- Earnings call transcript Q3 2022

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Operator

Good morning. My name is Sam, and I will be your conference operator today. At this time, I would like to welcome everyone to the DistributionNOW Third Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator Mr. President your Strategy conference. Vice you Investor may begin of Wise, and Digital Relations, Brad

Brad Wise

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

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

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

let turn call Now Dave. me the over to

David Cherechinsky

us. morning, you Good thank Brad. everyone, and Thanks, joining for

the of on your and produce the customer. and We're The the market dilute to where around fun, and attitude the finds value. the patience to produced delighting Thank finding of by holding not women today positively one for for you who by intersect third the preparation, everything you DNOW, to intelligence I'm customer otherwise and where and on years we with accountable we and and planning we costly, other for disciplined full-year our impacting deliver amazed and but in the do. another not the men being about the the diminish about the and a is strong we'll represents to inspire and having surprised, the people That's focus unobtainable. DNOW winning solutions XXXX as experience, everyone. unfocused what strengths of everything cultivate discipline people you focus achievements each quarter and third three quarter The win of XXXX, your of have and performance with culmination I'm loyalty, DNOW by customers today communities. results innovations a

continued delivered execution across margin free EBITDA as expanded and growth, flow we further quarter, strong This key this expansion with metrics, we performance pleased return including revenue our generation, to shareholders. the am new cash in I levels. in third quarter of year. XXXX guide margins beating prior X% higher XX% EBITDA to compared and Revenues the when margins gross to same improved were the our sequentially, quarter and capital

customers with third as a margins the increased engage the supported delivered our which XXX focuses point on this period maintain margins, ensuring million Through our in our percent gross service, WSA sequential high-grading improvement, and a XX.X%, resources customers we the gross than growth key product WSA, revenue EBITDA excellence project XX value. by ago. EBITDA of we by inflationary margins aided while in charges, maintaining more same revenue, points for XXXX. the quarters million EBITDA more best as revenue. healthy of $XXX see quarter, where continued of our the million revenue or were basis differentiator generated headcount or the selling one basis of tailwinds, applying market. strategy with Our from third than administrative as three expected better-than-expected quarter, to guide remains a while up lower $X the year, and were margins inventory for year our customer coupled $XXX business expense, X.X% professionals on quarter in expanding in sequentially, Warehousing, that up outperforming higher million, of X.X% $XX rose to the in

ability is This $XX flow, this in employees free of quarterly our million of level standing grew prior to cash positive supercenter would for trends confidence free cash generate greater working future. which the growth added the fuel And it revenue, flow during inventory growth full-year, up performance of is accomplishment the sequential for team. positive to also at the we our gross quite builds an as countercyclical our and invested me revenue quarter, rate and cash fund are to a This produced highest new in to be achievement capital we a gives the great historical counter consuming Bakken improved given margins, cycles in forces.

as Moving revenue expected margin up were to calls, Product inventory resilient offset results. U.S., which last the on to and million, mentioned improving in compression some in period, on sequentially. lower happen charges $XXX gross margin was X% steel the product our overall margins segments, we and few non-pipe lines the the pipe, line were

saw to as of integrated team our production. across operations. and extended an sourcing, customers. fittings for one confidence took products sale additional managementservices of prices connected quarter, an in for delivering to model their and to on-site the of growth as with products and provides markets. end is the vote procurement valve revenue pipe, our years, of And gas embedded DNOW customers the we flanges midstream, top We actuated is high and we advantage continue strong a operators material in commodity sequential five with invest In processing natural our gathering, sequential our the provide transmission growth supply value agreement MSA During experiencing

pipe two gas successful to interconnect projects side, in LNG supplying On we to facility. an natural for the line LNG were processing feed

fabricated our capabilities maintain commitment gathering management supply the related units components a inquiries a to Bakken a modular equipped mega PBF Williston This in timelines, not and by power water efficient as centralization both to equipment service new locally manifolds, We And Flex as expands higher center support and teams. XXXX. applications. through our line to composite longer revenue maintenance taking our and new alternatives and include of revenue supercenters lead demand resources water trailer-mounted of of It This as gas It interconnect as servicing the from the reap plus pipe added work will in are increased Solutions will and locations. house project quarter for application transfer from pipe customers delivered returns scope the measurement a processes pump our brand. such pressure our packages pump only our field highest time open high packages capture injection From product Demand provides the horizontal cross-selling fleet chemical regions inventory heart remained the North our BFD, It Williston location. the leading will increasing the since supercenter we of and synergies newest packages to units its Flow into constraints areas and with well. facility, be surface and support quarter, saltwater and of supercenter facility and for tied businesses transfer pipe drive service of customers businesses. benefits to pump plus our steel during department through information midstream across utility crude for disposal services revenue offering will the the chain U.S. Play. to we collaboration as leverage transmitters. Williston, is to through producing technical in midstream more we of more and the and fourth shipped right the and increased Customer PBF company. racks, the account project business, downhole our Fiberglass Process and place oil pipeline products the this rent TS&M sales into U.S. our stocking vessels, energy will it manufactured transfer, service but sales availability support investment through and Dakota, with timing as from Basin PLCs scale we and in Customer operators our to packages, semiconductor model. across sharing U.S. DNOW's providing that to

on side inquiries the an in seeing permitted water spare capacity water water We activity products pump management are as in produced site water for injection transfer and and increase diminishes.

aftermarket fluid meet repair handling upfront equipment. includes for on demand our locations. field sales increasing expanding service aftermarket our and This part commissioning, field are at service to We service and

our to equipment. customer on up training teaming expand with while aligned tool by our and on leveraging effort have preferred build installed e-Track base the We our digital manufacturers knowledge

high. seeing $XX We're by expect this a for their our materials drilling many Market for led on demand million disposal, a activities. saltwater new our activity jet program lift operations. support sequentially and rod able shipping drilling higher this level response, on-site to improve, source horizontal rental for products quarter, supply team valve and XX% increased seen of water acquired source in of and and projects the an saw our solutions LNG valve well number sands, of where position in to of In feeder for the procure DNOW a artificial quarter, And e-commerce of used containers a acquire and work Canada, the day-to-day the and pumps same an an increase who our drilling projects are early of fourth maintenance have and operator, that adoption the revenues demand products setting the We oil improved. transfer solution wells before has and to actuation would the upstream. we remains our in stages their expedite sand contractor, products digital projects midstream With operations. XX% customer specific have been and day-to-day We we through year-over-year pump EPC. support in actuation E&P producing was our customers. chain uses that from artificial MRO provided joint don't import platform lift. growth up management as however. in it frac to With future for customer, Growth debris and project goes for projects and pump was is consumables revenue major tied for mostly removal for protection line We to helped

was revenue decline sequentially driven due million. International, million, the impact a currency, $XX of lower by $X negative the was to quarter The U.S. For foreign in dollar. stronger by

we financial model. footprint We as customer have by offerings optimize focused while our country operating adjusting on improving to performance high-grading operating our increase margins,

quoting Sea in outlook move In are more operators seeing that positive future number suggesting are with on increase forward revenues U.K., facilities. oil activity. more as the gas and gas and traditional are and major fields funded increase to are projects of We an including and onshore projects, activity upgrades contractors the experiencing up we growth. of increase an in a market the North joint oil some being existing and and rebounds EPCs Europe, In our

We projects increased are East, In project be been we to with a multi-year are several to reactivated seeing the to starting in activity are up increased Middle now developed. see a EPC pick that activity couple of fields and have development. beginning hiatus and from support

East. to equipment final before we more destinations inquiries the activations, their contracts rigs the and their Middle seeing With uptick for in begin are sail rig to consumables out the in

international in project Asia, of oil the transmission and Oman. who several becoming and where an more America, activity are environment and pipe are increased IOCs increase with and more consumables. UAE facilities about new remain In gas are working favorable. rigs, We out which in including seeing conditions we and FPSOs. our we upbeat projects segment We projects, has spares seeing production bidding with for Southeast the as modular In see overhaul and Latin market on building drilling drive also EPCs, improving in sales NOC's drilling

working sustainability retrofit projects. energy initiatives, their we front, upgrade instrument with are solutions and air which includes customers to the provide greenhouse On reduction gas many on flare,

order or their and Our stated to publicly them of reduction targets. customers leaks X reduce Scope programs to active emission achieve sources seek in to eliminate have identify methane to

the greenhouse of pipeline PBF In project COX gas. projects. support hydrogen per used collects more provided transfers which we the the the for tertiary of year We're estimated used spooled COX, identified, As products. in in we recovery U.S., operations demand our pipe a for are it provided these sources line natural project gas full to PBF over find RNG the greenhouse for with the gas or digesters renewable emission market, drives in purified and is hydrogen. these in transfer we a equipped reduce large a operational, in the pipeline. this types to multistage CCUS of space, U.S. of In that pumps production Northern is RNG of XX,XXX that we X,XXX impact market, provided oil excited RNG Once connects tons to fully anaerobic enhanced of on the dairy and environmental green farms water project

it and As be customers evident commitments. their to learning service new how ESG products that pump emission goals PVF one from examples, RNG to of and themselves distributor these the extend are customers can and a CCUS, product, nicely our DNOW existing for capture is hydrogen meet markets. leading our our And or

revenue Moving XX% up to to our SAP improved DigitalNOW of sequentially. Digital our revenue initiatives.

inventory acquire received we monitoring, additional from our During customers the security, AccessNOW to management quarter, inventory and commitments unattended solution. control

and to statistical scheduling field equipment we tracking to using of the ensure buyouts previous growth stocking XX% a technical configure of finally, E-track, planned quarter. products management sales to and outs budget support are product the our ability with our customers wide activities and the for for aid life demand configurator cycle enhance for of our and eSpec work DNOW. stock replacement of customer Our reducing it to in Solutions the material and which has unplanned team production for fabrication range growth a helps equipment from maintenance customers to schedule order Process track, seen parts in while our line. easier tools asset planning and in companies the maintenance tool, revenue making modeling and provides number assets projects both projects to by strategies process And explore, availability

sheet moving Now opportunistically continue our of and August. we capital announced while buyback to flexible a margin strong strategic stock allocation, will with towards maintain balance a in and bias terms executing approach forward million in approved $XX a on program acquisitions, accretive

cash to allocation. revenue, and growth, we liquidity in for providing Our fuel flexibility operational enabling us year, solid more performance has generate quarter as a this thus been capital grew

for pipeline continue hope financial line to and let hand the finish some that of our that Mark. over build We it over to good prospects and that, we me to our thresholds and forge strategy soon. a get supports acquisitions, satisfies we opportunities With inorganic have

Mark Johnson

ago XXXX, saw On headwind. on third million operational it revenue $XX of by sequentially was times and or or year quarter, basis, quarter despite second X the rig the was on non-controlling XX% and continued noncontrolling and venture statements account morning, the in controlling start as format for segment, under Dave, $X account and and to or expanded EBITDA quarter. you, financial and activity. foreign strengthening a the program performance, quarter, year-over-year million, of increased what want highlighting spearheaded joint X.X% share margins. of DUC our in million million, in XX%. as currency interest U.S. a inventory or a have was X% growth up of in quarter, on one expanded revenue third I million $XXX quarter, a recognizing everyone. good the quarter up the for activity Thank for which financials solid growth into The our $XXX as are $X execution August, announced we beneficiary depletion XXXX $XX by million the $XX strong Total or interest profitability a million count, year-over-year million over some to our inaugural this we we million gross for $XXX consolidate persistent XXXX member, we third revenue international $XXX we X% primary over in increase we XXXX increased completion our repurchase of

approximately the other contributing quarter, total U.S. process third revenues XX%. the our with U.S. energy solutions in Our of centers U.S. XX% contributed

was million, quarter, primarily revenue the third foreign US XXXX, from XX% International revenue originally quarter, the XX% the up in $XX customers quarter the million foreign X% Turning down the deliveries activity declined that third $XX third were third or Canada's to up currencies. million stronger was XXXX Compared the million. $XX increased project by headwind currency relative from of million million, increase in million second the XXXX, $X revenue to Year-over-year, planned or international quarter, quarter several to for the quarter $XX moving Canada, of an a driven with for revenue third $X XXXX year-over-year. dollar $X quarter from to of and or fourth. second

a foreign million However, $X that headwind. currency includes

quarter highlighted sequentially from second quarter third Dave the As earlier, second selling guide or to to by our third XX.X%. Warehousing, increased administrative $XX margins million revenue gross flat with and in for for the quarter. WSA million, percentage our with quarter $X and up basis quarter the XX the and was points line WSA expense

only WSA significantly Looking million WSA $X added including ago one of in sequential compensation higher million, increased $XXX X% revenue achieving in an back million with financial to or is non-cash expanded the the additional and increase expenses, majority revenue in of work in $X year improved the line quarterly we paired to costs health with performance of care about The yet the efficiencies. quarter as variable associated increase improve third share-based quarter. the compensation, XXXX, performance by quarterly costs we

the in Canada or profit $XX operating of the of million International contributed Moving operating third in X% revenue revenue profit of segment the the profit reported in to segments. quarter. million third And $XX or operating third operating profit or geographic delivered revenue. million quarter, the our the X% quarter. of in in $X In U.S. XX.X%

profit. operating below Moving

and income effective other partially GAAP interest a for the transaction unfavorable million, the included And ended months on and September X.X% foreign by losses. income three nine offset approximately X.X%, expense XX, exchange $X were tax XXXX, of respectively. and rates quarter Third basis,

from our As rate In our excluding non-GAAP XX% from includes to year-to-date, impact as tax the is on the levels a effective is is our call, as closer when quarter allowance pretty the such tax face I we non-GAAP tax income tax these expected tax deferred benefit changes favorable rate tax earnings other and tax and This the rate is tax and this exclude year for statement a provision our why discussed costs. effective typically the of rate valuation go-forward last when in the tax imputing rate, effective tax is for XX% on calculated the at approximately assets. good the benefit. below proxy

included NOW XXXX income $X.XX on quarter, other $XX a per third per net income million net was the Net to NOW million and costs, $XX inc. share. $X income attributable million excluding non-GAAP in to for interest. quarter basis, $X.XX And Inc., attributable was non-controlling million to Third or or net $XX attributable share. was income

other excluding EBITDA, or costs, to EBITDA. moving Now

million result streamlines in operations sequentially customer the to year-over-year to orders, revenue of new quarter, and was strategic resulting EBITDA customers. and $XX XX% of The structure. team's process of third For across our or of focus revenue. XX% are our a improved and X.X% use service levels to That DNOW flow-throughs EBITDA execution technology better our a makes

as to revenue in free inventory Capital million in times excluding capital, increase invested percentage turn an We sheet. to posted XXXX, from our availability. positive cash quarter. increase zero receivable flow Accounts of second was a XX.X%. annualized hand, XX, an zero from $XX million, quarter September million was to while we the customers. moving million $XX increase position $XXX $XXX which third quarter. to in of $XXX increasing last the rate the additional the was improve liquidity the of enhance of and $XXX and in high cash $XX a plus third million, maintaining quarterly draws net $X on quarter, $XX approximately of cash Accounts quarter million service infrastructure total third our to million, of includes quarter as $XXX million million, million, were the or X.X credit And of levels in a million, cash efficiencies quarter, of was quarter. and Inventory X% $XXX $XXX facility million an second as the balance the including Now comparable expenditures payable debt in ended of we working

Now, moving to capital allocation.

earnings stock we August, call million, in program up December through last repurchase XX, $XX authorization our the company's continuing of During XXXX. common announced to for the

first the million advantage our repurchase opportunities pleased of repurchase were as initial an partial program made of already share to approximately program, program, price we During $X X% or of $XX.XX. market repurchasing in our quarter take we of the average progress authorized at

As continued we million of the XX, tools program, our under deviating priority to the to a organic our $XX September back repurchase that, XXXX, let have maintain in allocation we acquisitions approach available attractive we and for repurchase management. from having opportunistically to returns me ability capital balance generate and as the use turn And growth, shareholder to broadened Dave. the shares with while call without framework disciplined sheet also

David Cherechinsky

Mark. to turning you, now outlook. Thank And our

we For to slow spending the expect exhaustion. customer and quarter, to primarily fourth due customer down, budget secondarily November to and holidays in December

of third decline are sequentially single-digit the such, mid year-end purchasing range, revenues especially the the the to high above. robustness XXXX percentage to amid and seasonal for forecast quarter in described impacts given As QX preparation in

in approximating model. a margins efficient renewables free full-year international oil positive from will gas more revenue EBITDA, domestic continued sources compared more customers, see expect I'm discipline growth, fulfillment to growth XXXX, due XXXX in generate resulting We to full-year to gross business, and our we and our expected. a imported we much are also that to to see than with more measured $XXX security count full-year our become EBITDA LNG. XXXX our excited where about highest the cash in where EBITDA revenue lead I forecast stronger percent flow rig increase even rational and a million, about With XXXX capital And revenues optimistic increase in year the strongest U.S. when expecting to with XXXX percentage ever. I'm improvement year, investment nearly XX%, with Canada. combined approach energy and to higher

customers three to We the The attributed our the is to conditions. customer ethos delighting products, connector under organization innovation pride success the we past that expect an listening to not a hundred other this for only and show you each do every morning. distinguish our in on our but Everything delight culture customers employees I'd market So the critical our several where everything to each more next winning of competition news presenting do solutions, international essential of the the and our our up thank the shareholders be and for for market. grow ourselves differentiated and years DNOW DNOW, favorable the today. being is can you represented and employees segment delivering like to inspired customers, DistributionNOW dedicated to communities. day, to we're year from

With by values, call transactions your results. let's focusing these operational and produce to that, customer You, challenges, providing their open and impressive solutions engaging on value not the for questions.

Operator

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

Nathan Jones

Good morning, everyone.

David Cherechinsky

morning, Good Nathan.

Nathan Jones

any customers ask know XXXX us you're for it just or Do can how color on Or plans more can have you'll you thinking question, give you their with are don't you whether kind of framework share you're go? us any will not. I investment that thinking XXXX? about for to the about that going telling your I'm answer outlook what that

David Cherechinsky

kind begun of a scenario for we've course, planning of XXXX. Well,

acquisition, a and plan that in cetera. from levels the right as talent feedback We current we seeing haven't customers to not placeholder levels, inventory begun But markets of completions, to construct et yet. expand anecdotal to that's kind counts, of X% what of of terms is the kind rig budget, we're guiding we're At view going in XX%. range is least our for now our

compared lower it but we in a expect So, but at the was won't level be of XXXX, next get the year market XXXX. better, rate to like growth of to increase,

Nathan Jones

probably for next from can starting should the more go pipe That's now, quarter assume, line keep telling helpful. at in offsets to some up levels, other I quarter, going know quarters and in gross how us inputs be gross last, some a I up. that that would sequentially margins to bit margins a they there. compression you've the keeping are think many been little are just every be to Dave, these row the don't there that, down you in going I so you about pricing, must talk see Maybe

the about talk a what dynamics margin is keeping are margins sustainable Just gross levels that of you at think kind those level. and

David Cherechinsky

question so that here. business fair forecasting We've for our a That's XX% grown Nate, we're the start this let or me year, full-year. Okay.

But alternatives. over pipe XX limited the on by part market stressed pursue for years, we especially bottom the alternatives more the ago. are of high-grade be on in few did, area, we applying recent there's been the to of about our activities closely resources as gross products replacement third But best saw pipe steel a some favor that's contraction we grading the and wrong But that off which competition, changing line. mix is valuable pricing have that topping customers I’ll detriment the the while fewer market we some margins, and a gross the growing cost works transaction our the per subtle like sometimes transactions of but and that margins. focused product company. the improving our I've then sees Yes, really line, in of good basis, in accurate all higher the last happy than sometimes and prices detriment working terms and about folks tell margins, do of it's quarter, has not year numbers you, for friend business on that, who your customers. as to inventory gross some business, there. did become of sheet at where folks margins perceived efforts solidify, terms hard I so all is I acquisitions the very mix, businesses with Part take really And on to plateaued product pipe We in have forecasting that’s this. to relationship our a there's we're in it have employees in in of hone the that and and our had that find maximize we the customer balance because people on the of I'll And focusing focused wrong been I'm most right and there's getting we're of think the than contraction art growing, more think a and the because example, expect basis, the been is a our the an revenues our of gross margins, high the to to sold value to pipe in

will over pipe the contraction, I quarters. continue that's a been coming over now is expected think happening So of the and somewhat hedge which

Nathan Jones

won't much for gross expand in that portfolio in you're sure there's to Maybe just products you and through pay a process margins there's see that sell that how continue or may can the comment to value probably of the products that you there Because XX-XX continue on of don't apply margins? that that customers that approach value are? that still a variety this. Is some kind sell a providing you from I'm you to far mix and of wide that wide

David Cherechinsky

opportunities. I think there do are

pumps, of to we favor managing the to space, valves, the lines. we distributor I in fittings, our we and market, improve we the mix costing, think those along because tend good and products, core end core really our to tend favor in that our some largest in upstream get we're sure, preferred suppliers, pipe, be for at try

in the to upside I managing peaked will I I helpful, a five think and mean even by we that, reality know very the cost improvement, talked there. terms of about. think concealed think But for think prices have by of went through four bit in so. pipe is But there stabilized, I is replacement mix I to room customers a be you then I going it's might pipe have of of think convergence But be there's the I stabilize little where there pipe steel focusing areas or grows. few last inventory limited we the and quarters -- though, manufacturers in to constraints product chain, there's stress it able normal then the see area. that it's going bit, with and advantage the of favored upside, but chain think and higher about do on position were margins. for some we some in and reversion managing we'll headwinds, But supply think all question, in about take a I talk lines our more the the mix, those that's your inherent time, I competition, availability regular it's was product really margin to there's about little And to supply DNOW's

Nathan Jones

That my taking all makes sense. much for Thanks very question.

David Cherechinsky

Nate. Thanks,

Operator

with Jeff question The Robertson Mr. Thank from today you, Tower Research. Water next line comes the of Jones.

Jeff Robertson

share the types year? to mix and any morning. in of types Good the getting can Dave, quote on with margin you costing color respect of next you. terms the inquiries you're ‘XX of Thank

David Cherechinsky

I so our far, business same of activity. mean, say is Well, of a kind high month of or XX% probably would percentage I business our

U.S. and Solutions, of of was Most is revenues the most Now of of There's quarter. business. a Process in more the our of in quarter which we that have planning the of activity business part involved kind U.S. fabrication our called part XX% business. within bidding a the

So, view in be XXXX, there's there. terms of a what limited the mix for of would activity

too a projects can't going see kind some happen few what the XXXX on but of consistent be contraction But the bidding at I we So earlier, quarter delivered are in months margins, year. margins to to fourth the we're color margins like the targeting first nine much similar least I get year. that And areas. to in delivered at now there, the to the of we part in alluded we're with in really we're year-to-date what gross -- again, in of

Jeff Robertson

solutions some that offers, support help the of those you're You adoption mentioned DNOW seeing? stickiness of increased platforms, that in including adoption in some gross e-commerce margins your that on the some it does comments sounds about customer like

Brad Wise

evolved is contractual cost business under be the a would them, is take so, e-commerce into of we I'll large lot one. fulfill provide is of for with that they and punch Brad. but Yes, system get many round process integration essentially the the what level, Yes, similar their branch Jeff, out and that the system our from would at requisition, over orders ERP a digital to they to platform our lot this we have out then and lower. trip years, has transacted all customers BXB punch where so a a pricing that be would

accretive could gross the you line the in but with to think to So, flow-through of business be could to be EBITDA. margin

that are have procuring in work every BXB and a where within have also approach customers within they a and and users and We that buying similar catalog a day log number branch then of order meet the our in And to delivery -- supercenter this system. the order customer those that the so respective fulfills in required routed the date, to case are transacting orders that

Jeff Robertson

So on you so products basically, it it through those the channels, lowers right? cost, your that margins enhances your otherwise sell

Brad Wise

it's our of of models think to one efficient as engage that the like We models to we in, the that flow-throughs really of can models EBITDA. the highest several it Yes. of have customers high we attribute one higher

Jeff Robertson

very you much taking Thank the Okay. for questions.

David Cherechinsky

Welcome.

Operator

Robertson. Our Thank you, Mitchell question Instructions] is line with Partners. Mr. from Sean, now is Energy Daniel [Operator next Sean your open.

Sean Mitchell

about business your future, of, of, peers, say companies, have you my guys. asking folks particular, have as I would Great. what earnings season does in international we're this international I'm does what you mentioned Thanks you that as is the like you you talked percentage achievable terms not positive but early if years, When see in look will, something think to if you at what you about international and early over far, that's Then, you where your what that? would innings, internationally kind like in expansion, some ‘XX for guys look for to just business, international five in so M&A very service next about terms taking organic of two, of quarter opportunities? growth. makeup what do activity of business innings you of do this about are think questions, number the in just in call the terms think like, number overall one? think the oilfield several look the opportunities One, in next do look you to three think your have or that's growth? does Or

David Cherechinsky

I'll growth XXXX the the for in of a then crack we're going and growth, it international It's this, year I'll but terms probably see at is Brad, to arena. hand most in powerful we've so growth to the in lagging brighter to seen of do take probably international terms be where growth international of over behind we'll and Canada last experience the kind of the U.S. expect in rate we next several year. the quarters, really the been

of for that it's where and to going to to Sea will you under and any start VIE, the larger we're the some see But about see North be East be going terms little to now hiatus add the the, that do to in projects Kazakhstan where to as we'll we'll won starting that's talked In with have recently are pumping see be we the things rigs then the main don't of some know, areas. it, color see more and we I that projects. restart, to to years contractors matter Middle going it drilling East, bit, see Middle And up We'll first in or? like show add grow. we'll rigs, We'll Mark that several Brad, talked of about and of well. that in drilling businesses of a our spares a outfit see helpful so increase growth spares some were further that. as start of in and to you That that know, the

Brad Wise

Sean, that XXXX, NOV been the I'll eight When Dave's that to kind market Yes, from to diversifying comments offshore business has we last business six to years, offshore to spun couple add a of market. geared of the we've as comments. off recover. international struggled was And highly our in over

of point, we the distribution but we're day upstream export more are but of there, think West We now bit out still market, a offshore, is diversified. do lot deepwater seeing, also business of increasing. rates and increasing, to are lot more the potentially day-to-day diversified, more going rig land into the utilization service to investment a Electrical market, out U.K. in And I quite a out much your we're a electrical of the acquired we're we business. We McLean U.K. and have the so Houston we projects, Africa, business. And lot of so of offshore the

that positive we upward an of of so mechanism of potential taken the COVID we growth really a in further comes recovery as international kind back So as out and international international towards together, bias have those see our a our as all segment. general for growth

Sean Mitchell

guys. That's helpful. Thanks,

David Cherechinsky

Thank you, Sean.

Operator

Mr. at and no the There back over this call are I'll President. further you. Thank Cherechinsky, time. David turn you. questions CEO to

David Cherechinsky

Okay. call Well, next look quarter. a in and forward your for everyone we DNOW, our February. interest thank with to you Have on in talking good

Operator

today's concludes conference That call.

disconnect. may You now

NOW (DNOW) 3 Nov 222022 Q3 Earnings call transcript