false 0001599617 0001599617 2024-08-07 2024-08-07

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) August 7, 2024

 

 

DNOW INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-36325   46-4191184

(State or other jurisdiction

of incorporation)

  

(Commission

File Number)

  

(IRS Employer

Identification No.)

 

7402 North Eldridge Parkway

Houston, Texas

   77041
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: 281-823-4700

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

  

Trading

Symbol(s)

  

Name of each exchange

on which registered

Common Stock, par value $0.01   DNOW   New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐    

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 2.02

Results of Operations and Financial Condition

On August 7, 2024, DNOW Inc. issued a press release announcing earnings for the quarter ended June 30, 2024 and conference call in connection therewith. A copy of the release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.

The information contained in this Current Report shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01

Financial Statements and Exhibits

(d) Exhibits

The following exhibit is provided as part of the information furnished under Item 2.02 of this Current Report on Form 8-K:

 

99.1    DNOW Inc. press release dated August 7, 2024 announcing the earnings results for the second quarter ended June 30, 2024.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: August 7, 2024       DNOW INC.
     

/s/ Raymond W. Chang

      Raymond W. Chang
      Vice President & General Counsel

Exhibit 99.1

 

LOGO

Earnings Conference Call

August 7, 2024

8:00 a.m. CT

1 (888) 660-6431 (within North America)

1 (929) 203-2118 (outside of North America)

Access Code: 7372055

Webcast: ir.dnow.com

 

 

DNOW Reports Second Quarter 2024 Results

HOUSTON, TX, August 7, 2024 – DNOW Inc. (NYSE: DNOW) announced results for the second quarter ended June 30, 2024.

Second Quarter 2024 Highlights

 

  •  

Revenue was $633 million for the second quarter of 2024

 

  •  

Net income attributable to DNOW Inc. was $24 million, or $0.21 per diluted share, for the second quarter of 2024

 

  •  

Non-GAAP net income attributable to DNOW Inc. excluding other costs was $28 million, or $0.25 per diluted share, for the second quarter of 2024

 

  •  

EBITDA excluding other costs was $50 million or 7.9% of revenue for the second quarter of 2024

 

  •  

Cash provided by operating activities was $21 million for the second quarter of 2024 and $211 million for the trailing four quarters ending June 30, 2024

 

  •  

Repurchased $10 million of common stock in the second quarter of 2024

 

  •  

Cash and cash equivalents was $197 million and long-term debt was zero at June 30, 2024 with total liquidity of approximately $579 million

David Cherechinsky, President and CEO of DNOW, added, “We are delighted with the growth we achieved during the second quarter, in a challenging market, where we delivered $50 million in EBITDA and produced $18 million in free cash flow, bringing our free cash flow haul to $201 million over the past four quarters. We opportunistically repurchased $10 million in shares in the quarter and are on a path to complete the $80 million share repurchase program this year.

We continue to execute on our strategy to bolster DNOW’s capabilities and expand our core market, while further penetrating into midstream, energy evolution and adjacent industrial markets, providing additional opportunities for growth. The future remains bright thanks to our dedicated, skilled and passionate employees who work tirelessly and successfully to help solve our customers’ complex operational and supply chain challenges.

With $197 million in cash, no debt and $579 million of total liquidity, we continue to pursue complementary, margin accretive acquisitions where the combination would maximize shareholder value and fuel future DNOW success.”

Prior to the earnings conference call a presentation titled “DNOW Second Quarter 2024 Key Takeaways” will be available on the Company’s Investor Relations website.

About DNOW

DNOW is a worldwide supplier of energy and industrial products and packaged, engineered process and production equipment with a legacy of over 160 years. Headquartered in Houston, Texas, with approximately 2,600 employees and a network of locations worldwide, we offer a broad set of supply chain solutions combined with a suite of digital offerings branded as DigitalNOW® that provide customers world-class technology for digital commerce, data and information management. Our locations provide products and solutions to exploration and production, midstream transmission and storage companies, refineries, chemical companies, utilities, mining, municipal water, manufacturers, engineering and construction as well as companies operating in the decarbonization, energy transition and renewables end markets.

Statements made in this press release that are forward-looking in nature are intended to be “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 and may involve risks and uncertainties. These statements may differ materially from actual future events or results. Readers are referred to documents filed by DNOW Inc. with the U.S. Securities and Exchange Commission, which identify significant risk factors which could cause actual results to differ from those contained in the forward-looking statements.

Contact:

Mark Johnson

Senior Vice President and Chief Financial Officer

(281) 823-4754

DNOW INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

 

     June 30,     December 31,  
     2024     2023  
ASSETS

 

Current assets:

     

Cash and cash equivalents

    $ 197     $ 299  

Receivables, net

      403       384  

Inventories, net

      399       366  

Prepaid and other current assets

      24       19  
  

 

 

    

 

 

  

Total current assets

      1,023       1,068  

Property, plant and equipment, net

      139       131  

Deferred income taxes

      105       118  

Goodwill

      192       139  

Intangibles, net

      57       28  

Other assets

      47       45  
  

 

 

    

 

 

  

Total assets

    $ 1,563     $ 1,529  
  

 

 

    

 

 

  
LIABILITIES AND STOCKHOLDERS’ EQUITY

 

Current liabilities:

     

Accounts payable

    $ 278     $ 288  

Accrued liabilities

      123       120  

Other current liabilities

      11       10  
  

 

 

    

 

 

  

Total current liabilities

      412       418  

Long-term operating lease liabilities

      32       30  

Other long-term liabilities

      20       18  
  

 

 

    

 

 

  

Total liabilities

      464       466  

Commitments and contingencies

     

Stockholders’ equity:

     

Preferred stock - par value $0.01; 20 million shares authorized; no shares issued and outstanding

      —        —   

Common stock - par value $0.01; 330 million shares authorized; 106,549,496 and 106,257,565 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

      1       1  

Additional paid-in capital

      2,028       2,032  

Accumulated deficit

      (783 )      (828 ) 

Accumulated other comprehensive loss

      (151 )      (145 ) 
  

 

 

    

 

 

  

DNOW Inc. stockholders’ equity

      1,095       1,060  

Noncontrolling interest

      4       3  
  

 

 

    

 

 

  

Total stockholders’ equity

      1,099       1,063  
  

 

 

    

 

 

  

Total liabilities and stockholders’ equity

    $ 1,563     $ 1,529  
  

 

 

    

 

 

  

 

2

DNOW INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In millions, except per share data)

 

     Three Months Ended      Six Months Ended  
     June 30,     March 31,      June 30,  
     2024      2023     2024      2024      2023  

Revenue

    $ 633      $ 594     $ 563      $ 1,196      $ 1,178  

Operating expenses:

              

Cost of products

      495        460       434        929        907  

Warehousing, selling and administrative

      105        98       101        206        200  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Operating profit

      33        36       28        61        71  

Other income (expense)

      —         (1 )      1        1        (1 ) 
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Income before income taxes

      33        35       29        62        70  

Income tax provision

      8        1       8        16        4  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Net income

      25        34       21        46        66  

Net income attributable to noncontrolling interest

      1        —        —         1        1  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Net income attributable to DNOW Inc.

    $ 24      $ 34     $ 21      $ 45      $ 65  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Earnings per share attributable to DNOW Inc. stockholders:

              

Basic

    $ 0.21      $ 0.31     $ 0.20      $ 0.41      $ 0.59  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Diluted

    $ 0.21      $ 0.31     $ 0.19      $ 0.41      $ 0.59  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Weighted-average common shares outstanding, basic

      107        107       106        107        108  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Weighted-average common shares outstanding, diluted

      108        108       107          107          109  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

DNOW INC.

SUPPLEMENTAL INFORMATION

BUSINESS SEGMENTS (UNAUDITED)

(In millions)

 

     Three Months Ended      Six Months Ended  
     June 30,     March 31,      June 30,  
     2024      2023     2024      2024      2023  

Revenue:

              

United States

    $ 512      $ 456     $ 435      $ 947      $ 883  

Canada

      56        66       66        122        149  

International

      65        72       62        127        146  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Total revenue

    $ 633      $ 594      $ 563      $ 1,196      $ 1,178   
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

 

3

DNOW INC.

SUPPLEMENTAL INFORMATION (CONTINUED)

U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) TO NON-GAAP RECONCILIATIONS

NET INCOME ATTRIBUTABLE TO DNOW INC. TO NON-GAAP EBITDA EXCLUDING OTHER COSTS RECONCILIATION (UNAUDITED)

(In millions)

 

     Three Months Ended     Six Months Ended  
     June 30,     March 31,     June 30,  
     2024     2023     2024     2024     2023  

GAAP net income attributable to DNOW Inc. (1)

    $ 24     $ 34     $ 21     $ 45     $ 65  

Net income attributable to noncontrolling interest (2)

      1       —        —        1       1  

Interest expense (income), net

      (1 )      —        (2 )      (3 )      (1 ) 

Income tax provision

      8       1       8       16       4  

Depreciation and amortization

      9       6       7       16       12  

Other costs:

           

Stock-based compensation

      4       4       2       6       7  

Other (3)

      5       2       3       8       6  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

EBITDA excluding other costs

    $ 50     $ 47     $ 39     $ 89     $ 94  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

EBITDA % excluding other costs (4)

       7.9 %       7.9 %       6.9 %       7.4 %       8.0 % 

NET INCOME ATTRIBUTABLE TO DNOW INC. TO NON-GAAP NET INCOME ATTRIBUTABLE TO DNOW INC. EXCLUDING OTHER COSTS RECONCILIATION (UNAUDITED)

(In millions)

 

     Three Months Ended     Six Months Ended  
     June 30,     March 31,     June 30,  
     2024     2023     2024     2024     2023  

GAAP net income attributable to DNOW Inc. (1)

    $ 24     $ 34     $ 21     $ 45     $ 65  

Other, net of tax (5) (6)

      4       (7 )       2       6       (10 )   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net income attributable to DNOW Inc. excluding other costs (6)

    $   28       $   27     $   23       $   51       $   55  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO DNOW INC. STOCKHOLDERS TO NON-GAAP DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO DNOW INC. STOCKHOLDERS EXCLUDING OTHER COSTS RECONCILIATION (UNAUDITED)

 

     Three Months Ended     Six Months Ended  
     June 30,     March 31,     June 30,  
     2024     2023     2024     2024     2023  

GAAP diluted earnings per share attributable to DNOW Inc. stockholders (1)

    $ 0.21     $ 0.31     $ 0.19     $ 0.41     $ 0.59  

Other, net of tax (5) (6)

      0.04       (0.06 )       0.02       0.05       (0.09 )  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Diluted earnings per share attributable to DNOW Inc. stockholders excluding other costs (6)

    $ 0.25       $ 0.25     $ 0.21       $ 0.46       $ 0.50  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

(1)

In an effort to provide investors with additional information regarding our results as determined by GAAP, we disclose various non-GAAP financial measures in our quarterly earnings press releases and other public disclosures. The non-GAAP financial measures include: (i) earnings before interest, taxes, depreciation and amortization (EBITDA) excluding other costs, (ii) net income attributable to DNOW Inc. excluding other costs and (iii) diluted earnings per share attributable to DNOW Inc. stockholders excluding other costs. Each of these financial measures excludes the impact of certain other costs and therefore has not been calculated in accordance with GAAP. A reconciliation of each of these non-GAAP financial measures to its most comparable GAAP financial measure is included in the schedules herein.

(2)

Net income attributable to noncontrolling interest represents the income retained by the noncontrolling party of a joint venture in our international segment which we consolidate into our financials as we are the primary beneficiary and controlling member.

 

4

(3)

Other includes certain income and expenses and does not include stock-based compensation expense.

For the three and six months ended June 30, 2024, Other was primarily related to transaction-related charges, of which approximately $1 million and $3 million, respectively, were included in warehousing, selling and administrative, and approximately $4 million and $5 million, respectively, were included in cost of products. Transaction-related charges include transaction costs, inventory fair value step-up, retention bonus accruals and integration expenses associated with acquisitions.

(4)

EBITDA % excluding other costs is defined as EBITDA excluding other costs divided by Revenue.

(5)

Other, net of tax includes certain income and expenses and does not include stock-based compensation expense.

For the three and six months ended June 30, 2024, Other, net of tax, included approximately $4 million and $6 million, respectively, related to transaction-related charges.

(6)

Totals may not foot due to rounding.

 

5

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Document and Entity Information
Aug. 07, 2024
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Entity Central Index Key 0001599617
Document Type 8-K
Document Period End Date Aug. 07, 2024
Entity Registrant Name DNOW INC.
Entity Incorporation State Country Code DE
Entity File Number 001-36325
Entity Tax Identification Number 46-4191184
Entity Address, Address Line One 7402 North Eldridge Parkway
Entity Address, City or Town Houston
Entity Address, State or Province TX
Entity Address, Postal Zip Code 77041
City Area Code 281
Local Phone Number 823-4700
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Security 12b Title Common Stock, par value $0.01
Trading Symbol DNOW
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