DNOW - Earnings call transcript Q1 2022

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Operator

Hello, and welcome to the NOW Incorporated First Quarter 2022 Earnings Conference Call. My name is Emily, and I'll be your operator for today's call. [Operator Instructions] I will now turn the call over to Vice President, Marketing and Investor Relations, Brad Wise. Mr. Wise, you may begin.

Brad Wise

good Earnings welcome Conference and First NOW Emily, XXXX Quarter Call. you, morning, to and Inc.'s Thank We appreciate you your interest joining us, and NOW thank Inc. in you for and President With Financial Chief Chief David today Senior Cherechinsky, me Executive President is Officer. Officer; Mark and Johnson, Vice and under and conversation Exchange Stock operate refer during and our us morning. DNOW ticker you'll York primarily We DistributionNOW our and New brands, hear this to DNOW, the DistributionNOW which is symbol, call, not this the the projections outlook statements comments we your business. note may responses about company's Please some questions, during to that of and make estimates, limited our including contain forecasts, the including for but to forward-looking are U.S. within the of These the statements meaning laws limited federal based today, information on which of to securities as change. is subject and materially. uncertainties, may risks results to actual differ and subject are They should year. quarter statements later remain No these forward-looking the valid or in one in assume later the to undertake statements any not reason. any do We update obligation forward-looking any or for revise publicly

most this judgment provide conference Further contains addition, detailed major latest filings with found operating that time the the costs. non-GAAP costs, more SEC. net NOW discussion to information and and call. excludes excluding refer referred affecting the comparable of Forms that Exchange been financial certain as of you'll with earnings of GAAP results ir.dnow.com an time-sensitive available to as live Inc. release. EBITDA other per excluding reconciliation financial the the information costs, impact our XX-K our the GAAP. Each file information its accordance determined other GAAP, and for the in in these XX-Q the our Commission measures each refer you at investors sometimes non-GAAP of other measure In note release relative U.S. to including for at have we other additional and or on their earnings information I excluding various risk a with in that supplemental therefore management's as best or to call to has reflects also disclose Securities measures, supplemental our earnings information costs of U.S. the as at business. share within calculated financial well of not be factors diluted and EBITDA, may Please the income end our financial to effort website by In

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

the over to Now, let call me Dave. turn

David Cherechinsky

our quarter. DNOW. Thanks, the with the way off results the by first Brad, and marks inside I’m good What kick the encouraged to delivered a just the through XXXX year, a momentum over Today in way morning, great building everyone. team third of and

the are market company. significantly the We and earnings improving power and capturing pursuing share desirable of

manufacturers and support share, the and durable, aggressively enhancing of supply at ultimately moment could placing gross bold a see the suppliers X has pronounced focus of you on ago, in customers focused driving protecting past require and as to how do. connector transformation focused we our the better We pursuing at our customers inventory margins were significantly financial through the DNOW chain in became valuable results. availability this cycle. And of business link on customers market our serving fitness. We we financial critical while X on to reshaped and a and growth deliver to relentless uncertainties. services our we financial Over the scarcity commitments intentional and years to everything transforming reduce they providing the the have for products global years, improve around of product or center our order with and selective in made risk our depths organization the downturn, performance

reminded, world and customer it needs the by We to the a this said value especially world-class critical Economies towards said bias and We the management, cultivation geopolitical from transitioned model supplier while pivotal We project inventory, win we and solutions physical moment, is operational fulfillment, team. been to attention for grow, share the increase with gaining in and national to of would showing We sales source are the proximity would provide unmatched numbers. that require we would security. it up to We efficiencies. project a careful continuing Those energy. sales our market procurement the product on and kept a commitments are lure. without maximizes as in results and selection, pricing. customers regionalize have that price and market simplify relying business to

in year half will positive XXXX half flow in and cash even and quarters. now sourcing in to of first from X.X% destined though periods. About cash is guided consume or year, generate we our We of the third inventory quarter million was $XX of half XXXX be we said of Like in better growth for strength the be $XXX first to the the full the we the stand. to ready cash revenues project for our expect full high pipe demand better the call we and our growth activity comes in the since year for specific even than customer and to and quarter costs, first the summer the $XX were other second for believe excluding added inventory demands remainder XXXX. We future by EBITDA, expectations in and of example, for last revenue. year-end million on and as second grew For million

less cash In our we third working We major imminently the than building In finding global installed XXXX, single on Bakken, make turning integrated material quarter understand manufacturers more our partners excluding around revenue standing completion the the are projects around frame supercenter areas focused a while the customers better culture operations. value. and They're generated as future. more schedules Customers achieved that for in to schedules. in where of time, some project in assets. up process to with tools budgeted the to a ensure than our more and better accountability value for of the quality transparency These critical capital They are and the commitments quarter, X.X% and are $XX year. in to integrity are deeper new asking and year. on more best first and in yet, time production commitments are availability chain maintenance their of visibility we partners the for to We are asking seeking revenue Xx supply processes EBITDA results completed our the supply maintenance in are or the results. revenues see their where are solutions customers met. These aligned million million within sequentially. now up the for with And surplus our on first in $XXX are critical color

revenue margins sales was than our at expected. record XX.X%, In United was up pipe, margin expanded growth States, remained valves $XXX gross captured U.S. XXXX record tank above and near sequentially. XX.X% offset and better of million, refracs XX% of through Our of levels and well or condensate new construction the and for fittings declining well existing production and tie-ins, gathering used essential water. used crude and oil, for producers production lines to to wells, gas, produced measure grow battery gas oil separate gross

with achieve customers one renewal the had the chain. with include and successes of of South drilling orders large X-year of We recognize of in production Powder production and a a Williston a we their customers, our performed optimize of captured customers completion facility Texas. for Ford, And XX And customers and contract in a we combination activity we our helps and growth the the and of general relationship due we producers. tools, to quarter experienced of top smart independent plant investments, them fruit. their during large status our deploying strategic one expand various bearing a tracking platform. a which develop a mid Where to that of a and targets top in growth, by the large XX are of through the growth quarter responded increase work and across exchange maintenance Some to they Permian, across our during central our experience number continue the number supply producer, commitment have increased Eagle and Basin, workflow cap communicate activity River data

not are new excitement example, our for our the footprint, project other fundamentals opened high-grading product Canada up and we’ve example, tremendous the our regional led areas PVF+ and as optimizing For Permian, sales within operations, This only accounts, where, we also commercial the our and been our lines has strong. teams, supercenter and customer team. quarter, in but expanding last across our of and in momentum end markets U.S. to the regionalized Permian

have at our quarter, We are supercenter almost for the promising. PVF+ Wyoming Casper, equally and operational a results been

to secured PVF+ scaling a North our pipe. Coast recently supercenter Houston Dakota few new our We on just PVF+ are Gulf the support comments Williston, supercenter. and now And

most across lines. product demand strong pipe see to continue We

for due demand distributor limited line pipe availability. leading to a the increased spot be upstream margins market, combination continue and a our As of midstream and market pipe our to bright

midstream an in station to primarily supplied project Utah-based a seamless support for Our compressor transmission increase addition customer by demand, pipe. line we PVF during closely valves and automated replacement as the reduce company. quarter a the actuated space, flaring we pipe prevent and worked stack inventory emissions grew gas increased the with to midstream bench to customer for In in driven

we project for receiver Permian On onboarding gathering successful natural midstream in new in and launch a Bakken With in the and and dehydration thousand We pipe PVF midstream XX XX-inch and midstream gas were operator. for midcontinent that several Dakota Permian to package operator, a a Mexico, a side, from units we an project large pipeline, brine of customer X exports a feet well to the for region. awarded Basin the project. were assets well in were connect multiple another projects PVF North integrated for awarded gathering a station pipeline addition line X for a processing

products and quarter. improve number plant We increased continue capital from and target we Northeast Process U.S. the saw PVF safety these to utility we sales and for with market, turnarounds projects equipment. companies are demand process downstream revenue winning customer growing the quarter our in captured and customers pump production gas and scheduling sales In the maintenance packages, mill Solutions Midwest. of refining, a and as into with to PVF+ of during fourth business tool several planned the engineered expanding

look customer customers are secure We access inquiries activity to to also seeing products. as increased from

large a quarter, operator of the We order in to Texas the and River During shipped we to independent of large Tomball, variety from across facility. for number equipment fabricated Permian Basin. to plays. to the of packages Permian addition numerous another separator shipped to a large a separators Basin Powder kids metering Delaware a with a producer in provided pipe producers major racks We assets modular operator our fabrication

assortment SWDs. to In Canada, packages, to provide continue and booster We the sequential XX% water and LACT transfer for oil and wide revenue of including grew measurement million process, and skids, units, $XX water quarter, production a improvement. a kids

our perform customer to outperform model in service the their exceptional at a expectations. by and our strong team then continue well the of employees put Canada, who center and management We led

incremental a operating procures our equipment lift rig efficiencies. major the drive our market producers [ph] on expanding growth several quarter. number helped of who of we addition rods customer We company, of equipped major are in shipped from OEM joint bXbshop.dno.com in that This approval EPCs workflow consumables with outside drives Saskatchewan. providing drilling several while PVF, visibility And customers procurement a oil growth. customer's producers and artificial experienced to of orders fertilizer to for potash applications platform, MRO oil revenue added top eCommerce a with mining projects. One while using provide customized We each revenue for of match which from process, all and contractor their rigs, executing share sucker during gas, large based the sands assortment in an

security causing from and which Europe, IOC West look Russian an Ukraine we where those operators an Our energy segment the and into many for and imported potential revenue see domestic their our for Russia replacing material increase with of campaigns. U.K. to as European is reevaluate interest more was sources market supply Africa, in agreement products sequentially activity note, remain the extended International at brownfield within oil the MRO MRO with of that rigs imported supply product we added for translates of million. nations our to an and joint and demand flat $XX picking Of for economies, drilling to electrical continue generating up and gas or markets drive exports the In IOCs existing the strong. for their reliability electrical options, The invasion of regions. for

and As with personnel, both areas. each additional an with the Brisbane Russia, seeing mobilizing to both service X% such, operations activity and Australia, and are Kazakhstan, in Tengiz we field activity EPC contractors in ceased In recruiting pump of revenues picked drilling led In activity. which increase Roma DNOW valve assets and we maintenance where for at and have than less up represented net totals.

have we chain product to supply supply focused our been by increasing demands. available support ensuring minimizing team Our has customers' on disruption

suitable customers our that provided AML. their successful manufacturers we find only customers been worked access on have products manufacturer volume meet required. expanding depend to to leveraging and approved DNOW increasingly obtain alternatives the preferred our global to requirements. who to hard adopting regional we several allocations, in have DNOW's of has solutions we resulted spend have ensure Not list have This and to We their

some On component we of electric packaged the are OEM and from equipment equipment engineered side, delays experiencing suppliers. our

of initiatives. product I at Digital line, total control to solution. and NOW XX% and our our unattended suite management represents revenue. inventory a Digital quarter, remained Last revenue inventory talked which transacted intelligent Moving about AccessNow SAP

This Basin. solution a option for warehouse is producer deploying that enables an ultimately inventory and are increases time upstream Permian servicing port to efficient the reduces technology-enabled, visibility, unattended cost remote We more solution and in AccessNow our a our replenishment customer.

front, to assets. we database asset of the our customer continue management expand On

enabling parts ability Our to the its used production track is if fabricated and assets. customers' to life. software eTrack asset entirely services software And and manage is efficient and used valves, provide replace of at provide and track our our replacement to the more DNOW Mercury process end manage to our the customers' expedite useful or

and industrial emissions. their reduce continues initiatives. tool skids are greenhouse would configurator help and now equipment to the customers for cycle, touch briefly to energy I engineered sales using compressed eSpec on budget X gas revenue like air this Our estimator that through And drive our many our transition scope

we energy of on mentioned nicely sell many fit calls, a the into previous As of we today products number have transition projects.

were a we facility major greases tactical quarter, to supplier fats, from and California that the reconfiguring gasoline in used fuel sustainable choice renewable bale during example, [ph] For to and oils, refinery is the jet of cooking soybean their process renewable diesel, oils.

We broad standards. and refining additional operators of refineries new located the several PVF fuel at U.S. petroleum those renewable successful in as supplying for forward the across projects are meeting range also distribution their a move business biodiesel

On customers of the various which carbon assist and storage capture, stages we continue are in sequestration side, planning, and to design. with engineering projects

the revenue progress. projects We future expect as contribute to opportunities to these growth

the in packages DNOW frontiers today's air it and that to to new and compressed Mark. same systems instrument as engineered greenfield let provide ventures. the order that, transparency replacing projects being after for and and energy integrity to energy hand is trusted to pneumatic emissions selling are greenhouse DJ me a is also With their transition transition in over who to existing gas ESG atmosphere. a are gas Basin energy We eliminate producer in producers sought partner

Mark Johnson

we of XXXX first million, year-over-year Thank a increase $XXX you, quarter with revenue over a quarter Dave, strong $XX everyone. million in XXXX. $XXX On saw XXXX good XX%. first or X.X% of performance growth or fourth million morning, the Total not and revenue only quarter growth basis, was

EBITDA million XXXX first quarterly revenue the emphatically $XX sequential and improving XX% activity. U.S. U.S. revenue a count, quarter completions $XXX XXXX. also increase inventory from or profitability increased market X.X%. The The Year-over-year, DUC or modest for improved to million fourth continued see of XX% U.S. to increase first We quarter. the a continued in than was million, the of quarter U.S. $XX depletion higher our with million increasing $XX rig

quarter, Our U.S. in solutions balance total U.S. our XX% of revenues XX%. U.S. contributed first of process energy the and centers contributed approximately the

million, quarter XX% million, from quarter in increased by to or revenue was sequentially And compared for million approximately to of $XX year-over-year, compared of was revenue first $XX Canada, impacted quarter XXXX. million quarter $XX unfavorably XXXX XX%. the million $X the flat XX% $XX U.S. sales XXXX. of up Turning first the revenue and fourth million to of Canada first period or up the International The same or currencies stronger first quarter to relative the XXXX. $X foreign dollar

quarter at increased resilient above down WSA XX.X%, taken the year the last expense set administrative were record of fourth the margins of The $XX completed the strategic of result was million, margins workforce we and the gross of $X in efforts and in The year. was WSA full gross selling above visible growing our or late revenue. benchmark actions and direct X/X period sequentially. the Warehousing, on efficiency driver primary by quarter million our XXXX about for network quarter First XX.X% XXXX facility were while throughout improvement the expectations. line fully as the optimization a successfully late

segments. the million. from transient balance, increase $XX Taking expect profit be level two nature $XX temporary dollars operating Operating in the X International $X job was first $X few in approximately U.S. a benefit Canada first segment while or a or all to margin the profit into the as XQ revenue, health the the about million, a more approximately sequential payroll them. benefits first The reported to commendable and delivered million modestly experienced last costs recognized and for related level do operating we account, $X in for by we lower-than-expected segment profit WSA those record care X% in of $XX across While million fewer Meanwhile, by quarter our million quarter, considered operating we Canadian X% revenue in of favorable year-over-year days quarter. operating flow-throughs in of should contributed the compounded million, million with and profit sequentially.

XX% To generated a on EBITDA our costs, quarter operating was GAAP to proof for costs, organization income our team's as improved on The and where primarily million to excluding EBITDA it achieved in driven in care corresponding approximately our is the quarter with $X.XX quarterly results transformation, Moving and million $XX see of highest these team And or was of clear of our of flow-throughs for the benefit a other of liability profitability. meaningfully also compare revenue and delivered to profit. the than is public. dollars or the success. $X recent $XX needed of million easier of and the in or strategic taken non-GAAP first DNOW our to million WSA an through-cycle of structure net XXXX and $XXX ago we million first XXXX. customers achieve our in is basis, quarter share. million period more other million focus income, XXXX years collectively posted each loyal $XX million share. for more of million in EBITDA in related costs $X.XX can $XX company's I This period more EBITDA. per in A highlight accomplishments XXXX. efficiently have $XX or the Non-GAAP quarter of attributable excluded that gain by X our equipped our want our and execution $XX business was below terms change take clear expense million the of X.X% our That quarter improvements financial sets the Other $XX the EBITDA, a the being measures. that has of thank record-setting actions to just per since result first was revenue, earnings in upgrade decrease consideration the to stage value first from income contingent continued non-GAAP for for our that customers. such net $XX pre-pandemic shifted current DNOW's with employees efforts composition the being we third same our makes period of compared a our excluding

as balance additional the plus net a including customers access debt demand. were was secure an inventory Accounts Cash capability in the $XX the a million, sheet. part to credit strong continue sheet of resulting moving $XXX established draws of and partnerships our turn capital the million receivable strong of source to fourth million reflecting quarter our marketplace. in capital the nil. facility our seen first the trusted our meticulously reliability $XXX hand and zero operating million In in maneuverability to that inventory of comprising XX% quarter provides as we can $XXX We this because in in million, in of and balance we supply from in the total quarter, long million $XXX first our Now support critical cash In to able period cash rate quarterly an ended chain and our products on $XX expenditures million, the first X.Xx. activities working a industry-leading during with position was of global quarter, large quarter, And increase customers and liquidity or zero quarter $XXX of the this in used customer availability. This $XX were DNOW maintain suppliers. result constraints, commitment to of differentiates build. on be require maintained million additional

call David. And successful sustained resources optimistic We with product again quarter, will strength possessing the that, working turn capital back cash for first as celebrate future, reliable expand I March we of as percentage customers. we talent, drive deliver to growth ratio as do availability the this to increase support capital excluding working to a As to in with and quarter some for a customers shareholders. the discussed XX.X%. and of value was XXXX, our annualized to revenue earlier, Dave expect And our XX,

David Cherechinsky

Thank you, Mark.

and M&A We liquidity an debt sheet, strong organic support growth zero balance have to strategic enviable position opportunities. and a

maintaining overall we as We enhance approach strategy, accretive position competitive disciplined growth and margins, vet a that support our opportunities are differentiation. our continue EBITDA generate to

in are in to this market deals, while of our and expectations by now various shareholders. valuations do patients to we're the require or our negotiations, We finesse right making long-term outlook. smart and in investments stages hungry around raised conversations turning sellers for And

For with single-digit to the health and XX% in quarter, warehousing, and hires to XQ. and in EBITDA the range, expected revenues top second administrative retain and talent, selling we sequential percentage expect revenue increase in new to flow-throughs costs to low to to range. mid increases attract in Salary wages expense are the impact our care expected XX%

the a overall XQ. despite and quarter winter in earlier seasonal While the slower DNOW sequential second allow revenue We Canadian breakup see headwinds continues a drilling should seasonally activity north will both Canada. in period decline, in U.S. storms completion we growth but for the XQ to expand, simultaneous see market usually U.S. the in in strength

revenue bottom We line total XX% with guidance with forecast approximating to to company implications. upgrade is raising are with a full strong This full XXXX to meaningful now revenue to the earnings XX%, year compared XXXX. EBITDA year for increase incrementals the

us availability, in year that margin impacts XXXX first XX.X% the an margin are We approximate for our like flow-through we full one and and land our XXXX As I now the levels recognition families be wage would in to our our project full strong Overall, percent and and provide their really performance gross impacting makes are to -- all margins gross improved expectations guidance. believe the inflation, XX.X% accomplishment, Mark product quarter, reflect, mix, numbers timing And or range. demonstrated all year within raising could we and better. With we to proud, profile. guide with the the where employees, on product size gross which our very pleased our customers. significantly

has DNOW We aspect we have rate, our safety the been the announce proud safety program due in I'm our a globally of lowest possible our have row, employees. DNOW's it lower renewed continue on have in than build recordable upon incident how workplace have These done diligence years to at call in strides made total and work. organization I’m TRIR, in to making will a we and at we were invested to levels or safety represented that by of produced history. let's all of questions. that, and one of a we a culture that working results prioritization TRIR X improving focus the by are which key proud for and open DNOW. the the improving the here work safety making With in

Operator

[Operator Instructions] Jones Our Stifel. comes first question today is open. Nathan, line with your from Nathan

Nathan Jones

everyone. morning, Good

David Cherechinsky

Good morning, Nathan.

Nathan Jones

the about the the flow flow the I there structurally that some to major improvement of that multitude a I you numbers about despite wanted the you're business in things the to at in have start cycle, cash on being And XX last this Would point to off talking be allow get flow. contribute know business. will are heavy the in growth cash business outlook, that with are to years improved free in Typically, over despite question positive still a and changed improved positive the cash this that detail operations would what the a pretty year. the love that consumer have of big on growth cash. things in produce of 'XX?

David Cherechinsky

Okay.

expand $XXX where million the versus So produce year revenues a some see that probably taken our the beyond even have improve here to ability cash in changes place year. that we'll prior of are

you revenue if the XX% in gotten or range. cash capital working That of to at over allows velocity a it's XX%, where been working in a as XX% capital percent be look working So turn to of to XX% our capital, the year. the last us Xx couple years, Xx excluding has

lower or the enables conversion that even much us the cash in to so more much cycle grow. velocity cash there's So so sheet less invest we is balance as

millions Mark more Our EBITDA we XXXX, million a quarter associated $XX the was with of million, EBITDA. it expense but of and how in hundreds lot earnings profile. I about of in produced we think delivering $XX talked third and more revenue had

inventory produced or less million we're but a time So leaner we last ample $XX leaner organization organization lot a the a in we growth, had inventory with to see EBITDA.

We have to customer. more closer facilities our

However, does changed some the smaller what them each customer. of terms because we've servicing kind in location are today of of

velocity, as timing capital Nathan. the working So well, aspects

a So the relief fourth quarter might to where the balance half on first grow The our get we do side. second we risk. consume some accounts we little cash we be and But first a of third manage probably in in it's I the distribute expect we'd sheet, we and part half, might the said light, year, think how receivable quarters. so

we So, will all approach the an X,XXX we to managing anymore, and have items regionalize expert inventory. stocked that have won't branches to risk in that tend

think return our the for freight main would Plus, those take better the costing, focused are brands we customers we the finally, have policies, while commodities fewer we better things suppliers engage customers, I privileges, et thousands driving of and it. main to care So cetera. where really suppliers to our important most of on have

could even as book. inventory off the -- other down, So we idle substitute products projects things slow and get

generating and performance chance, pretty good So all cash improved the P&L XXXX. together and about that coming feel we means in

Nathan Jones

obviously can been most Typically, guess follow-up you my these generally expectations lower. balance the going buy you to mean you're sheet. I that. Maybe year you're cycles it's for likely better the here, been during the markets firepower just cash low touched assets. have about and you best capital up about kind on the the you the are higher. has -- be on historically, it sellers allocation, the for when market Are time of being Thanks and But just not how next off opportunities? prices and thinking waiting to on Does time less sitting the deals consummate talk some it year, for are for this to given that? size, better and

David Cherechinsky

acquisitions year. doubt no we that will my There's in mind close this

close we looking plenty or two the to soon. we at will that point, there. this very out tend have downturn. think got table And Now be last the and made able a But right of are deals. pretty for better acquisitions ones But We've and be year, to active we a are tend we to some opportunities balance now cash They now. on strong are right buy there year. prices I We sheet, small and lower think, we we your to smaller. could in do

So you we but how that are know goes. --

We it's acquisitions never -- are but not year. done, until this it's done -- we'll make

return Now And to I often shareholders, believe possibility. market we there we cash, ways discuss a options stronger. are while the get as cash can to get question other will we this well about as produce even and do other

have do want cash our to a to, equip to grow seize of we business and on amount And growth, the margins. hold locations we market at reserve high to so to to share take

lot we've think got a now. are flexibility, we pursuing of but right So I actively acquisitions

Nathan Jones

increase We've wells rig ask your count versus count rapidly the wanted over more. And disappearing? DUC bigger count it's in up, customers pertain go also I uncompleted that just you are looking go but one considerably seen for about as the Does deploying DUC market these to more rig last into low down telling that count. the the decade. been even the pretty seen an we've Are count here? at rigs least as rig they're at as

David Cherechinsky

like to those think DUCs of are backlog I there a those opportunity revenue Yes. DUCs for by I think it future immediate us we are provides because our of as lot is kind opportunity. I increased depleted, spending customers out But it's a the for DUCs see as mean there. completed

impact what when our means this. should the to be us the in like customers place. gauge to more think hard for future But spend Now we it it's DUCs in the continue economy will will that expand reduction takes

Nathan Jones

on. will I Thanks. pass it Great.

David Cherechinsky

Thank you, Nathan.

Operator

Moll is with Tommy question Tommy, Stephens. ahead. next go please from Our

Tommy Moll

morning questions. for thanks taking and Good my

David Cherechinsky

Tommy. Hi,

Tommy Moll

on Dave, I the fulfillment want regionalized start to strategy.

pretty is You've given is how far -- to are updates come? today are we in us several recent have that and quarters. question there rollout or real into well But my more you there you

David Cherechinsky

Yes.

I think we will X probably have by the stood end of year, supercenters. this up

Williston but a Canada. done, that we’ve and not areas. are hit we’ve Edmonton will supercenter new hit we -- then Odessa, in largely It -- hottest are Wyoming, the we be think Houston, the area Casper, I So in

So hotspots. those the will hit

them But are I'd in as Now tend and that some of with capacity really halfway say process. serve more that branches larger some well. to our large, than we are done of

enterprises. really the in from the have project The be handled they're on color places. tend can all we some areas. The inventory areas was not for where customer-focused business, to by Just supercenters, large fewer usually in benefits we big the push They They're singular really regional project warehouses. project. to there which branches opportunity is

transaction. in location and products command we we better abundance, And volume costs for margins. have because each available can You -- reduced more can have in operating one push

we are halfway So I more done. think than

I that We to strategy. we benefits really to say to of proximity that And also want are maintain customers. the seeing want

in we cost-cutting we So are not mode. in are a -- not

our and efficiency and want keep future. in our of that open to mode. to form are gaining as we customers go We We differently into model close the kind branches

Tommy Moll

that, to line. Appreciate Dave. WS&A Shifting your gears

if more say expect Mark, terms, in QX. an philosophy I few into overall think, on remarks, cycle. then on in I clarify And whether the in up should dollar right. just heard a I you up there prepared refresh broadly, heard maybe million But you we WS&A that wanted dollars to could just

revenue as growth do there the think you WS&A? So for about of rate grows, how

Mark Johnson

we a here inflation I number. flow-through of items WSA of has about very the we're efficiency dollar Sure. beat to the in Yes. to we But to talked couple a was erode in the XQ around And And it to able XXXX I the especially guide, some year likely going those talking 'XX. were some right, the second prepared think $XX of that. in that similar into those hitting are in amount last to one related numbers expecting of then percentage to into if of We in clearly, come models. mention those in about tailwinds, pulled which in And build ended million quarter. million, business, increase remarks, the XQ. -- XXXX XQ you're Dave it was of kind to out how low And did

are And we positioning second have I then -- into into into think some. that WSA so growth to quarter kind the ourselves moderated with clearly and half the could of number next continue guide

David Cherechinsky

Yes.

every -- the Tom, to our comes for our revenue the we And salespeople, to to might of other are et our X% at we that that And X%. facing is, full kind force I are with we up calling see WSA think modeling, company the way go we like grow up do as year upgrade thing our we increase One to cost. go for and the it, is to XX% one look internal staffing skills, sales cetera. for are technical seeking business, our talent to improve year-over-year.

scarcity are are seeing -- while we seeing help business. people are product to inflation, seeing So product our we scarcity of and grow we

that's we going to and grow X% But perspective, year put have WSA headwinds. grow to revenues just see So in full might some XX% to it X%.

thinking much expenses we on the but to track, additional this So also in we customers of efficiency the you are much along still our to business. context business. gives very, an wanting we very products to some kind sure make the That people and on have grow very close are

Tommy Moll

environment. level, could I toss the if And here, looking you. Thank Yes. just at commodity in high more one

cycle of to I think the here. say fairly part a we're it's in robust safe

David Cherechinsky

Yes.

Tommy Moll

base a are That said, XXXX, XXXX. from coming off very low we

than there realized commodities potential, some realize your market. selling business next way others have understand is an One but over price reasonable one I the into commodities quarter, there's not here. run in just not pricing for substantial maybe So the planning of real can't upside horizon and or it for call does at this point? and quarter end opportunities the yourselves if have appear on embedded been for saying, gas this that one time, quicker oil you with that option

David Cherechinsky

with appreciation, a and greater driven balance the what price And primarily growth margins to down in possibly. were fourth do quarter, gross opportunities year each for guided of and guide competing we our down did what year product on but full for we did. it topped are we on Well, by the I depends margins, off come to we've gross But saw spending kind expected. beating we which it, for demand, we through I they went by we pricing be of margins more and But customer gross decline we what rate supply we I expected margins. price quarter, which depends expected we in but factors. there depreciation but mean the think first could in availability -- so. rebates, the upgrading and expect gross quarters secondarily of think and there's last

Tommy Moll

I appreciate it. I it back. will turn

David Cherechinsky

Thank Okay. question? you. your answer that Did

Tommy Moll

yes. does, It does. It

Operator

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

David Cherechinsky

we your you. talking Thank the and you, look everyone to for in second interest DNOW, to Emily. Thank you in quarter. Thank forward

Operator

Thank everyone, our for today. you, joining concludes us This call.

disconnect. now may You

NOW (DNOW) 7 May 222022 Q1 Earnings call transcript