DNOW - Earnings call transcript Q3 2019

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Operator

Welcome to the Third Quarter 2019 Earnings Conference Call. My name is Sylvia, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session [Operator Instructions].

I will now turn the call over to Senior Vice President and Chief Financial Officer, Dave Cherechinsky. Mr. begin. may you Cherechinsky,

Dave Cherechinsky

NOW primarily Exchange is Inc. welcome call. which morning. NOW Executive conversation us We you in brands, and And York Alario, DistributionNOW is XXXX Stock Export Interim symbol, this third under earnings thank NOW interest your conference appreciate for our and me during to you. today this DNOW, Officer. Inc. Dick Chief the quarter morning, With Thank you you'll DistributionNOW hear and the Wilson ticker our and us Inc. operates refer to New joining

contain discussion the Before call, projections we this the company's but including, begin for the financial to, and this some we please statements on including XXXX, the quarter about estimates, note of forecasts, that our limited third outlook may not business. of answers during for comments to make results questions, your

which based They Securities these These may information and as are U.S. that one for and risks publicly not the forward-looking the today, Federal subject of or any uncertainties, to materially. statements statements actual remain the limited the on No subject meaning We should undertake to obligation is assume later to any Laws within of are do forward-looking any reason. differ statements revise update year. valid results in forward-looking change.

XX-Q Further in with as site on financial our information, the Forms and time Exchange at Commission, be earnings at In and Web of major call. addition, release, XX-K well this the and with conference discussion ir.distributionnow.com, NOW I found the factors supplemental, call may the risk that on our detailed reflects of file or live the filings more latest Securities you contains best judgment Inc. business. time-sensitive for within management's affecting U.S. SEC. information our a refer has operating our to information, that as

also disclose provide excluding sometimes results and referred U.S. including diluted measures, you'll certain various to our as not we costs; EBITDA, Each costs. other other to other as additional the GAAP. non-GAAP been information of therefore, calculated with other an excluding GAAP, In excludes EPS, note investors and has by costs EBITDA; net determined income, that financial effort in accordance with excluding costs, relative to impact

non-GAAP reconciliation each financial our its measures to of A release. of measure these comparable financial included GAAP most earnings in is

next A plan on our of As a the site section will presentation XXXX on morning, to key also Investor We our today's available the today, call and Relations our our results quarter. it days. of contains third XX-Q file this be replay the be covering XX site. takeaways for Web will available quarter of for site the and Web Form

the please let me our recently appointed welcome call introduce Now Alario. Dick and CEO, Interim to

Dick Alario

kick that, everyone I on strategy, morning, know off everyone with to you, letting our is welcome. regard Dave. want usual especially as Good Thank DNOW. morning, and executing our at business serving to and this customers

balance enviable company reach Our and supportive to its and proven very a because its well-positioned vision current is team base, clear fully future, of DNOW's is executives, strong and improve executive our to the for managers the very customer employees, our strategy. sheet, Because is long our continue especially our about global of and hard-working serving market Board position. of

join interim Board excited capacity. to entrusted And DNOW's the team. has outstanding I'm I'm the very to in that opportunity grateful me the for responsibility and this

and let I'm other place, employee in speed them. stakeholders. to dedicated role, And employees already forward in leadership up me with and get is base to I meeting I and As fortunate to look long-serving work DNOW this and emphasize, working and have ready new to proven our my team beside

But the in key time morning details a would I this to into Dave like highlight I'll themes. and our then quarter dive few to results. strategy to brief defer on start third new capacity, my of Given the

perhaps no team market, more you I'd especially can principles values. to been positive different. DNOW's what to is some pronounced, on the when and our without delivering exercising about control, uncertainty continue we customer outlook promise and financial has any has a be to will deliver reasons discipline than current results you and it's our like face NOW talk sacrificing the and paramount In and First, market. is focus focus superior here judgment others as service, core sound

target. debt This and revenue time key our the capital collections was three employees important driving million, by quarter, our leadership first is the will of discipline inventory all turns performance continued in XX% the thus, to cash Free for flow the strong few company capital This segments the and down to milestone in globe. enabling improved period, working themes. business $XX a position as zero percent generation a beating for working since exemplify across by further quarter the XXXX. team Now a for XX% our across to return a the the to testament

Moving to growth.

market, Our the continue capital flows and and follows overall ebbs allocation to do will cadence it so. the of typically

Our itself acquisitions, appetite opportunities shifts in organic to during market a our slowing tendency to or contracting while expansion. market lends

total market have exceeds providing ample capital that deploy opportunities. we to to Now seize to and continue zero exercise debt $XXX our financial our ability and liquidity reduced discipline, million,

to expect focused and grow. We're the pipeline on we M&A,

Our and return DNOW to further and the accretive for generate company strategy stakeholders. differentiate remains its

marketplace. added to bolster Power moves offering example, Solutions. XXXX expanded in the in we businesses continue to U.S. Odessa product business. immediately and establishing market Service, Solutions our momentum and value and more differentiate an our that DNOW our businesses quarter, U.S. These Process capture during Process As the while share ultimately XXXX, and to Pumps customers, acquired we two Last

was In up spring as activity Canada, increased market breakup. revenue due sequentially XX% exited to it

XXXX. provide win want market customer international to employees, prospects our quarter we We to scaling international our and excited match the by in ability since And we superior of congratulate while Electrical, a in levels to business costs, our McLean particular, maintaining its to continue revenues our long-term driving about international to remain reduce and consolidating market. brand's the arena, depressed for to outperform in Canada organization the in conditions second service. We're footprint operating highest

So can discuss so XXXX, outlook Dave before moving the back of quarter financials. call review he for the over remainder to turn I'll the on to the

Dave Cherechinsky

Thanks Dick.

revenue And For million the third $XX quarter of since It our million million $XXX in same rigs in Sequential our U.S. quarter XX% represents is XXXX, X%. of the Service, U.S. part revenues with dropping compared Process by X% limited revenues to U.S. declined sequentially approximately rigs and decline. $XX Power last growth XX% better XXXX, in XX X%. quarters less we while revenue rigs rigs XX XXX Solutions, that U.S. fewer fared and year-over-year. third earnings rigs the The active U.S., declining end noting XXXX. in to XXXX. X% revenue quarter, declined than since and when the down the the that our our worth Sequentially, XXX three period revenue, compared call declined generated year-over-year now in declined to or of with rigs or same year fewer

the million, XX%, contributing third and were where services revenues XX%, of process chain supply $XXX XX% solutions quarter U.S. centers U.S. XXXX revenue. energy U.S. U.S.

fabrication of Process Houston two second the business acquisitions, to of interest quarter our recently customer and have Solutions continues in We successfully U.S. area integrations grow. completed acquired

the XX separators to additional booked with order for Ford. Eagle capacity deliveries, example, work an As done a action. test from which customer quarter, shorter the the top we testing during closer allows to the lead fabrication are customers more an for attracted time for This our

In million the quarter, we year. midstream won multiyear be customer $XX $XX to million a a the in contract to new estimated Permian

as have complete that will providing as Delaware XXXX, be We be active numerous and midstream in projects new Basin products, processing multiple the the will continuing solutions, be yield throughout will all valves like plants. they as Northern fittings, midstream This customer pipe. as line they will well very high

X% revenue seamless putting primarily quarter Centers the market of for due to cycles sales, and and project pipe. line U.S. steel Replacement pressure Energy continued a welded pricing. pipe which oversupply pipe pipe the in continue drop, sequentially, to down product to on costs softened due was

Turning to Process X% lower purchases as revenue generate Solutions U.S. off was flow, sequentially record on resulting cash discipline coming sequentially services, continue free to down E&P focus down revenue expected, U.S. to XQ revenue DNOW. X% a in customers supply was chain capital as to quarter.

pump was pumps Activity the equipment for pump production Ford oil booster led package Bakken, our a measurement a a Permian, crude pipeline customers to quarter. Rockies midstream in delivered midstream We and for process units, and Eagle by and lacked units. and fabricated packages, pipeline on large vessels, for gas orders

to expanding customer technician service is to Pumps program service our sale. pump our Odessa expand capability equipment after the field

short mean for sales likely more work. and capital the More As equipment to customer and technicians it. repaid repair customers are increased to existing wait reduce replace opportunity budgets, and product times they

in Service Bakken Permian, quarter River as customers, year-over-year by was the and the gathering well delivered driven major Powder E&Ps. growth as Basin midstream Power in for lapped large packages

Our Ford Eagle helped packaged and also Bakken. Houston quick added the area ASME vessel us gain in to in deliveries capacity additional turnaround

against growth our million from XX% revenues Specialties and down the ash gains in acquisition were Revenue southwest $XX pipe million, year-over-year Piping in XX% soda mines additional power or $XX yielded Canada count. rig decline Wyoming plants.

up outperform as a to spring breakup. depressed we to Canadian increased due continue in exited sequentially activity was We Revenue market. XX%

driving Viking the market Our and oil lower in Canadian and for gas and a access team are down continues to plays. tightening and in win to Government limits business customers. with credit post-production activity investment, Cardium

reducing reduced curtailments in are we team Takeaway can our growth the continues resulting by position. to our organization Government. of and This there Due levels Canadian on consolidating Canadian we to impact see is result. by production leading XQ brand's want concentrated by improving our inventory, scaling to. to DNOW's winning, are levels in business footprint are environment market, revenue Alberta as opportunities, but the capacity we constraints you where the And activity

impact from $XXX were of revenue million, third a net from $X quarter year International a up rates. XXXX million ago, foreign million the $X exchange million unfavorable in

International and In on sales. an we joint increased sequentially equipment revenue was America, Latin Brazil, in resulting Mexico X% activity increase on in Our MRO segment activity. project capitalized up in

activity market international also international OEM bolster and in the are product seeing evaluating uptick rig to softness Middle to load slowdown across resources in MRO a Asia pull outs Eastern We needed. West We're and and sales experienced or with costs out sequentially in tightening We some exported in region. credit flatness as Africa. the market an

sequentially sales. percentage which quarter product These and welcome third which today, sales, product mixed overall declined a in XX trading to is better of margins In the at sales. margins lower gross gross trading gain primarily Canada, a as Pipe are a percent mix. XX.X%, of basis enabled average grew were margins, In than improvement a effects geography due as margins.

results an the we've higher of and XX.X% employ this strategies XXXX margins lines Gross September that maximize margins price enabling product XXXX. rates XX.X% We're emphasize the with to of otherwise seen and year-to-date year, the product year-to-date amid technology order were in environment. September stability deflationary win year-to-date and pleased kind margin

We directly prices and to commodity term levels, price expect gross in as the be near to margins observe oil reduced the activity market gas reacts and declines. choppy more to steel

administrative September as in we made was from XXXX. down million selling XXXX $XX WSA, reflect September WSA is million Warehousing, sequentially to quarter year-to-date expenses, versus $XXX the expense million flat adjustments year-to-date and period $X XXXX, and third the market or trends. down or of

of by We end in the continue October, the third and reduced headcount quarter. have and or efficiencies on quarter reductions in XX XX second XXX to since reductions additional focus the about

locations third million in those 'XX, the in $X XXXX, in $XX consolidated revenue XQ more on more closed million generated the When in XQ approximated or in considering year-to-date. a than of locations the or through quarter 'XX XXXX

from the working and and velocity. while mid a resources quarter, some side range. the revenue customers retain DNOW. demand. capital supporting tactical to million improve we be In Grow the the at low able productivity returns move of on market capital. is meet to the This of business the expect us did improved demanding and to key $XXX This fourth we we earnings in scaling to other working by were While locations, elsewhere remains business WSA

$XX $XX XXXX. was or the $X.XX costs, Net was or income, for or profit third diluted was diluted chair. of per of or quarter of On other a million, excluding Operating non-GAAP X.X% costs, third $X.XX revenue million EBITDA, income quarter share. per basis, for million Net was $X excluding X.X% revenue. the million $XX other

million severance. the in Other quarter from for costs in $X after tax against for approximately in company's valuation allowance benefit tax after period $X offset the the deferred assets, the by included tax of approximately other the recorded changes costs million

XX, September XXXX, three Our for calculated tax months as effective for purposes, the GAAP XX.X%. rate was ended U.S.

a of revenue, reduced was to due in Moving compared on or million offset to profit earlier. million compared increase generated to decline compared when operating XQ expenses. revenue, down operating U.S. a as the the X.X% million, the of operating was to $XX International profit period partially or million expenses. operating to million, $X result when decline operating profit in with XXXX, The mentioned of corresponding primarily XXXX a to due up of and of $X the $X $X million, decline period a revenue of decline 'XX when operating revenue Canada $X profit. coupled corresponding by or

the $X with the in from revolving the zero We the the quarter million located credit U.S. achieving debt outstanding $XXX to balance period. under third of the We million with quarter repatriated Turning facility, outside borrowings end during no position. at Canadian third the of our quarter million sheet. a operations $XX Cash exited totaled XXXX. our

XXXX, September the under XX% our total hand for cash was the a since $XXX time Working our facility percent revenue availability first XX%, cash XX, from credit At third quarter from capital, spinout. as XXXX liquidity of on was of million. plus excluding

DSOs the Accounts of million $XX $XXX third including the down quarter, end million receivable XX were at days. sequentially, at to

quarter Third at accounts times. payable X.X with days. were third outstanding in million, improved payable to to inventory $XXX million days XX turn levels $XXX And the were the resulting of end quarter rates inventory

in of quarter months. third by $X XX quarter trailing the cash cash and and $X free million in $XX cash the year-to-date, expenditures million flow activities capital Net resulting third in flow $XXX with million provided million in approximately million operating in was for in the the quarter free $XXX

would where the XXXX better, or cash doubled $XXX million, cash through range. to than flow XX be close And on in with our flat be similar year-over-year. nine revenues actually maybe flow said low is We I'd to level decline months, year-to-date stand expected XXXX basis In September. XXXX more through that XQ $XXX like we three within XXXX said free has February to and million we month we quarters. to free the a trailing a revenue single-digits that through at guidance,

work discipline, XX% and percent a be strengthening quarter. to the nine-months cash in position, our towards Process we'd we capital, XXXX XX% we goal XX.X% market and We margins, would were just and said gross XX.X% the to deflationary period. were excluding maintain markedly said did barely achieved below margins now nine-month We has an our we inflationary and After we Solutions. a in the it have XXXX, in if and gross defy market we of Canada U.S. that to We period, working said did. and gravity revenue, in of year-to-date price we as in would of and price maintain level slowdown in

mid-XXX's could the 'XX. at XQ and low and XXX's. levels through the million we'd in the said XXX's, to EBITDA high we're said mirror adjustments the We eclipsing is EBITDA making XXXX XXXX through XXX's quarterly We expect $XX $XX million low be WSA yet, 'XX, in XQ towards

pleased are with after nine best having velocity, debt we're and earnings, we months, bright capital produced So solid the inorganic no working prospects. where

I'll turn that, Dick. call the With back the

Dick Alario

Dave. Thanks,

the our of XXXX, Looking of the exhaustion count range nine period the compared in continue February. year, same ahead, million to first within to X% year. revenues budget rig $XX to declines, and the the customer of business we and top-line discipline CapEx to remainder the the or we our impact back expect in declined seasonal months guided during Through

the dedicated that of quarter, it strategy team range. least the employees on third in active at the be to to declines, the move decline, recognize like the down rig XX% before to the I of Given emphasize our quarter from at progress fourth made expect to a X% be our third we now the seasonally execution and quarter. some And will persistent American of of I'd DNOW that here normally expect North high-end one in at

a challenging our to discipline is facility time. logistics, with reduced in resulting and focus optimize centers increase quote to our market distribution and in order better turns. and We're which continue land U.S. inventory technology consolidations, leveraging We to margin invest in optimizing our our on footprint

in structured of cash tariffs, capital the percent through sourcing generating flow a as quarter. is is Our changes free revenue to these strategy to success leveraging respond in working import $XX acquisitions our The opportunities. million in by reducing and cross-selling of evidenced

to see our the outstanding leadership excellent team DNOW easy and so made And on objectives. it's employees that at strategic progress have

acquisitions quarter. such sheet the provides inorganic small that balance healthy the as wherewithal last for we options, growth two closed Our

And as the of to young dedication to daily our us recognize and August tradition Murphy Wilson for Bryan position hard Louisiana, in Texas the months one a a accepted ago, operations XX DNOW be driver, work sales years moved Shreveport, and to now, in for continue Brain, to working of Greener, a employees' he in it's XXXX, the XXXX, promoted my to pleasure to warehouseman and promises. inside was enable and the delivering man Supply. truck Six branch. manager later,

me years, the including that branch held behind branch has of manager some And got Murphy the manager, sort the warehouse ran toward was on several needed invoicing Over here operations whenever and the fire. Murphy guy or expert manager. that a help, team tells roles,

Texas, Wyoming, Murphy's Evanston, of Alabama, to but and always Some he Texas. included Bryan, Dillon, returned Tuscaloosa, support staffs

hours I have requirements. continuous tigers. an the meet wife go this my In his employee Murphy, our office received Lynn last your spending around on service customers' Murphy first continued for to earnings is XXXX, recognition to XAM. their thing especially enjoy our an time countless and and And and thank of that Murphy, in Murphy support week, we one eight early riser I'm Murphy at hopping proud with call DNOW, for dedication company. grandchildren. you And can very dedication here

now I'll for turn the Sylvia call back to questions.

Operator

you. Thank

the instructions]. Seaport our [Operator first Liptak Global. And session Walter now question will begin We question-and-answer from Please go comes from ahead.

Walter Liptak

wanted the And EBITDA Good I strong was wonder really and what this you get look thanks. there the I to and about fourth like quarter. numbers looks on And flow think going payable, those cash more the ask accounts is you some this do in DSOs. of job come can quarter cash on morning quarter, fourth the quarter. typically with Hi, DSOs, Where guys. good to your flow, room with be down the could those? like,

Dave Cherechinsky

and into the effect and going We're the revenue. the fourth quarter about talked we decline seasonality expected in

So think to reduce continue will meaningfully. inventory we

teams in done progress rates We have nice we've Our fun had the that an job there. long. the all we've had we excellent at third made quarter, turn highest very year since and

down In accounts as start you quarter in quarter things and the I the off is expect the season. being the way throughout receivable, terms we'll the would will slowing go October highest think of with revenues

the and the things counts rig declining are half. In slow really so will meantime, second down towards

will collections days of given at than of timing the revenues. probably the the usual usually number be we So Accounts we quarter same maintain those will payable, better fourth in do.

So the revenues sheet. has given expect organization the we on quarter balance managing in focus decline our strong and cash generation a the whole

Walter Liptak

come the been things because you've do discipline that? as costs working facility about is of like on hard you optimize and discipline more your How cost think getting are coming, what that rate run more think can I for talk guys the and of there million we're little a of are target about the years what is last, and costs you WSA if bit one number costs of $XXX had. and could for logistics, I kind much we is a now. you control level wondered in the cost below comment that And And XXXX have the learning out a more

Dave Cherechinsky

grew of more during became can on XXXX, we you the approach We've we XXXX, been And being efficient focused really up productive. the and if we lot a more were growing call market. as years them, while the,

scenario a different the where all in has really we're market along, shrunk. U.S. year Now,

reduced to last call, begun was because WSA costs. facility we've it in costs cost include a we'd in third So we've we resulting out and and pulling have from those make And the quarter lease that. closures, the said $XXX to rent million $XXX been adjustments million and

been more we've activity direction. reductions, personnel and doing American of stridently globally kind North given those On the

of a So, peripheral that cost the the to rent, us. where big and that. savings personnel, that's you're in That's are come going see with cost focus most for

to about So we're ready not XXXX. to what going really is be talk for the level

that the more be will We elaborative on February call. about

Walter Liptak

If one. year? spending the, budgets what's Do have rigs you your a I think customer for do into you XXXX? about What telling could what at outlook for or for next look are you customers ask

Dave Cherechinsky

what numbers to think could are more early XXXX, comment how put the some is outlook in are viewing I so a budgets certainly it much looks further say contraction, and of there. shrink, think to the then ready I But there our There and the that. out formalized going anyway, like. will position don't being reads don't looks But contraction. not North to where want things. be we're kind really like some to some prelim it we're that's I than be market America -- are

So, have we've we XXXX, to in to business in our shine XXXX. got position like

Operator

Please ahead. comes go Hirschman Stephens, Inc. Blake question following from from Our

Blake Hirschman

out if On different of markets? kind that the the of way declines, more of by curious XX% so. that geographic break does geographic sequential kind historical a was of give could trends How you by that commentary, end XQ I upper little at and bit or

Dave Cherechinsky

I'll optimism one there start is some area that's international, with ultimately because where there.

or up for million, flattish with internationally. And down fourth business at make project some the moving flat revenue expect, million a least, so our down, a but up or few it be which quarter, few to might international we

as we expect don’t the better there. the so know, that been I has quarter the for do a last million last for down a Canada, used look third, the of a $XXX had at stellar overall. for In case where if not Canada, good couple feel historically, fourth have be to the expect revenues we had U.S., 'XX. you to In revenues we DNOW, than in years, We but slow year, do in revenues. in XQ you decline it

great in of going overall at And I storm and and went throughout down US. up quarter in our that December peaked XXth, XQ true 'XX, things was revenues really think were throughout but perfect a period rig down the then slowed X%. Just And counts opposite's here. the revenues that

we're is the waiting rig with going level. least XXXX fourth the drop third sour. going sentiment XX% the budgets are And So into counts Customer the quarter to probably quarter at from exhausted. refreshed. are are until And budgets people

We So normally talked we be where decline. about it possibly see high the X% of we that XX% higher. to range think will end or

the So going revenues being our The are the trend. XX% have color on the one how of to I flavor. that's the of that's most U.S. revenues, and we think kind

Blake Hirschman

And there. margins, then up gross pick the on sequential nice

out called mix, the was probably it like key You sounded it driver.

I about behind think kind sequential the slide you better frame-up also gain? drivers that the talk of Could pricing.

Dave Cherechinsky

saw product most across margins mean, lines except stable gains. some product we some pretty I pipe. actually in saw we margin product lines, interestingly, So

you impacted So, third less could quarter. quarter, in third in margins argue, was, pipe stability right except What pipe. where seeing price is the we the gross our market second simply quarter sold for the gains now, we're

better as product on now a a revenues Canada and increased Canada reduced and level So, in of what average declined. was third have we sales, in U.S. quarter. percent margins right is And lower-margin segment than the revenues

for and except which improvement products. some overall stability, gross steel-related we're geographic of product seeing otherwise, kind But was margin drove it margins. mix, that So in

Blake Hirschman

just you've on a then year, come? and tack on of You And the into are the opportunities should XQ mainly just It to into M&A thinking you we to be debt like or lastly it. paid free down guys little How that? debt. maybe to going about for next all looks are going stay

Dick Alario

Blake, the this heard, as is you the Dick. to is in it's be service position oilfield of with it state Look, today. business our as enviable

discipline. So, coming what I mean, to DNOW we're the sweet or see going strategy. for the time exercise But we to this prime is continue spot

have Everybody been been balance have can The accretive. on here acquisitions do focused We is sheet. with we acquisitive. what the

able is round. bank But has, that and its I use great to here team it as balance account get the then the they for this the think and demonstrated, management are able thing back ready are and next we sheet quickly pay have

we message I is So, think stay the course. the here

We continue to and strengths. wait just some and for do this build our successfully, of we what more take to we've done pipeline advantage

Operator

Our comes Weil. from go following Vaishnav Please ahead. Vebs Howard from question

Vebs Vaishnav

guess the I room. just management changes elephant can address the to would if I recent helpful. to provide color in speak around the about, want Want be some you that

Dick Alario

Vebs, was business, the position when Look, that a there not this The in in change a back if the leadership let consideration, our resignation his Board filed, we disagreement. and a a that it's it After from due casing terminated there times not determined make when the Robert's I Board the at press no change are Board in here. to Form strategy employment release without to is Dick. cause. necessary that me the change and best and is look very start termination. is you careful for-cause There determines DNOW go at X-K CEO Look, the want was for company. And our to emphasize. Board often

be there me is and for-cause financial when no is business there here. case clear, termination a event Let disagreements, irregularities not the which for is

So it market for given its and there. Board there's would generate to and you I've incremental saying, And I runway value. advance the DNOW position something look wrap ample up recognize by I incremental

So I we to on. matter that can move put that and bed hope

Vebs Vaishnav

are to guys about that the revenues, X% talked you guys not decline talking maybe for I want some fourth sure about to the you quarter. you back if when about end, we XX% going financial specifically, guess to of guidance I and think higher -- even Maybe Dave, of talk first that. about US overall make all, of

Dave Cherechinsky

not we really the And saying right. we range. good beyond discipline, the That's benchmark. X% of just expect decline tend global, we is potentially cash the XX% on given historically. a haven't to and flow, But customer normally discipline that's that's and And seen the focus quarter that or to were where But to land before, in fourth view. go that we erosion that, activity U.S. free that's

Vebs Vaishnav

if is provide chain like, center energy driving color that's you more around or And could that? it some more is supply it

Dave Cherechinsky

would energy center, be that. it more be part In chain think I So going is more to that E&P related. of supply

chain have top directly some impacts our branch notably, reduce how of them that their at to customers similar supply it if us with level. spending So then would big

bunch where and in have been Now where making midstream gains most but in business. project that's the some increasing Service Power a we activity recently of related, arena, our of offsets we've to it's is related

talk just Odessa Power Process Service that Pumps We unit great a making been U.S. about up as and solutions, headway. our process lot They've Solutions. a makes

So rate than area. a centers. with expect Service in the in quarter in some But declines might U.S. even stability fourth perhaps in or in energy at Solutions, we Process supply revenue fall they the the lesser chain see there, we'll Power

Vebs Vaishnav

if last squeeze I And in. may question

I see the think upon mix. up. but in touched whole you U.S. was I revenues margins of business I really down very to a see surprised this, lot couldn't and And change

just time address it So please? could for more me, one you

Dave Cherechinsky

sales themselves of in been margins pipe global declining U.S. those and pipe sales global they because we US, been that percent what But happened had declining, improved sales U.S. margins. our where XXXX. absolutely, we as I XXXX, sales. of lower margins some sales, pipe the think actually primarily had is happened a a they peaked in in U.S. gross in Most And the of U.S. have and percent declined have --

period. sell in we DNOW higher Canada because here than And margins right midstream down now has Canada here. product are also, sales down we the up in experiencing But basis more U.S., more work do in pipe we went and part on a

main for drivers in the the points improvement So third XX quarter. those the are basis

Operator

comes JPMorgan. Meakim from Our go following ahead. from Please question Sean

Sean Meakim

on to bit touch just maybe a So the midstream more.

You the time, there. discipline. highlighted pressure some transmission even feeling wins At same investors become more from companies capital to are the

about stream? more in noted, currents bit been what very progress environment maybe you've a talk As a of made pipe seems lot just you are so there. line you Can the in has like in midstream challenging pricing cross spending context of that a weak, the you've

Dave Cherechinsky

our business. those recently our function some of in all be revenues the fourth And quarter Service to Generally, business, of progress midstream down the new customers. we're we're that there. across a is to markets. going But and that's market see and by basis demand you a we're And in midstream won at going declines we had share because with limiting on we've look gaining Power if decline year-over-year why particular

fourth quarter we at that, quarter. So the are fourth feel exhausted streams. led a resilience being a new have by But our still other We budgets rate largely don't we great midstream in from for have and contracts, decline solutions. the but revenue offering expect in to in in the seen formulated or customer even lesser process solutions

Sean Meakim

acknowledged. I And that glad room topic. hoping forward been was take bit that to the I'm of a has in outlook on But elephant more a the

What versus type search what So, could presumably external as Board you Dick's think needed the for the looking candidate. characteristics next in of strokes in and terms give leading you just CEO, broad the CEO? are of internal us the you maybe of full-time that some for are

Dick Alario

first to search all, candidate going a Well, program. very the select of broad under we're

take think to going very strong be time. I we're given fair not to agent. very, change to And to going seeking it's the say we're So, our culture here, that

select think very I so the a management strategy going And of be winner seek that the someone accomplishes been going has and would us that candidate this to I the existing and to then to we the prosecute patient those that can facilitate that success we're strong for the I are last far. very, team company. for We're guess things say going fast. go thing is best not very

Operator

comes Nathan question Stifel. go from from ahead. following Jones Please Our

Adam Farley

market. But environment weak. is it maybe the and are My guys like Canadian progress macro sounds solid making gaining Clearly, first there you the is regarding question share.

So, I is coming from? if you color was wondering on any can what gain share that market provide

Dave Cherechinsky

Viking the We about comments, little the Plays talked Cardium sands. of on bit and it opening the kind a and oil

in revenue of Canada, although quarter. up We've the established we presence coverage, that walking other picking away made we're So, are stream good competitors in closures got kind from.

others from. a about we management are We And in some able walking the to revenues talk are scoop of Canada. up that lot team away our

repeatedly really environment. kind scrappy in while and are up been margins ground There of of maintaining gain group we've a able folks customer-focused miserable there, to

also business. but they think So, I nature our that it's well. but talked do to as of of related I not kind just it's areas attitude business the revenues, the of I'm just about, earnings real how about scrapping those and of the excited people the

Adam Farley

business? XXXX, And there then offshore? just do Maybe just any Are helpful. switching Any we was level there a be that how in work. would like over to high increased a at as international, it project seeing sounds you look you maybe bright activity move couple of from into color spots,

Dave Cherechinsky

some Mexico and to group, positive notably Latin think most revenues Yeah, seeing we're We're to there. see movement in increase some our Brazil, Africa. interest West we're export I in starting America. seeing In

where to internationally we bit. in what a North starting see are project optimism yet. Still Still characterize probably there things other possibilities But business. little we're for kind in you the can't of a even recovery goings America. preparing early a of percolate So, as

Operator

we now reached time question-and-answer over call session. for turn CEO gentlemen, to statements. Interim have I Mr. and will Ladies the the for closing of Dick our end Alario,

Dave Cherechinsky

for Thank see the next will Have And everyone calling today. you we quarter. good a Okay. in in call.

Operator

Thank today's concludes this Thank you. conference. gentlemen, participating. for and you Ladies

disconnect. now may You

NOW (DNOW) 6 Nov 192019 Q3 Earnings call transcript