NOW Inc. Reports Second Quarter 2023 Results
Earnings Conference Call
August 2, 2023
8:00 a.m. CT
1 (888) 660-6431 (within
1 (929) 203-2118 (outside of
Access Code: 7372055
Webcast: ir.dnow.com
Second Quarter 2023 Financial Highlights
-
Revenue was
for the second quarter of 2023$594 million -
Net income attributable to NOW Inc. was
and non-GAAP net income attributable to NOW Inc. excluding other costs was$34 million for the second quarter of 2023$27 million -
Diluted earnings per share attributable to NOW Inc. stockholders was
and non-GAAP diluted earnings per share attributable to NOW Inc. stockholders excluding other costs was$0.31 for the second quarter of 2023$0.25 -
EBITDA excluding other costs for the second quarter of 2023 was
or$47 million 7.9% of revenue -
Free cash flow for the second quarter of 2023 was
$79 million -
Cash and cash equivalents was
and long-term debt was zero at June 30, 2023 with total liquidity of approximately$203 million $584 million -
As announced in May, we completed two acquisitions for
in cash, expanding our manufacturer territorial exclusivities for key products$33 million -
Repurchased
of common stock in the second quarter of 2023$8 million
David Cherechinsky, President and CEO of NOW Inc., added, “I am proud of our DNOW team as strong performance continued in the second quarter, generating
Looking ahead, I am excited about the traction we are making positioning DNOW as a vital energy evolution partner, deploying our full suite of supply chain management services and decarbonization products and technologies, including our EcoVapor offering, to provide our customers the innovative emissions management solutions necessary to achieve their sustainability goals.
We are focused on executing our strategy and creating shareholder value by growing market share, leveraging our debt-free balance sheet with
Prior to the earnings conference call a presentation titled “NOW Inc. Second 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
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
NOW INC. |
||||||
CONSOLIDATED BALANCE SHEETS |
||||||
(In millions, except share data) |
||||||
June 30, |
December 31, |
|||||
|
2023 |
|
|
2022 |
|
|
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ |
203 |
|
$ |
212 |
|
Receivables, net |
|
417 |
|
|
398 |
|
Inventories, net |
|
424 |
|
|
381 |
|
Prepaid and other current assets |
|
31 |
|
|
26 |
|
Total current assets |
|
1,075 |
|
|
1,017 |
|
Property, plant and equipment, net |
|
130 |
|
|
119 |
|
Goodwill |
|
141 |
|
|
116 |
|
Intangibles, net |
|
31 |
|
|
25 |
|
Other assets |
|
43 |
|
|
43 |
|
Total assets | $ |
1,420 |
|
$ |
1,320 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ |
364 |
|
$ |
304 |
|
Accrued liabilities |
|
129 |
|
|
126 |
|
Other current liabilities |
|
8 |
|
|
9 |
|
Total current liabilities |
|
501 |
|
|
439 |
|
Long-term operating lease liabilities |
|
26 |
|
|
25 |
|
Deferred income taxes |
|
1 |
|
|
1 |
|
Other long-term liabilities |
|
15 |
|
|
11 |
|
Total liabilities |
|
543 |
|
|
476 |
|
Commitments and contingencies | ||||||
Stockholders' equity: | ||||||
Preferred stock - par value outstanding |
|
− |
|
|
− |
|
Common stock - par value shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively |
|
1 |
|
|
1 |
|
Additional paid-in capital |
|
2,029 |
|
|
2,066 |
|
Accumulated deficit |
|
(1,010 |
) |
|
(1,075 |
) |
Accumulated other comprehensive loss |
|
(146 |
) |
|
(150 |
) |
NOW Inc. stockholders' equity |
|
874 |
|
|
842 |
|
Noncontrolling interest |
|
3 |
|
|
2 |
|
Total stockholders' equity |
|
877 |
|
|
844 |
|
Total liabilities and stockholders' equity | $ |
1,420 |
|
$ |
1,320 |
|
NOW INC. |
|||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) |
|||||||||||||
(In millions, except per share data) |
|||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | March 31, | June 30, | |||||||||||
|
2023 |
|
|
2022 |
|
|
2023 |
|
2023 |
|
|
2022 |
|
Revenue | $ |
594 |
|
$ |
539 |
|
$ |
584 |
$ |
1,178 |
|
$ |
1,012 |
Operating expenses: | |||||||||||||
Cost of products |
|
460 |
|
|
411 |
|
|
447 |
|
907 |
|
|
777 |
Warehousing, selling and administrative |
|
98 |
|
|
89 |
|
|
102 |
|
200 |
|
|
173 |
Impairment and other charges |
|
− |
|
|
10 |
|
|
− |
|
− |
|
|
10 |
Operating profit |
|
36 |
|
|
29 |
|
|
35 |
|
71 |
|
|
52 |
Other income (expense) |
|
(1 |
) |
|
(1 |
) |
|
− |
|
(1 |
) |
|
9 |
Income before income taxes |
|
35 |
|
|
28 |
|
|
35 |
|
70 |
|
|
61 |
Income tax provision |
|
1 |
|
|
2 |
|
|
3 |
|
4 |
|
|
5 |
Net income |
|
34 |
|
|
26 |
|
|
32 |
|
66 |
|
|
56 |
Net income attributable to noncontrolling interest |
|
− |
|
|
− |
|
|
1 |
|
1 |
|
|
− |
Net income attributable to NOW Inc. | $ |
34 |
|
$ |
26 |
|
$ |
31 |
$ |
65 |
|
$ |
56 |
Earnings per share attributable to NOW Inc. stockholders: | |||||||||||||
Basic | $ |
0.31 |
|
$ |
0.23 |
|
$ |
0.28 |
$ |
0.59 |
|
$ |
0.50 |
Diluted | $ |
0.31 |
|
$ |
0.23 |
|
$ |
0.28 |
$ |
0.59 |
|
$ |
0.50 |
Weighted-average common shares outstanding, basic |
|
107 |
|
|
111 |
|
|
110 |
|
108 |
|
|
111 |
Weighted-average common shares outstanding, diluted |
|
108 |
|
|
111 |
|
|
111 |
|
109 |
|
|
111 |
NOW INC. |
||||||||||
SUPPLEMENTAL INFORMATION |
||||||||||
BUSINESS SEGMENTS (UNAUDITED) |
||||||||||
(In millions) |
||||||||||
Three Months Ended | Six Months Ended | |||||||||
June 30, | March 31, | June 30, | ||||||||
|
2023 |
|
2022 |
|
2023 |
|
2023 |
|
2022 |
|
Revenue: | ||||||||||
$ |
456 |
$ |
408 |
$ |
427 |
$ |
883 |
$ |
742 |
|
|
66 |
|
72 |
|
83 |
|
149 |
|
154 |
|
International |
|
72 |
|
59 |
|
74 |
|
146 |
|
116 |
Total revenue | $ |
594 |
$ |
539 |
$ |
584 |
$ |
1,178 |
$ |
1,012 |
NOW INC. |
|||||||||||||||
SUPPLEMENTAL INFORMATION (CONTINUED) |
|||||||||||||||
|
|||||||||||||||
NET INCOME ATTRIBUTABLE TO NOW INC. TO NON-GAAP EBITDA EXCLUDING OTHER COSTS |
|||||||||||||||
RECONCILIATION (UNAUDITED) |
|||||||||||||||
(In millions) |
|||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
|
GAAP net income attributable to NOW Inc. (1) | $ |
34 |
|
$ |
26 |
|
$ |
31 |
|
$ |
65 |
|
$ |
56 |
|
Net income attributable to noncontrolling interest (2) |
|
− |
|
|
− |
|
|
1 |
|
|
1 |
|
|
− |
|
Interest expense (income), net |
|
− |
|
|
− |
|
|
(1 |
) |
|
(1 |
) |
|
− |
|
Income tax provision |
|
1 |
|
|
2 |
|
|
3 |
|
|
4 |
|
|
5 |
|
Depreciation and amortization |
|
6 |
|
|
5 |
|
|
6 |
|
|
12 |
|
|
9 |
|
Other costs: | |||||||||||||||
Stock-based compensation |
|
4 |
|
|
2 |
|
|
3 |
|
|
7 |
|
|
4 |
|
Other (3) |
|
2 |
|
|
12 |
|
|
4 |
|
|
6 |
|
|
1 |
|
EBITDA excluding other costs | $ |
47 |
|
$ |
47 |
|
$ |
47 |
|
$ |
94 |
|
$ |
75 |
|
EBITDA % excluding other costs (4) |
|
7.9 |
% |
|
8.7 |
% |
|
8.0 |
% |
|
8.0 |
% |
|
7.4 |
% |
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 | Six Months Ended | |||||||||||||
June 30, | March 31, | June 30, | ||||||||||||
|
2023 |
|
|
2022 |
|
2023 |
|
|
2023 |
|
|
2022 |
|
|
GAAP net income attributable to NOW Inc. (1) | $ |
34 |
|
$ |
26 |
$ |
31 |
|
$ |
65 |
|
$ |
56 |
|
Other, net of tax (5) (6) |
|
(7 |
) |
|
3 |
|
(3 |
) |
|
(10 |
) |
|
(12 |
) |
Net income attributable to NOW Inc. excluding other costs (6) | $ |
27 |
|
$ |
29 |
$ |
28 |
|
$ |
55 |
|
$ |
44 |
|
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 | Six Months Ended | |||||||||||||
June 30, | March 31, | June 30, | ||||||||||||
|
2023 |
|
|
2022 |
|
2023 |
|
|
2023 |
|
|
2022 |
|
|
GAAP diluted earnings per share attributable to NOW Inc. stockholders (1) | $ |
0.31 |
|
$ |
0.23 |
$ |
0.28 |
|
$ |
0.59 |
|
$ |
0.50 |
|
Other, net of tax (5) (6) |
|
(0.06 |
) |
|
0.03 |
|
(0.03 |
) |
|
(0.09 |
) |
|
(0.11 |
) |
Diluted earnings per share attributable to NOW Inc. stockholders excluding other costs (6) | $ |
0.25 |
|
$ |
0.26 |
$ |
0.25 |
|
$ |
0.50 |
|
$ |
0.39 |
|
(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 June 30, 2023, Other of approximately |
||
|
For the three months ended June 30, 2022, Other primarily included approximately |
||
(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 June 30, 2023, Other, net of tax included a benefit of approximately |
||
|
For the three months ended June 30, 2022, Other, net of tax included approximately |
||
(6) |
Totals may not foot due to rounding. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230802049595/en/
Mark Johnson
Senior Vice President and Chief Financial Officer
(281) 823-4754
Source: NOW Inc.