DNOW - Earnings call transcript Q3 2024

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Brad Wise

We appreciate you joining us, and thank you for your interest in DNOW. With me today is David Cherechinsky, President and Chief Executive Officer; and Mark Johnson, Senior Vice President and Chief Financial Officer. We operate primarily under the DNOW brand, which is also our New York Stock Exchange ticker symbol. Please note that some of the statements we make during this call, including responses to your questions, may contain forecasts, projections and estimates, including, but not limited to, comments about the outlook of the company's business. These are forward-looking statements within the meaning of the U.S. federal securities laws based on limited information as of today, November 7, 2024, which is subject to change. risks and to differ results subject materially. are and actual uncertainties, may They assume remain forward-looking the one these No should statements year. valid in later revise We publicly any any undertake any or reason. do for forward-looking obligation statements not update to

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

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

Now, over call the me to let turn Dave.

David Cherechinsky

product and you, been I smaller the market want the ample EBITDA of supply compared our years our to and performance highlighting which in strength start period morning, intensified driving XXXX, opportunities. to revenue customer with off availability things pricing chain, year a Brad, in Thank activity for now one a last in in reduced despite everyone. good has the pressure best DNOW in being

free million the significant million, raised cash and or cash XQ capital revenue May. million in cash excluding XXXX quarter, percent cash In of approximating with a of flow to $XXX year $XXX over as to working again period. year free Today, capital, that approach $XXX XXXX. generated from million, we flow Xx. velocity improved forecast million XXXX our in annualized in forecasting We we at trailing started accumulating approximately during $XXX quarter, cash cash from $XXX free or the full outlook quarters we flow $XX cash $XXX This the to approach flow operations million our at that operations in best million are X free a upgrading working recent XX.X%, to

revenue by offer, in drive Looking and year-over-year. than drilled, attribute compared chain our wells helping as the of impact the our we've the more customer to against commitments been of growing our performance oil our because leadership in revenue primary we We to we the mitigate to energy and market, competitive mute suppliers as passion XX% and evolution have importance as and and all number supply impact excitement, resilience inroads, our the our make people. the at solutions fueled market, market gas team's new adjacent our viewed declined in has spirit customers, U.S. full completions to the rigs, But each to active spending customers by position of the our this the able streams competition, revenues our that our declined. activities

maintenance of Flex Canadian Flow aftermarket the Just technical one composite pump region and off delivery and staging, piping local distribution where service execution parts field the out Flow our operational. Their supply our the It's notable their staff, our our investments repair, instrument for in stop center, North units service provides U.S. industry-leading well. where coupled fiberglass operations. Power with support example as our do of Service, to our mega production organic at equipment systems Flex Mountain center inside PVF-plus are customers' It's local Rocky region our service, fiberglass and techs, with fulfillment. quoting, expediting, and support projects piping SWDs, the skids, Williston, houses main Williston also and mega Dakota air center, needs. keep home for expanding the inventory, sourcing, LACT paying expertise the to project for which we business

as serves our in a ever our performance, mega to series Williston oil in for built of and well our terms of home Northern differentiation top the the Rockies-based as of which Finally, competition. Contributing gas in Bakken a wide-ranging base, RNG customers. acquisitions and service for from best customers. their spot The U.S. offers some results a a mega against year units, center are support deployed business the we having as Solutions, financial field provides Williston as EcoVapor its the Process in bright starting quarter scratch its and EcoVapor serving uses locally play technical robust center XXXX. was for

advance combined production XX further growth pump markets. And industrial outstanding is naturally years, to engineering, distribution, market highly energy X and now we business. business, Process to our sought-after into the integrated expand Solutions and energy past service with rental of for to a into and complements share part lever produce of grow the and our been adjacent an midstream, years strategy moving which over fabrication equipment, and design from businesses measurement company important has Over centers results. the evolution U.S. activities an process our

$XXX was million the $XX EBITDA guided project revenue sequentially X% a within to declining million, performance. in range. was revenue X.X% the completions million the $XX In count, activity. XXXX quarter sequential We solid decrease our of a million, and quarter, of or or or million revenue generated X% $XX U.S., Third in $XXX down due rig

but approximately We not that XQ $X were delayed. as also had processed forecast of were they million orders

quarters, delays those line or impact execution shifts. I'd timing, speak like the project to time For underway. and and customer announced of And some in wins consolidations mention funding project deals few to approval project continue our strategy. the past pending customers, to several were our a more of for that resulting

Gulf large product to my the LNG to as remarks, as due diversify an number we work First, quarter a revenue Coast a focus. In we processing, at further facility we through winning mentioned in project the of performance midstream of provided large business expanded chemical work sequentially improved In in as markets. pipeline opening a activity. we and to revenue downstream costs. expenses for of processing EPC U.S. of softer grew targeting that utility in large-scale tied to chemical reshoring And diversify manufacturing. Each revenue of are to markets an expansion, the customer. revenue an Process valves teams through construction example into downstream trend plant the the speaks to our our gas in we award chemicals growing the was and non-upstream Solutions, our and lower project completions to And we for gas optimize revenue

margins packaging and integrated we side, UL-certified vertically fabrication our the our in business. on work of shop to service a the improve of products panel power I&E scope On our fabricated

updated new pump. Our engineering product optimized new shipped and design, and an LACT development our incorporating with footprint team the pipeline unit

the the provides pipeline design with footprint lead competitive of reliability improves price. For more the pump, and a times new the smaller at a shorter customer,

pump Wyoming grow offers U.S., margins We business helped drilling mechanical less when are and the At cyclical to in revenue. Montana, continuing Colorado, a helps an and seals refinery improve to and we our is downstream and compared which revenues example a completions-related our in we're their and systems. Scope reduce leaks how great by incorporating eliminate of containment This customers upgrading systems a in by emissions operator emissions secondary adding X current refinery. reduce sealing helping

distribution solutions growing territory broad offers a expanded and our of with top-tier who we quarter, pump to a the by products pumping mining U.S. the During service range geographies manufacturer our industry.

downstream chemicals the Second, targeting we an pumps a of our and revenues. In And added mining end help a activity. number expand we the finally, chemicals will sector, that process-related more line for we added slurries refining line markets of new additional wins. API us pump had and robust

CCUS an revenue for We for activity from help oil packages pump continuing grew vertical million in we gas the nuclear to with top operator. securing the an in brought older in steel and Beginning demand to the of alloy we Canadian to growing seek to a quarter. supply was as the pump in XX% opportunities into efforts the In to power our pipe revenue In a sequentially, units. on number the meet the presence and with in master and turbine Flex Canada. units used gas Canada. in expanded our Eastern and $XX execute evaporation mining. breakup mobile our growing in For increase saw our recovery customer the diversification market solar strategy service the rental due a commercial we project service operator an Flow by potash are period quarter quarter, mines for primarily and products we increase last production. In expanding Canada, for generation, several uranium H-pump hydrogen provided business, sector activity into have RNG, refining hydrogen customers production in we Flex to the invested being of Flow fourth, sales are providing example, our we sector, third of In target agreement as industrial

export activity revenue primarily MacLean U.K. of West gas cable a to decrease to the packages X% in provided project was and we evolution. comments closures and range an Australia, an of provide international, in million, U.K. quarter, number We $X Africa. And a finally, as interconnect our several to products project the our frame from $XX in bulks an and and due Gorgon few a project tie-in saw second for distribution electrical Middle operators agreements electrical For million increase renewed energy continues related group we for lower location to a to IOC East the business and In oil of customer now the facility. support or LNG And in activity at

PVF-plus direct provided In in the potential the last products to products for number during has XX% construction CCUS XXXX, a products of plant year. products in XXX of the sold DNOW from U.S. to Texas. We project XXX within demand CCUS increased a facilities PVF of facilities projects compression projects space, to low-carbon the We terms the phase stations provided XX gas of in PVF in year, we power a the a In synfuels had Operating year-over-year. increase construction this air during few space, expand And nearly COX permanent the oil an conversion plant to capture geologic recovery capacity companies evolution phase notable for COX are energy we capture quarter, pipeline. XX% for of COX the use in the sequestration. a from more operations enhanced through coal wins.

Finally, we extracting and MRO geothermal mining is to delivered a operator from a lithium PVF brine who solution. products

digital Moving our to NOW initiatives.

quarter, of total the SAP as XX% to the for revenue during revenue XX% digital mark the a time. percent improved first Our passing

labor cost drive integrated process system. Ultimately, efficiencies benefit extract digital through new integration of our purchasing We like began biggest from lever the a solid using approximately customer for and debt In XXX resulting position, to of supply growth customer technology working seamlessly solutions lower and a punch-out Historically, ordering to per to an is using most with with customer respective lowers and procurement, value transactions suppliers a and products XX of requisitioning customer remains and surplus the and automation strong cost procurement our enabling for is acquisitions balance with per method the procurement efficient DNOW platforms. a example nonintegrated to of solution for inorganic a as and ripe order a growth the ERP This we and sheet, an transaction from products from top market and our to of advantage automation now hours cost strategy. e-commerce believe key part highly We customers us digital we a required the switching cash DNOW, this. inventory acquisitions leveraging partners no in both a streamline parties BXB our processing, gaining systematic implemented we process of suppliers number when reduce efficiencies, with DNOW. to to key workflow. compared been connect have for the is ensures work through the are transact a to in the technology savings solution a year. And orders customer, right systems lower customers, processing our a chain

aiming businesses, natural increase opportunities margin-accretive companies capabilities in serving of We standards, the prioritizes long-term value, the strategy investing contributions operator, strengthen to maintain diversify Our create to acquired and our rigorous are where we shareholder value. poised in and drive customers. our

We line that, it let we in these to can me of are to confident over finish get hand more term. With the near Mark. the

Mark Johnson

identified million, year-to-date, million, $XX action EBITDA, $XX million, since third And other totaled revenue quarter, profit the million and revenue second or revenue of for with the on focus our had revenue, U.K., In and international second we contributed Through revenue $X and Canada, energy excluding our to see in Middle accounted X% quarter or XXXX, costs some or $XXX XXXX, quarter million, locations quarter year-over-year. public. U.S. produced lie, Australia, areas in Dave, XXXX revenue third U.S. morning, $XX operations third invest the approximately where or returns and $X million you, for million the or level $XX XX%. strength million partly of quarter, align sequentially, of ]. was closed through XXXX Netherlands, of the a quarter impacted the the $X X% revenue X.X% we Process minimal of by million for totaled when [ $XX And the was regions the of Year-to-date, XXXX Thank down contribution. X.X% of year-over-year. centers handful contributed and of down X% suboptimal was and value. In across $XXX XXXX financial we revenue. for to international X% an EBITDA in of going or or third this Solutions Canada $XXX quarter increased most million good $XX comparing X% million everyone. or EBITDA of our the quarter third the $XXX revenue increase restructuring to best Total outlook. U.S. roughly remainder. recalibration, International year-over-year. locations U.S. for million total up quarter took or million customers third third export the of the revenue East approximately the in with our where continue specifically Norway, that X/X

the as $X second administrative, not we to In $XXX and step-up XX up forecast to million or amortization the focus XX.X% Now inventory as resource we the and back alignment moving first in points quarter, the for quarter, for approximately Warehousing, half Gross favorable fourth depreciation XXXX million to statement. lower in second margins million. regional was primarily amortization repeat. the from related impacts selling activity. second WSA WSA fourth million, to basis XXXX charges be forecast did the of operational $X the $X And million quarter on of from reported increased quarter WSA market income third could quarter and as to We of $XXX the depreciation level quarter quarter. and towards expense. the we efficiencies expected,

excluded driven reporting. quarter of restructuring. segment the million the profit for operating The $X items XXXX. was And in delivered are related generated profit $X charges profit. those third the of operating total million operating of quarter non-GAAP U.S. and $XX Canada the In $XX to million $X The the recorded loss quarter, of third company XXXX, moving operating third a Now million. by million International in to

component the income and currency income other inline to million of With is noncash noncash comprehensive being quarter. a the our largest the component charge customary charges a losses, reclassification from of foreign our the impairment is $X and within translation P&L charge in the of which other This presented statement. loss accumulated

interest DNOW's year-to-date. was million $X third Our expense million million. And taxes. quarter was $X In $XX income XXXX, income moving in the period the tax and to of income

face as rate tax computed on was XXXX. effective the income XX.X% year-to-date statement Our the of

quarter $X.XX our was $XX be for than of our primarily the We restructuring rate, rate third to effective per reported year or DNOW excluding benefit. per or those U.S. QX rate charges to was full associated estimate the at impact Inc. the $XX GAAP was non-GAAP XX% approximately federal strong diluted net approximately third DNOW And costs, International $X.XX XX% in tax higher excluding share. to Our tax noncash fully with segment attributable statutory XXXX share. tax to million attributable fully no diluted to as on XX% due million for income basis, XXXX charges. Net other a Inc., to income quarter or restructuring XX%,

million quarter At balance $X total facility million offset sheet. in ended debt. the we quarter, repurchases $XX in Cash $XXX million, end expenditures. generation had We the stock by by in the cash from $XXX $XXX $X quarter, comprising a to million of our third operating with of position million Moving million $XXX the of X and quarter million of availability. cash of liquidity third position in partially and the driven the credit net activities, increased by and additional our capital cash

December the was second the existing days facility. Ending at and end of XX the $XXX the DSO, the of $XXX million million quarter, $XX decrease the of XXXX, immediate accounts access providing at million quarter. end capital Our revolving days DNOW outstanding, $XXX quarter. third million was Inventory into a facility third receivable credit sales extends to from under with was or

inventory second with outstanding the velocity this that managing our quarter's mark. Accounts results proximity the hand comes measured done for the that in be orchestration XXXX. cash cash, million. free revenue high million from payable our XXXX, customers, demands XX.X%. was third our with XX, inventory partnered the activities right flow operating September an planning The quarter. totaled field, market and And quarter, end third of quarter quarter, by as the an for our quarter, beating third the the annualized quarter, million and of capital capital, percentage the free trailing improved located working million all X.X while was In in the provided $XX to flow the ensure perishable in to cash talent inventory. third on third a cash quarter $XXX in to risk of incredible third And flat are million $XX invested has the prior can $X in ending job teams quarters bringing model, products XX X for operating of We the quarter Our at expenditures $XXX $XXX in turns of trailing impressive the was have million. months, excluding

December We repurchase September that as share repurchases XXXX. continue XX, our execute program $XX to totaled our $XX under through is And our cumulative on authorized repurchase million authorized of program million. XX, share

sheet the commitment shares repurchase the from to through also approach our key our of company ability a margin-accretive returns initiatives as to balance remains organic having growing opportunistically shareholder combination generate Our tools framework capital in M&A deviating without and allocation a while priority, disciplined use attractive to management. to the we

and flow call generation We Dave. keep be back me to continue to the priority. And top a with that, let cash turn debt-free

David Cherechinsky

Mark. you, Thank

be XXXX. relatively the full Canada, Internationally, due normal expect for favorable be and of our U.S. budget to activity some seasonality. activity gas due project In expect to with to and lower to outlook quarter location fourth sequentially and Now year we we fourth offsetting timing sequentially flat to customer quarter exhaustion, switching the the closures. oil

to high year X%. revenue modest percent is anticipating our seasonally XXXX. Full compared numerous and full 'XX XQ good digital $XXX either for million the digits 'XX, above. We the can cash upstream interest Taken of strong, upgrade full by And can $XX expected revenue use the earnings entering either. refine businesses make new infrastructure, manufacturers e-commerce reduce doing of million. cash their or And opening sequential are expand down be down funded. approach single we're promoting finds pay from expansion all EBITDA bolster year a that per or shares reliable markets burdened are competencies, revenue approaching By right together, could could levers well to acquiring and a XXXX to business a having while forward, XXXX increasing DNOW operations year as growth locations, XQ of growth adjacent in to new could We complementary XXXX approach possesses a strategic cash from the with our cash footing reset, to some the CapEx deal or with more, options or share also obviously channels and our repurchasing its new number we of by and or costs. our calling platforms. implement not use now, debt for or products, with pull. But while analysts moving And market existing a

that momentum And and a We prospects of to We're our energy continue and existing the midstream are adjacent like focus customer and in processing about revenue business, industrial now year-over-year food growing approximately on excited new growth and evolution markets gaining we water expanding revenues. chemical pursuit DNOW of and beverage. mining, on wastewater, in of XX% in basis. investments see our our

and in turn, energy is improvements for positive supply energy a which interest rates expect companies. in economic outlook, the and We in reduction companies

we velocity. with results million who $XX driven of a These results during produced quarter the gas $XXX program generated the share and on the a X path record repurchased of repurchase challenging and this We to lower yielding backdrop complete year Finally, in customer during the for and growth pursue by debt, commodity are no with robust million we environment consolidations. Process open to service in acquisition to achieved of prices revenue of million cash were customers contribution options dedicated positioned U.S. drive strong our quarter $XX call differentiated thanks to of oil every efficiencies the performance are and this questions. Solutions additional an trailing and level flow returns the business, as $X and a that, well for employing and million million our day. despite shareholders. With the wave cash range shares quarters, inventory $XXX in quarter, free provide a capital, in growth, for in hard improved period, delays with We generate in a solid work conclusion, deploy the employees our let's products project year-over-year planned. In our

Operator

Your first from Jones will Instructions] [Operator question come Nathan Stifel. with

Nathan Jones

have like positions think Does considered the start favorable some could at wanted when that favorable an of with more could demand bit they're on that get the and results the those result in off, market. markets, more of to potentially an for days better environment soft this they presidency I targets oil to it's the to administration election Or and impact environment and a M&A Obviously, maybe on potential policy through Dave, in. of for make the I questions that's you're week. sweep on know not this that of that going Does the acquiring you and and do maybe would Republican some the for to Senate House, be of kind a the hang when the environment side really ahead? election a here issue? particularly oil that be said gas that all? you want DNOW gas change it like to good looks

David Cherechinsky

much participants as we business-friendly the a industry, for business more would of results be election well. in our a think benefit climate much provide would I from do that more that Well, -- the

There us where differently an think favorable this administration did reject of something little deal in than there'll -- some hand. first was done rather the and government approval. be it required deals issue. at I But we've very a more was year overlap, make not place would we look that it out

So would a we body, from a lubricant comes I from benefit that policymaking different that. think there's and

Now when target table and pretty are now we're now. conversations pursuing companies, unique we right we're those in the at

I in million environment, to $XXX we to as accrue for simply have generally million, But our deals. a So our a the think with, favorable leg begin shareholders more and well. benefit $XXX especially we'll up

Nathan Jones

getting here about likely the talk done next over think mature the it you it deals how how is, is, just actionable months? then how Maybe more pipeline, some XX

David Cherechinsky

Well, of -- we're a few stages in negotiation. them, we're at various of

accelerate I are to the us negotiating deals. So have want like total I don't to when possibility. flexibility we

But natural we at I'm would kind that. the going not some operator. So active right for conversations to of price the do right be the pounce. We're few the suitor, we for one we And have we where table. right of can the the broadcast positive -- terms,

range -- to our So generally business fit which years, investment a capital, process we built we've the several the from that's in now to year. going on we're PVF-plus going a opening energy focus. our the centers-related are that that the those kind last the we're of spot Whitco companies I early talking arena. It focus going the of I building deals CEO, right is limits happy was for very We going was really to my unique, That and focus a And employed to sweet comments, in pattern growing business. a scratch. And said is about now. where solutions. I've that's in said since or we solutions we're bought be pumping deal. -- became that's But and where we're to

Nathan Jones

out Got the -- maybe then project you the deferrals talked of about just third one more quarter. it. some And on

gets in Just Just out maybe of to to or ship those is quarter XXXX? fourth a of pushed pushouts, or that kind whether color you detail of bit not going circumstances there, please. think any stuff the the more

David Cherechinsky

those million in in North U.S. the couple a in the And Yes. rest there In $X.X America, America, drove quarter. fourth Canada. ship the in DNOW deferrals. the should of projects, largely and of were availability, a $XX effectively from third all North believe, million, about $X the into in quarter. $XX million in projects there product And was we saw in international. And push million But I going million

within are the just similar about missed, we evolution-oriented Yes. and those of million XQ. for that projects in were and a that half North the our $XX projects rest fourth fourth occur in pretty And fittings happened business. pushing into standard seeing quarter fully projects again, valves America We was energy pipe phenomenon But And... about quarter. should projects

Operator

Instructions] question a from from You [Operator have Nathan Stifel. Jones

Nathan Jones

and All Maybe during Okay. going the just E&Ps potential mean, you few about of the other Well, guys talk if right. years have last capital questions cycle. I I'll discipline showing there's no impact. talked more oil over keep up the the there. gas

do Are and relative of to Now what of down bust here. the in boom or we've you kind bit cycles? gas level the mute we're to that a cycle you to kind expecting that in of and of seen a continue oil past expect downturn

David Cherechinsky

And that X I decline, quarters we've through we've the or rigs where completions so Yes. think decline. seen experienced last

we've that over our the in customers discipline and great XXXX oil off XXXX think on as we're I think benefit prices taking restraint. And restraint downside, early showed got when I was think $XXX, to exhibited the market from enjoyed seeing and I they the too.

been at you inventory Now, availability, shape. a good mean to and risk. we've inventory -- that I us so from in market, characterize however, certainly where we're a helps this We're declining now. oil I really And -- by it inventory has mean, opportunity think right obsolete but very keep able excess DNOW, charges, strong inventory from perspective been charges, low in that, product I our revenue

as our benefit strong the market behavior us very has declined. one so by of helped that been it for asset vital the as big and was careful And customers for a

So benefited yes, ways. we both

Nathan Jones

whether there? are and think what's period customers' also favored understand lasts not? how some customer comments consolidation, integration can provide made consolidation businesses the long going disrupt of yours and I some disruption maybe on or a of just for time. on by How you the you details that you Can You about

David Cherechinsky

Okay.

There the So there's first the the first period all, be where is approved of together. companies come well, X it has all, government. of to -- by

another pick Some we'll some of some deals, customer where bigger we're In these that happens. that up and takes the there's jockeying are with them people strong time. the real from so customer. leave And meantime,

that. real procurement we isn't There is direction process, some going Once to happen. how around. there So experienced integration strong an tiptoeing is on there's

supply customers, of like in chain and for less they're services concerned procurement their thinking customers, some price different have value chain about companies around and partnerships Some products. unit supply strategies advanced our

those customers with takes the procurement company. shape take lines. to in time maturity sometimes those degrees of So you'll and along have integrate varying thoughts to the That

combined or business and Sometimes and of parties sometimes we the we one the neither parties lose the company business. the of win the had of

of chance that things companies happening. a there's in product, So play generally In both don't and at market of least, on short the are cost of those term, unit in low-margin focused like a we business. this,

combinations. in because that both these that customer large with this things will the these in is from satisfy with capabilities go -- there's set ways. few the DNOW So our big can few only position benefit thinking to especially has, long pretty we're those term, people we companies consolidations, North consolidations, But a America with

So are of we thinking as there address that's how simply unfolds. integration There road. deferred are kind our there of the those. is projects bumps -- But in process that

Nathan Jones

getting of you we've kind to where years few working primarily of the turns. Obviously, start guys do maximum that a something working you can want business. there service guys to turns and I'll are in available capital. just out the make? And up focus last not limit? more product that? can further you is having of on Or you mean, product of levels the distributor having get do is are good a and Where that I run for on dropping customers do we available significant kind against inventory you Like like chunk or that seen in business you of inventory improvements risking very kind just I improvement what capital. one then

David Cherechinsky

for I've I've turns to said turns. X been at good X pretty said is over business. this for above I've -- turn overall now this the always And a years. asked X Well, rate the we're least quarter, question And

need. I think where the can or There don't harm product to your a point customers in ready if diminish access products we're comes position strain market you X.X your turns. availability, you the have

turns they a I turns. a out because we're is rate. don't smartly, that think could market the and is the from good this. in little than much really it think that, My X inventory pulling fact the think point think And we and actually turn the I bit declining benefit better get is I shows revenues So or I

X.X get to us. a able which good be might turns, really You is turn for

and is pipe we're there's And good But too flanges. this course, improve think real upside, and products, I of rate. include fittings Nathan. steel our a commodities term don't You And to like striving much always capital working velocity.

Operator

will Robertson Tower Your Water Jeff Research. next from come question with

Jeffrey Robertson

XX% is prepared I about Dave, remarks, that revenues. think of in mentioned midstream your you

David Cherechinsky

That's right.

Jeffrey Robertson

-- where going really for my say, that business that XXXX year? benefit of quarters? for full in questions having see or Whitco with quarter? had or X is you And And does now what you do expect in, umbrella Was and X the the your the under is that that that

David Cherechinsky

calling Good question, in. Yes. Thanks for Jeff.

XX% so is quarter. think I that a --

I think this it's our of business midstream was quarter. where XX% last XX% quarter,

of that's right So stable midstream our probably where level now.

midstream what really but upstream. there, Going stronger more activity we little do bit ready and a into to be we're give XXXX, not we guidance buoyant, than little in will think a expect

midstream to would I increase. sales that So expect of component

it's all little but be We've large transactions. nice lower, to got supplier products, what [ gets know, I for to for the the Now is low said gross focus upstream. midstream to can XX%, we've XX%, coupling some do the whether you to we bit margins ] The that transactions. large and us a access service all time it don't the service just given target with a relationships, real a tend in cost but

in us. So XXXX. we grow that's and should a benefit target environment that, for We'll

Jeffrey Robertson

changes some you Nathan's in permit think applications? that do is an midstream for could as around election you sort just of the -- So the approval process question week, benefit from this area

David Cherechinsky

to want you that? do take Brad,

Brad Wise

the heard Yes, think federal permitting can the the Yes, and that reduction and in customers quicker, for in in. may toward Jeff, from of thanks dialing we general what Trump of expedite gas from that can you faster. bias get permits bureaucracy, increasing kind was a also and be campaign our side, we've the to takes development oil I but kind lands,

that might had DNOW of been gas where basin production advantage very think the dry LNG to we pause. of So is to be in the the takeaway carefully We watching gas favorably positioned that capacity all natural case. And then to and and the U.S. administration does development Biden long-term take what have exports. the prospects LNG

LNG in comment, export capacity, So the if that your the grow think back help we the I help midstream will us upstream in can and potentially and beyond midstream midstream us XX%. revenue expand the kind our of caveats to

the carbon little some So going capture. had grow, whether -- Trump We're Dave be those carbon we think that initiatives comment are of that as would a seeing of and on projects we're the kind if I carbon is way. put positives. Maybe address in capture aware a of, of support red a projects notes lot with you there. see how want unclear it to continue to them those. there I some the states, mean, number last to those some around capture, possible administration But And

in kind of in, the changeover administration see upside that see to XXXX, the So XXXX. January that we road baking transfer revenues and the all hope from in down

Jeffrey Robertson

those or grid data revenue where and the capacity of lot to things could DNOW and for the of new that. centers areas maybe the expectations increased Are develop expand streams? like generation There's some been power discussion a around need meet

Brad Wise

production going reliable really, We've on seen and of continuous grids. electrical so. a and generation. do around in generation. comments to power some nuclear also And excuse the the would to Yes, we're data With ability comments reshoring capability. power to centers, seen nuclear big the on around be in -- We've have nationwide U.S. I that need sources able growth gas I increase of for to me, more think natural I the some say, for to will respect electrical impact think, manufacturing, provide, that,

be be accommodate the CapEx reshoring of forecasted to is the as DNOW able new foreseeable that could development, is spent to growth data beneficial center to need new future. both those the for think growing I and

with it's they So yes, backup, an wants center, about get the to heard wind I -- I've if XX/X uptime utilities there. to comments you we are with center solar see through the And going and think those early comparing going as if still agreement utility data positives. There's battery think is support. data sign about not -- that the

So well bodes that to I for sources and natural think higher speaks that of gas. reliability

Jeffrey Robertson

On there you help that some among starting Does does it strategic or digital of companies could give businesses and have major the DNOW's see chain supply out that seeing consolidation, mentioned completed transactions. Are partnerships? -- help DNOW your traction that that the Dave, to in you're you some resetting just XXXX?

David Cherechinsky

for do. different for they we their necessity range products. but doesn't our actually they of requirements have digital control -- of a think sell have some -- the We competition suppliers, our I that because combined products the level of these with we are capacity a that have interact things customers, Well, the of a those to lot how quality companies,

So we'll that. benefit from

-- our are Now competencies, together, digital we benefit but still some the et big of these cetera. they strength come especially from underway, in combinations expect from as we'll

Jeffrey Robertson

million on ordinary versus on continuing lastly, repurchase -- your you your share you how of cash an about I think your think in to And far, returns, generation? shares cumulative free light dividend Can talk share $XX so repurchases about $XX strong the all million you authorization. flow

David Cherechinsky

cash our reiterate, can always doing. how generate, to stronger We mean, in flow is just just I priority we less organic -- think to risky. the we use we're terms I Yes. with risk. growth, It's want we grow, through of know less I first what

cobbling really That's capital generally about M&A. the that. years. talent talked over repurchase. dividends over is allocation a be DNOW it's a We've companies share of and We period -- the Secondarily, beyond third new of a favor our would of that's great time. strategy essence the together And

million over last over $XXX cash time. modeling we generate from $XXX year, this been much have how operations We'll would million We year. generate

ability growth, time, earnings, organic provided we're use and coupled with the over shareholders continually improved tranche broad like us probably of affords to that but the that third M&A balance do things, primarily a think share inclined I our in mean strength something over value repurchases. strong of Our to to management sheet dividends. very as I range

Operator

back There are call you. to turn no at this time. I questions Brad further Mr. Wise, over the

Brad Wise

to forward fourth We XXXX talking questions look interest and and DNOW. your call you for Well, everyone earnings in with February. full-year on quarter today conference your in our thank

the Let's the back to call. turn conclude it to operator

Operator

conference today's call. concludes This

You may now disconnect.

NOW (DNOW) 7 Nov 242024 Q3 Earnings call transcript