DNOW reported a substantial year-over-year revenue increase to $1.34 billion, far exceeding analyst expectations, though GAAP profitability was dampened by acquisition-related costs and inventory adjustments. While the top-line benefited from broad-based geographic strength and sequential growth in all segments, gross margins remained under pressure.
Key Highlights
- Revenue surged 111% year-over-year to $1.34 billion, reflecting significant inorganic expansion and sequential growth in downstream, industrial, and midstream businesses.
- GAAP gross margin contracted to 19.8%, missing the 22.4% estimate, as results were impacted by LIFO inventory costing and acquisition-related fair value step-ups.
- Cash flow from operating activities reached a strong $120 million, driven by improved working capital velocity, which helped maintain a net debt leverage ratio of 1.1x.
- The company repurchased $17 million of common stock during the quarter, bringing the year-to-date total to $92 million under its current $160 million authorization.