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
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
DNOW (NYSE:DNOW)
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