers and acquisitions (M&A), with 23 acquisitions since going public in 2014 [16][17] - The recent acquisition of Trojan is expected to enhance the company's water management solutions and expand its market reach [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in overcoming upstream sector headwinds and achieving growth in 2025 [10][61] - The outlook for 2025 includes expectations of flat to high single-digit revenue growth, with a focus on capturing market share [67] - Management acknowledged potential challenges from upstream spending reductions but highlighted opportunities in midstream infrastructure [61][64] Other Important Information - The company completed an 160 million program [59][60] - The company ended the year with zero debt and a cash position of $256 million [51][52] - The effective tax rate for 2024 was 28.1%, with expectations for 2025 to be around 27% to 29% [48] Q&A Session Summary Question: Discussion on tariffs and their impact on guidance - Management indicated that tariffs are expected to be constructive to gross margins and revenues, with a mix of products to mitigate costs [73][74] Question: Insights on upstream production intentions - Management noted mixed sentiments from customers regarding upstream investments, with some planning to increase budgets while others remain cautious [82][84] Question: Trojan acquisition and its impact on water transfer business - Management highlighted that the Trojan acquisition fills a gap in the water solutions market and is expected to create revenue synergies [90][96] Question: Outlook for Canada and international markets - Management expects flat activity in Canada and internationally, with a focus on improving profitability in international segments [110][112]
NOW(DNOW) - 2024 Q4 - Earnings Call Transcript