Form 8-K - Current report

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

 

Earnings Conference Call

August 7, 2024

8:00 a.m. CT

1 [phone] (within North America)

1 [phone] (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

[phone]

---

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

Document and Entity Information	Aug. 07, 2024
Cover [Abstract]
Amendment Flag	false
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
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Security 12b Title	Common Stock, par value $0.01
Trading Symbol	DNOW
Security Exchange Name	NYSE
Entity Emerging Growth Company	false

---