NOW Inc. Reports First Quarter 2023 Results

Rhea-AI Summary

NOW Inc. (NYSE: DNOW) reported first quarter 2023 financial highlights, including revenue of $584 million and net income of $31 million. The company also repurchased $36 million of common stock and completed two acquisitions.

Positive

• Revenue for the first quarter of 2023 was $584 million, representing a 7% sequential growth. Net income was $31 million. The company repurchased $36 million of common stock and completed two acquisitions, strengthening their U.S. Process Solutions business.

Negative

• Headwinds related to inclement weather, lower U.S. rig counts and completions, and weaker oil and gas prices during the quarter may negatively impact the company's performance.

Earnings Conference Call

May 4, 2023

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

HOUSTON--(BUSINESS WIRE)-- NOW Inc. (NYSE: DNOW) announced results for the first quarter ended March 31, 2023.

First Quarter 2023 Financial Highlights

• Revenue was $584 million for the first quarter of 2023
• Net income attributable to NOW Inc. was $31 million and non-GAAP net income attributable to NOW Inc. excluding other costs was $28 million for the first quarter of 2023
• Diluted earnings per share attributable to NOW Inc. stockholders was $0.28 and non-GAAP diluted earnings per share attributable to NOW Inc. stockholders excluding other costs was $0.25 for the first quarter of 2023
• EBITDA excluding other costs for the first quarter of 2023 was $47 million or 8.0% of revenue
• Cash and cash equivalents was $168 million and long-term debt was zero at March 31, 2023 with total liquidity of approximately $555 million
• Repurchased $36 million of common stock in the first quarter of 2023 or approximately 3 million shares

David Cherechinsky, President and CEO of NOW Inc., added, “Our year is off to a nice start, including strong top- and bottom-line performance, with revenue growing 7% sequentially, driving 8% first quarter EBITDA as a percent of revenue. We achieved these better than expected results despite headwinds related to inclement weather, lower U.S. rig counts and completions, and weaker oil and gas prices during the quarter. We are excited about our international segment posting strong sequential revenue growth of 28% at operating profit levels not seen since 2014.

In the first quarter, we returned cash to shareholders by repurchasing $36 million in shares and since quarter-end, we completed two additional acquisitions, strengthening our U.S. Process Solutions business.

We are in a great place as a company, with incredible talent singularly focused on our customers. We remain debt-free with ample liquidity and possess an advantageous variety of tools to further advance DNOW’s position in the market.”

Prior to the earnings conference call a presentation titled “NOW Inc. First Quarter 2023 Key Takeaways” will be available on the Company’s Investor Relations website.

About NOW Inc.

DistributionNOW is a worldwide supplier of energy and industrial products and packaged, engineered process and production equipment with a legacy of 160 years. Headquartered in Houston, Texas, with approximately 2,450 employees and a network of locations worldwide, we offer a broad set of supply chain solutions combined with a suite of digital solutions 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 companies, midstream transmission and storage companies, refineries, chemical companies, utilities, mining, municipal water, manufacturers, engineering and construction companies 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 NOW 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.

NOW INC. CONSOLIDATED BALANCE SHEETS (In millions, except share data)
		March 31,				December 31,
		2023				2022
ASSETS
Current assets:
Cash and cash equivalents		$	168			$	212
Receivables, net			422				398
Inventories, net			406				381
Prepaid and other current assets			29				26
Total current assets			1,025				1,017
Property, plant and equipment, net			121				119
Goodwill			119				116
Intangibles, net			23				25
Other assets			41				43
Total assets		$	1,329			$	1,320
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	323			$	304
Accrued liabilities			118				126
Other current liabilities			6				9
Total current liabilities			447				439
Long-term operating lease liabilities			25				25
Deferred income taxes			1				1
Other long-term liabilities			12				11
Total liabilities			485				476
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; 107,394,917 and 110,369,266 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively			1				1
Treasury stock - at average cost; 244,604 shares at March 31, 2023			(3	)			−
Additional paid-in capital			2,036				2,066
Accumulated deficit			(1,044	)			(1,075	)
Accumulated other comprehensive loss			(149	)			(150	)
NOW Inc. stockholders' equity			841				842
Noncontrolling interest			3				2
Total stockholders' equity			844				844
Total liabilities and stockholders' equity		$	1,329			$	1,320

NOW INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In millions, except per share data)
		Three Months Ended
		March 31,						December 31,
		2023			2022			2022
Revenue		$	584		$	473		$	547
Operating expenses:
Cost of products			447			366			415
Warehousing, selling and administrative			102			84			97
Operating profit			35			23			35
Other income (expense)			−			10			(1	)
Income before income taxes			35			33			34
Income tax provision			3			3			2
Net income			32			30			32
Net income attributable to noncontrolling interest			1			−			−
Net income attributable to NOW Inc.		$	31		$	30		$	32
Earnings per share attributable to NOW Inc. stockholders:
Basic		$	0.28		$	0.27		$	0.28
Diluted		$	0.28		$	0.27		$	0.28
Weighted-average common shares outstanding, basic			110			111			110
Weighted-average common shares outstanding, diluted			111			111			111

NOW INC. SUPPLEMENTAL INFORMATION   BUSINESS SEGMENTS (UNAUDITED) (In millions)
		Three Months Ended
		March 31,						December 31,
		2023			2022			2022
Revenue:
United States		$	427		$	334		$	414
Canada			83			82			75
International			74			57			58
Total revenue		$	584		$	473		$	547

NOW INC. SUPPLEMENTAL INFORMATION (CONTINUED) U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) TO NON-GAAP RECONCILIATIONS NET INCOME ATTRIBUTABLE TO NOW INC. TO NON-GAAP EBITDA EXCLUDING OTHER COSTS RECONCILIATION (UNAUDITED) (In millions)
		Three Months Ended
		March 31,								December 31,
		2023				2022				2022
GAAP net income attributable to NOW Inc. (1)		$	31			$	30			$	32
Net income attributable to noncontrolling interest (2)			1				−				−
Interest expense (income), net			(1	)			−				−
Income tax provision			3				3				2
Depreciation and amortization			6				4				5
Other costs:
Stock-based compensation			3				2				4
Other (3)			4				(11	)			4
EBITDA excluding other costs		$	47			$	28			$	47
EBITDA % excluding other costs (4)			8.0	%			5.9	%			8.6	%

NET INCOME ATTRIBUTABLE TO NOW INC. TO NON-GAAP NET INCOME ATTRIBUTABLE TO NOW INC. EXCLUDING OTHER COSTS RECONCILIATION (UNAUDITED) (In millions)
		Three Months Ended
		March 31,								December 31,
		2023				2022				2022
GAAP net income attributable to NOW Inc. (1)		$	31			$	30			$	32
Other, net of tax (5) (6)			(3	)			(15	)			(3	)
Net income attributable to NOW Inc. excluding other costs (6)		$	28			$	15			$	29

DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO NOW INC. STOCKHOLDERS TO NON-GAAP DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO NOW INC. STOCKHOLDERS EXCLUDING OTHER COSTS RECONCILIATION (UNAUDITED)
		Three Months Ended
		March 31,								December 31,
		2023				2022				2022
GAAP diluted earnings per share attributable to NOW Inc. stockholders (1)		$	0.28			$	0.27			$	0.28
Other, net of tax (5) (6)			(0.03	)			(0.13	)			(0.03	)
Diluted earnings per share attributable to NOW Inc. stockholders excluding other costs (6)		$	0.25			$	0.14			$	0.25

(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 NOW Inc. excluding other costs and (iii) diluted earnings per share attributable to NOW 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.
(3)	For the three months ended March 31, 2023, Other of approximately $4 million, included in warehousing, selling and administrative, was related to legal fees for litigation matters that were not ordinary or routine to the operations of the business where the Company is seeking damages.
(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 months ended March 31, 2023, Other, net of tax included a benefit of approximately $7 million from changes in the valuation allowance recorded against the Company’s deferred tax assets, partially offset by approximately $4 million related to legal fees for litigation matters that were not ordinary or routine to the operations of the business where the Company is seeking damages. The Company has excluded the impact of these items on its valuation allowance in computing net income excluding other costs.
(6)	Totals may not foot due to rounding.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230504005296/en/

Mark Johnson

Senior Vice President and Chief Financial Officer

(281) 823-4754

Source: NOW Inc.

FAQ

What was the revenue for the first quarter of 2023?

The revenue for the first quarter of 2023 was $584 million.

What was the net income for the first quarter of 2023?

The net income for the first quarter of 2023 was $31 million.

What did the company repurchase in the first quarter of 2023?

The company repurchased $36 million of common stock in the first quarter of 2023.

Did the company complete any acquisitions?

Yes, the company completed two acquisitions, strengthening their U.S. Process Solutions business.