Earnings Conference Call August 3, 2022 8:00 a.m. CT 1
(833) 927-1758 (within North America) 1 (929) 526-1599 (outside of
North America) Access Code: 990303 Webcast: ir.dnow.com
NOW Inc. (NYSE: DNOW) announced results for the second quarter
ended June 30, 2022.
Second Quarter 2022 Financial Highlights
- Revenue was $539 million for the second quarter of 2022
- Net income was $26 million and non-GAAP net income excluding
other costs was $29 million for the second quarter of 2022
- Diluted earnings per share was $0.23 and non-GAAP diluted
earnings per share excluding other costs was $0.26 for the second
quarter of 2022
- Non-GAAP EBITDA excluding other costs for the second quarter of
2022 was $47 million or 8.7 percent of revenue
- Cash and cash equivalents was $232 million and long-term debt
was zero at June 30, 2022
- Raising guidance for full-year 2022 revenue to now increase as
much as 30 percent and full-year 2022 EBITDA excluding other costs
to approximate 7 percent of revenue
- Expanded capital allocation strategy with Board of Directors
authorized $80 million share repurchase program
David Cherechinsky, President and CEO of NOW Inc., added, “Our
great start to 2022 continued into the second quarter with another
stellar performance. I am proud of our record EBITDA as a
percentage of revenues, reaching 8.7 percent this quarter. These
results reflect the transformative two-year journey the entire
organization has made, laying the groundwork for making this
incredible turnaround indelible. I am honored to serve alongside
each of our highly talented women and men for inspiring one another
and fostering an inclusive, people-first, customer-centric culture.
We are singularly focused on delighting the customer everyday as we
win the market and pursue sustainable growth into the future.”
Prior to the earnings conference call a presentation titled “NOW
Inc. Second Quarter 2022 Key Takeaways” will be available on the
Company’s Investor Relations website.
About NOW Inc.
DistributionNOW is a worldwide supplier of energy and industrial
products and packaged, engineered process and production equipment
with a legacy of 160 years. Headquartered in Houston, Texas, with
approximately 2,300 employees and a network of locations worldwide,
we offer a broad set of supply chain solutions combined with a
suite of digital solutions branded as DigitalNOW® that provide
customers world-class technology for digital commerce, data and
information management. Our locations provide products and
solutions to exploration and production companies, midstream
transmission and storage companies, refineries, chemical companies,
utilities, mining, municipal water, manufacturers, engineering and
construction companies as well as companies operating in the
decarbonization, energy transition and renewables end markets.
Statements made in this press release that are forward-looking
in nature are intended to be "forward-looking statements" within
the meaning of Section 21E of the Securities Exchange Act of 1934
and may involve risks and uncertainties. These statements may
differ materially from actual future events or results. Readers are
referred to documents filed by NOW Inc. with the U.S. Securities
and Exchange Commission, which identify significant risk factors
which could cause actual results to differ from those contained in
the forward-looking statements.
NOW INC.
CONSOLIDATED BALANCE
SHEETS
(In millions, except share
data)
June 30,
December 31,
2022
2021
ASSETS Current assets: Cash and
cash equivalents
$
232
$
313
Receivables, net
389
304
Inventories, net
331
250
Prepaid and other current assets
17
16
Total current assets
969
883
Property, plant and equipment, net
111
111
Goodwill
79
67
Intangibles, net
13
9
Other assets
30
34
Total assets
$
1,202
$
1,104
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
290
$
235
Accrued liabilities
112
112
Other current liabilities
6
22
Total current liabilities
408
369
Long-term operating lease liabilities
12
17
Other long-term liabilities
5
6
Total liabilities
425
392
Commitments and contingencies
Stockholders' equity:
Preferred stock - par value $0.01; 20 million shares
authorized; no shares issued and outstanding
−
−
Common stock - par value $0.01; 330 million shares authorized;
110,851,347 and 110,558,831 shares issued and outstanding at June
30, 2022 and December 31, 2021, respectively
1
1
Additional paid-in capital
2,067
2,061
Accumulated deficit
(1,147
)
(1,203
)
Accumulated other comprehensive loss
(144
)
(147
)
Total stockholders' equity
777
712
Total liabilities and stockholders' equity
$
1,202
$
1,104
NOW INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)
(In millions, except per share
data)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
2022
2021
2022
2022
2021
Revenue
$
539
$
400
$
473
$
1,012
$
761
Operating expenses:
Cost of products
411
315
366
777
601
Warehousing, selling and administrative
89
85
84
173
164
Impairment and other charges
10
−
−
10
4
Operating profit (loss)
29
−
23
52
(8
)
Other income (expense)
(1
)
(1
)
10
9
(2
)
Income (loss) before income taxes
28
(1
)
33
61
(10
)
Income tax provision
2
1
3
5
2
Net income (loss)
$
26
$
(2
)
$
30
$
56
$
(12
)
Earnings (loss) per share:
Basic earnings (loss) per common share
$
0.23
$
(0.02
)
$
0.27
$
0.50
$
(0.11
)
Diluted earnings (loss) per common share
$
0.23
$
(0.02
)
$
0.27
$
0.50
$
(0.11
)
Weighted-average common shares outstanding, basic
111
110
111
111
110
Weighted-average common shares outstanding, diluted
111
110
111
111
110
NOW INC.
SUPPLEMENTAL
INFORMATION
BUSINESS SEGMENTS
(UNAUDITED)
(In millions)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
2022
2021
2022
2022
2021
Revenue: United States
$
408
$
296
$
334
$
742
$
548
Canada
72
51
82
154
109
International
59
53
57
116
104
Total revenue
$
539
$
400
$
473
$
1,012
$
761
NOW INC.
SUPPLEMENTAL INFORMATION
(CONTINUED)
U.S. GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (GAAP) TO NON-GAAP RECONCILIATIONS
NET INCOME (LOSS) TO NON-GAAP
EBITDA EXCLUDING OTHER COSTS RECONCILIATION (UNAUDITED)
(In millions)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
2022
2021
2022
2022
2021
GAAP net income (loss) (1)
$
26
$
(2
)
$
30
$
56
$
(12
)
Interest, net
−
−
−
−
−
Income tax provision
2
1
3
5
2
Depreciation and amortization
5
6
4
9
12
Other costs: Stock-based
compensation
2
2
2
4
4
Other (2)
12
1
(11
)
1
5
EBITDA excluding other costs
$
47
$
8
$
28
$
75
$
11
EBITDA % excluding other costs (3)
8.7
%
2.0
%
5.9
%
7.4
%
1.4
%
NET INCOME (LOSS) TO NON-GAAP
NET INCOME (LOSS) EXCLUDING OTHER COSTS RECONCILIATION
(UNAUDITED)
(In millions)
Three Months Ended Six Months Ended
June 30, March 31, June 30,
2022
2021
2022
2022
2021
GAAP net income (loss)
(1)
$
26
$
(2
)
$
30
$
56
$
(12
)
Other, net of tax (4) (5)
3
2
(15
)
(12
)
7
Net income (loss) excluding other costs (5)
$
29
$
–
$
15
$
44
$
(5
)
DILUTED EARNINGS (LOSS) PER
SHARE TO NON-GAAP DILUTED EARNINGS (LOSS) PER SHARE EXCLUDING OTHER
COSTS RECONCILIATION (UNAUDITED)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
2022
2021
2022
2022
2021
GAAP diluted earnings
(loss) per share (1)
$
0.23
$
(0.02
)
$
0.27
$
0.50
$
(0.11
)
Other, net of tax (4) (5)
0.03
0.02
(0.13
)
(0.11
)
0.06
Diluted earnings (loss) per share excluding other costs (5)
$
0.26
$
–
$
0.14
$
0.39
$
(0.05
)
(1)
In an effort to provide investors with additional information
regarding our results as determined by GAAP, we disclose various
non-GAAP financial measures in our quarterly earnings press
releases and other public disclosures. The non-GAAP financial
measures include: (i) earnings before interest, taxes, depreciation
and amortization (EBITDA) excluding other costs, (ii) net income
(loss) excluding other costs and (iii) diluted earnings (loss) per
share excluding other costs. Each of these financial measures
excludes the impact of certain other costs and therefore has not
been calculated in accordance with GAAP. A reconciliation of each
of these non-GAAP financial measures to its most comparable GAAP
financial measure is included in the schedules herein.
(2)
For the three months ended June 30, 2022, Other primarily
included approximately $10 million of impairment and other charges
related to the reclassification of accumulated foreign currency
translation losses due to the substantial liquidation of certain
foreign subsidiaries, as well as, approximately $2 million in
separation and transaction-related charges, which were included in
operating profit.
For the six months ended June 30, 2022,
Other primarily included approximately $10 million of impairment
and other charges discussed above, as well as, approximately $4
million in separation and transaction-related charges, partially
offset by a benefit of approximately $13 million related to the
decrease of contingent consideration liability, which was included
in other income.
(3)
EBITDA % excluding other costs is defined as EBITDA excluding
other costs divided by Revenue.
(4)
For the three months ended June 30, 2022, Other, net of tax
included approximately $10 million of impairment and other charges
related to the reclassification of accumulated foreign currency
translation losses due to the substantial liquidation of certain
foreign subsidiaries, as well as, approximately $2 million in
separation and transaction-related charges, partially offset by a
benefit of approximately $9 million from changes in the valuation
allowance recorded against the Company’s deferred tax assets.
For the six months ended June 30, 2022,
Other, net of tax included a benefit of approximately $13 million
from changes in the valuation allowance recorded against the
Company’s deferred tax assets, as well as, a benefit of
approximately $13 million related to the decrease of contingent
consideration liability, partially offset by approximately $10
million of impairment and other charges discussed above, as well
as, approximately $4 million in separation and transaction-related
charges. The Company has excluded the impact of these items on its
valuation allowance in computing net income (loss) excluding other
costs.
(5)
Totals may not foot due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220803005208/en/
Mark Johnson Senior Vice President and Chief Financial Officer
(281) 823-4754
DNOW (NYSE:DNOW)
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