DNOW 10-K & 10-Q changes, risk factors and insider trading
DNOW Inc. · NYSE · Oil & Gas Field Machinery & Equipment · CIK 1599617 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Decreased capital and other expenditures in the energy industry, which can result from decreased oil and natural gas prices, among other things, can adversely impact our customers’ demand for our products and our revenue.”
New heading “Demand for our gas utilities products and services depends on our customers’ capital investment programs, which may be reduced or delayed.”
New heading “Volatile oil and gas prices affect demand for our products.”
New heading “General economic and geopolitical conditions may adversely affect our business.”
New heading “If our product costs became subject to significant future inflationary pressures, then we may not be able to fully offset these higher costs through price increases.”
New heading “We may be adversely impacted by holding more inventory than can be sold in a commercial time frame.”
New heading “We may be unable to compete successfully with other companies in our industry.”
New heading “Demand for our sales of the products we distribute could decrease if the manufacturers of those products were to instead sell a substantial amount of goods directly to our customers in the sectors we serve.”
New heading “We may need additional capital in the future, and it may not be available on acceptable terms, or at all.”
New heading “We do not have long-term contracts or agreements with many of our customers. The contracts and agreements that we do have generally do not commit our customers to any minimum purchase volume. The loss of a significant customer may have a material adverse effect on us.”
New heading “Changes in our customer and product mix, as well as the timing, complexity and cyclical nature of our project-based work, could cause our margins and operating results to fluctuate and adversely affect our competitive position.”
New heading “Customer credit risks could result in losses.”
New heading “We may be unable to successfully execute or effectively integrate acquisitions.”
New heading “We may continue to experience challenges with the stabilization of the U.S. ERP system inherited from MRC Global.”
New heading “We are a holding company and depend upon our subsidiaries for our cash flow.”
New heading “If we lose any of our key personnel, we may be unable to effectively manage our business or continue our growth.”
New heading “Interruptions in the proper functioning of our information systems, including as a result of cyber incidents, deficiencies in our cybersecurity or disruptions involving third-party service providers, could compromise data, disrupt operations, impair financial reporting, expose us to liability and regulatory scrutiny, and adversely affect our financial results and the market price of our stock.”
New heading “The loss of third-party transportation providers upon whom we depend, or conditions negatively affecting the transportation industry, could increase our costs or cause a disruption in our operations.”
New heading “Adverse weather events or natural disasters could negatively affect local economies and disrupt operations.”
New heading “Privacy concerns relating to our personal and business information being potentially breached could damage our reputation and deter current and potential users or customers from using our products and services.”
New heading “We have goodwill recorded on our balance sheet. If our goodwill becomes impaired, we may be required to recognize charges that would reduce our income.”
New heading “Our indebtedness may affect our ability to operate our business, and this could have a material adverse effect on us.”
New heading “We may not be able to successfully integrate the business of MRC Global into our business or realize the anticipated benefits of the mergers.”
New heading “MRC Global may initially operate outside our existing control environment, and delays in integrating their systems and processes could expose us to control deficiencies and financial reporting risks.”
New heading “The failure to successfully combine the businesses of DNOW and MRC Global may adversely affect our business.”
New heading “The future results of DNOW following the merger will suffer if the combined company does not effectively manage its expanded operations.”
New heading “The financial forecasts disclosed in connection with the merger are based on various assumptions that may not be realized.”
New heading “The combined company’s ability to use the existing U.S. federal capital loss carryforwards, net operating loss carryforwards and other tax attributes could be limited.”
New heading “We may experience unexpected supply shortages.”
New heading “We may experience cost increases from suppliers, which we may be unable to pass on to our customers.”
New heading “We do not have contracts with most of our suppliers. The loss of a significant supplier would require us to rely more heavily on our other existing suppliers or to develop relationships with new suppliers. Such a loss may have an adverse effect on our product offerings and our business.”
New heading “Changes in our credit profile may affect our relationship with our suppliers, which could have a material adverse effect on our liquidity.”
New heading “Price reductions by suppliers of products that we sell could cause the value of our inventory to decline. Also, these price reductions could cause our customers to demand lower sales prices for these products, possibly decreasing our margins and profitability on sales to the extent that we purchased our inventory of these products at the higher prices prior to supplier price reductions.”
New heading “A substantial decrease in the price of steel could significantly lower our product margin or cash flow.”
New heading “If steel prices rise, we may be unable to pass along the cost increases to our customers.”
New heading “If existing tariffs and duties on imports of line pipe or certain of the other products that we sell are lifted, the U.S. market could see an increased supply of less expensive products, which could adversely affect our business and results of operations.”
New heading “Changes in trade policies, including the imposition or elimination of additional tariffs and duties, and risks with governmental instability in certain parts of the world could negatively impact our business, financial condition and results of operations.”
New heading “We are subject to strict environmental, health and safety laws and regulations that may lead to significant liabilities and have a material adverse effect on our business, financial condition and results of operations.”
New heading “Existing or future laws, regulations, court orders or other public- or private-sector initiatives to limit greenhouse gas emissions or relating to climate change may reduce demand for our products and services and the physical effects of climate change could damage our assets or facilities, adversely impacting our business, results of operations, and financial condition.”
New heading “We may not have adequate insurance for potential liabilities, including liabilities arising from litigation.”
New heading “Due to our position as a distributor, we are subject to personal injury, product liability and environmental claims involving allegedly defective products.”
New heading “We face risks associated with conducting business in markets outside of the U.S. and Canada.”
New heading “We are subject to U.S. and other anti-corruption laws, trade controls, economic sanctions, and similar laws and regulations, including those in the jurisdictions where we operate. Our failure to comply with these laws and regulations could subject us to civil, criminal and administrative penalties and harm our reputation.”
New heading “Compliance with and changes in laws and regulations in the countries in which we operate could have a significant financial impact and affect how and where we conduct our operations.”
New heading “We are a defendant in asbestos-related lawsuits. Exposure to these and any future lawsuits could have a material adverse effect on us.”
New heading “The market price of our shares may fluctuate widely.”
New heading “Your percentage ownership in us may be diluted in the future.”
New heading “We cannot assure you that we will pay dividends on our common stock.”
New heading “Certain provisions in our corporate documents and Delaware law may prevent or delay an acquisition of our company, even if that change may be considered beneficial by some of our stockholders.”
New heading “Demand for our gas utilities products and services depends on our customers’ capital investment programs, which may be reduced or delayed.”
New heading “We may be adversely impacted by holding more inventory than can be sold in a commercial time frame.”
New heading “We may continue to experience challenges with the stabilization of the U.S. ERP system inherited from MRC Global.”
New heading “Interruptions in the proper functioning of our information systems, including as a result of cyber incidents, deficiencies in our cybersecurity or disruptions involving third-party service providers, could compromise data, disrupt operations, impair financial reporting, expose us to liability and regulatory scrutiny, and adversely affect our financial results and the market price of our stock.”
New heading “Our indebtedness may affect our ability to operate our business, and this could have a material adverse effect on us.”
New heading “We may not be able to successfully integrate the business of MRC Global into our business or realize the anticipated benefits of the mergers.”
New heading “MRC Global may initially operate outside our existing control environment, and delays in integrating their systems and processes could expose us to control deficiencies and financial reporting risks.”
New heading “The failure to successfully combine the businesses of DNOW and MRC Global may adversely affect our business.”
New heading “The future results of DNOW following the merger will suffer if the combined company does not effectively manage its expanded operations.”
New heading “The financial forecasts disclosed in connection with the merger are based on various assumptions that may not be realized.”
New heading “The combined company’s ability to use the existing U.S. federal capital loss carryforwards, net operating loss carryforwards and other tax attributes could be limited.”
New heading “We are a defendant in asbestos-related lawsuits. Exposure to these and any future lawsuits could have a material adverse effect on us.”
Removed heading “Interruptions in the proper functioning of our information systems could disrupt operations and cause increases in costs or decreases in revenues.”
Removed heading “The occurrence of cyber incidents, or a deficiency in our cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information or damage to our Company’s image, all of which could negatively impact our financial results.”
Largest changes
“We are subject to U.S. and other anti-corruption laws, trade controls, economic sanctions, and similar laws and regulations, including those in the jurisdictions where we operate. Our failure to comply with these laws and regulations could subject us to civil, criminal and administrative penalties and harm our reputation.”see in full comparison
“Existing or future laws, regulations, court orders or other public- or private-sector initiatives to limit greenhouse gas emissions or relating to climate change may reduce demand for our products and services and the physical effects of climate change could damage our assets or facilities, adversely impacting our business, results of operations, and financial condition.”see in full comparison
“Newly acquired operations may temporarily function without full alignment to our established control structure, and the process of integrating their financial reporting systems, policies, and procedures may take significant time and resources. During this transition period, we may identify deficiencies in disclosure controls and procedures or internal control over financial reporting (“ICFR”) that, if not remediated timely, could affect the reliability or timeliness of our financial reporting. These risks are heightened while we stabilize MRC Global’s U.S. …”see in full comparison
“If existing tariffs and duties on imports of line pipe or certain of the other products that we sell are lifted, the U.S. market could see an increased supply of less expensive products, which could adversely affect our business and results of operations.”see in full comparison
“Changes in trade policies, including the imposition or elimination of additional tariffs and duties, and risks with governmental instability in certain parts of the world could negatively impact our business, financial condition and results of operations.”see in full comparison
“Privacy concerns relating to our personal and business information being potentially breached could damage our reputation and deter current and potential users or customers from using our products and services.”see in full comparison
Full comparison: every changed paragraph (124)
Risk Factors Summary
The following is a summary of the certain risks that we believe apply to our business and the industry in which we operate:
Risks Relating to Our Business
Decreased capital and other expenditures in the energy industry, which can result from decreased oil and natural gas prices, among other things, can adversely impact our customers’ demand for our products and our revenue.
Demand for our gas utilities products and services depends on our customers’ capital investment programs, which may be reduced or delayed.
Volatile oil and gas prices affect demand for our products.
General economic and geopolitical conditions may adversely affect our business.
If our product costs became subject to significant future inflationary pressures, then we may not be able to fully offset these higher costs through price increases.
We may be adversely impacted by holding more inventory than can be sold in a commercial time frame.
We may be unable to compete successfully with other companies in our industry.
Demand for our sales of the products we distribute could decrease if the manufacturers of those products were to instead sell a substantial amount of goods directly to our customers in the sectors we serve.
We may need additional capital in the future, and it may not be available on acceptable terms, or at all.
We do not have long-term contracts or agreements with many of our customers. The contracts and agreements that we do have generally do not commit our customers to any minimum purchase volume. The loss of a significant customer may have a material adverse effect on us.
Changes in our customer and product mix, as well as the timing, complexity and cyclical nature of our project-based work, could cause our margins and operating results to fluctuate and adversely affect our competitive position.
Customer credit risks could result in losses.
We may be unable to successfully execute or effectively integrate acquisitions.
We may continue to experience challenges with the stabilization of the U.S. ERP system inherited from MRC Global.
We are a holding company and depend upon our subsidiaries for our cash flow.
If we lose any of our key personnel, we may be unable to effectively manage our business or continue our growth.
Interruptions in the proper functioning of our information systems, including as a result of cyber incidents, deficiencies in our cybersecurity or disruptions involving third-party service providers, could compromise data, disrupt operations, impair financial reporting, expose us to liability and regulatory scrutiny, and adversely affect our financial results and the market price of our stock.
The loss of third-party transportation providers upon whom we depend, or conditions negatively affecting the transportation industry, could increase our costs or cause a disruption in our operations.
Adverse weather events or natural disasters could negatively affect local economies and disrupt operations.
Privacy concerns relating to our personal and business information being potentially breached could damage our reputation and deter current and potential users or customers from using our products and services.
We have goodwill recorded on our balance sheet. If our goodwill becomes impaired, we may be required to recognize charges that would reduce our income.
Our indebtedness may affect our ability to operate our business, and this could have a material adverse effect on us.
Risks Relating to the MRC Global Merger
We may not be able to successfully integrate the business of MRC Global into our business or realize the anticipated benefits of the mergers.
MRC Global may initially operate outside our existing control environment, and delays in integrating their systems and processes could expose us to control deficiencies and financial reporting risks.
The failure to successfully combine the businesses of DNOW and MRC Global may adversely affect our business.
The future results of DNOW following the merger will suffer if the combined company does not effectively manage its expanded operations.
The financial forecasts disclosed in connection with the merger are based on various assumptions that may not be realized.
The combined company’s ability to use the existing U.S. federal capital loss carryforwards, net operating loss carryforwards and other tax attributes could be limited.
Risks Relating to Our Supply Chain and International Trade Policies
We may experience unexpected supply shortages.
We may experience cost increases from suppliers, which we may be unable to pass on to our customers.
We do not have contracts with most of our suppliers. The loss of a significant supplier would require us to rely more heavily on our other existing suppliers or to develop relationships with new suppliers. Such a loss may have an adverse effect on our product offerings and our business.
Changes in our credit profile may affect our relationship with our suppliers, which could have a material adverse effect on our liquidity.
Price reductions by suppliers of products that we sell could cause the value of our inventory to decline. Also, these price reductions could cause our customers to demand lower sales prices for these products, possibly decreasing our margins and profitability on sales to the extent that we purchased our inventory of these products at the higher prices prior to supplier price reductions.
A substantial decrease in the price of steel could significantly lower our product margin or cash flow.
If steel prices rise, we may be unable to pass along the cost increases to our customers.
If existing tariffs and duties on imports of line pipe or certain of the other products that we sell are lifted, the U.S. market could see an increased supply of less expensive products, which could adversely affect our business and results of operations.
Changes in trade policies, including the imposition or elimination of additional tariffs and duties, and risks with governmental instability in certain parts of the world could negatively impact our business, financial condition and results of operations.
Risks Relating to Legal and Regulatory Matters
We are subject to strict environmental, health and safety laws and regulations that may lead to significant liabilities and have a material adverse effect on our business, financial condition and results of operations.
Existing or future laws, regulations, court orders or other public- or private-sector initiatives to limit greenhouse gas emissions or relating to climate change may reduce demand for our products and services and the physical effects of climate change could damage our assets or facilities, adversely impacting our business, results of operations, and financial condition.
We may not have adequate insurance for potential liabilities, including liabilities arising from litigation.
Due to our position as a distributor, we are subject to personal injury, product liability and environmental claims involving allegedly defective products.
We face risks associated with conducting business in markets outside of the U.S. and Canada.
We are subject to U.S. and other anti-corruption laws, trade controls, economic sanctions, and similar laws and regulations, including those in the jurisdictions where we operate. Our failure to comply with these laws and regulations could subject us to civil, criminal and administrative penalties and harm our reputation.
Compliance with and changes in laws and regulations in the countries in which we operate could have a significant financial impact and affect how and where we conduct our operations.
We are a defendant in asbestos-related lawsuits. Exposure to these and any future lawsuits could have a material adverse effect on us.
Risks Relating to Our Common Stock
The market price of our shares may fluctuate widely.
Your percentage ownership in us may be diluted in the future.
We cannot assure you that we will pay dividends on our common stock.
Certain provisions in our corporate documents and Delaware law may prevent or delay an acquisition of our company, even if that change may be considered beneficial by some of our stockholders.
Demand for our gas utilities products and services depends on our customers’ capital investment programs, which may be reduced or delayed.
Gas utilities must obtain regulatory approval for many infrastructure and maintenance projects. As a result, our revenues depend in part on the timing and magnitude of our customers’ capital expenditure programs. Regulatory delays, adverse rate case outcomes, political considerations, or changes in economic conditions may cause utilities to postpone, scale back, or cancel projects. Any such reductions or delays could reduce demand for our products and services and materially adversely affect our business.
Oil and natural gas prices have been and are expected to remain volatile. U.S. rig count decreased from 621589 rigs on January 5,3, 20242025 to 589546 rigs on December 27,30, 2024.2025. U.S. rig count averaged 599561 rigs in 2024. U.S. rig count at January 24, 2025 was 576 rigs.2025. The price for West Texas Intermediate crude was $73.79$57.21 per barrel at January 2, 2025,2026, $73.79 per barrel on January 2, 2025 and $70.62 per barrel on January 2, 20242024. andAs $76.87seen per barrel onin January 3,2026 2023.as Evencompared thoughto January 2025, there was a decrease of $16.58, or 22%, indicating the pricesprice as of the beginning of January for the last three years have been relatively stable, prices have historically been very volatile,volatility and this historical volatility has caused oil and natural gas companies to change their strategies and expenditure levels from year to year. We have experienced in the past, and we will likely experience in the future, significant fluctuations in operating results based on these changes.
U.S. and global general economic conditions affect many aspects of our business, including demand for the products we distribute and the pricing and availability of supplies. General economic conditions and predictions regarding future economic conditions also affect our forecasts. A decrease in demand for the products we distribute or other adverse effects resulting from an economic downturn may cause us to fail to achieve our anticipated financial results. General economic factors beyond our control that affect our business and customers include public health crises, interest rates, recession, inflation, deflation, customer credit availability, consumer credit availability, consumer debt levels, performance of housing markets, energy costs, tariffs, tax rates and policy, unemployment rates, commencement or escalation of war or hostilities, the threat or possibility of war, terrorism or other global or national unrest, political or financial instability, and other matters that influence our customers’ spending. Increasing volatility in financial markets may cause these factors to change with a greater degree of frequency or increase in magnitude. Fluctuations in foreign currency exchange rates, particularly in countries where we operate or source products, may affect our revenue, costs, margins or cash flows. Currency volatility could also affect the valuation of inventory and receivables and complicate working capital management. In addition, worldwide economic conditions could have an adverse effect on our business, prospects, operating results, financial condition and cash flows.
Management's Discussion & Analysis (MD&A)
New heading “Reclassification”
New heading “Change in Accounting Principles”
New heading “Years Ended December 31, 2025 and December 31, 2024”
New heading “Fiscal Year 2025 Compared to Fiscal Year 2024”
Removed heading “Executive Summary”
Removed heading “Consolidated Results”
Removed heading “Provision (benefit) for income taxes”
Removed heading “Consolidated Results”
Removed heading “Years Ended December 31, 2023 and December 31, 2022”
Removed heading “Non-GAAP Financial Measures and Reconciliations”
Removed heading “Effect of the Change in Exchange Rates”
Removed heading “Allowance for Credit Losses”
Removed heading “Recently Issued Accounting Standards”
Removed heading “Recently Adopted Accounting Standards”
Largest changes
“We define Adjusted EBITDA as net (loss) income plus interest, taxes, depreciation and amortization and excluding other costs, such as stock-based compensation, restructuring and exit costs, transaction-related charges, long-lived asset impairments (including goodwill and intangible assets), inventory-related charges incremental to normal operations and plus or minus the impact of our LIFO inventory costing methodology. …”see in full comparison
“We define Adjusted EBITDA as net (loss) income plus interest, taxes, depreciation and amortization and excluding other costs, such as stock-based compensation, restructuring and exit costs, transaction related charges, long-lived asset impairments (including goodwill and intangible assets), inventory-related charges incremental to normal operations and plus or minus the impact of our LIFO inventory costing methodology. …”see in full comparison
“We define Adjusted EBITDA as net income plus interest, taxes, depreciation and amortization and excluding other costs, such as stock-based compensation, restructuring and exit costs, transaction related charges, long-lived asset impairments (including goodwill and intangible assets), inventory-related charges incremental to normal operations and plus or minus the impact of our LIFO inventory costing methodology. Transaction-related charges include transaction costs, inventory fair value step-up, retention bonus accruals and integration expenses associated with acquisitions. …”see in full comparison
“For the year ended December 31, 2024, Other included International restructuring charges of $9 million of which approximately $6 million of foreign currency translation losses included in impairment and other charges, approximately $2 million of inventory write-downs included in cost of products and $1 million of other exit costs included in warehousing, selling and administrative. …”see in full comparison
“We play a vital role in supporting customers’ supply chains, providing essential products for energy and industrial markets, including infrastructure across upstream, midstream, gas utilities, downstream and energy transition sectors. Our business depends on both capital and maintenance spending by our customers. Global oil and gas consumption is rising due to population growth and expanding energy needs in emerging markets. …”see in full comparison
“The U.S. government has imposed tariffs on steel products, which were expanded throughout 2025. A significant portion of the products that we sell are made from steel. In addition, a portion of the products that we sell are sourced from China and India, including certain valve sub-assemblies that are finished in the U.S. The tariffs on products from Canada and Mexico have a lesser direct impact on our business as they do not represent a significant portion of the products that we purchase from those countries for resale to our customers. Even so, a significant portion of our U.S. …”see in full comparison
Full comparison: every changed paragraph (183)
Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) and other parts of this report contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and information relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, us. Generally, words such as “anticipates”, “assumes”, “believes”, “budget”, “estimates”, “expects”, “goal”, “guidance”, “plans”, “may”, “will”, “might”, “would”, “should”, “seeks”, “project”, “predict”, “potential”, “objective”, “currently”, “continue”, “intends”, “outlook”, “forecasts”, “targets”, “reflects,” “could”, or other similar words and phrases identify forward-looking statements, although some forward-looking statements could be expressed differently. These statements reflect our current views and beliefs with respect to future events as of the date hereof, are not historical facts or guarantees of future performance and involve risks and uncertainties that are difficult to predict and many of which are outside of our control. Further, certain forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. See “Note About Forward-Looking Statements” at the beginning of this report for further discussion. All forward-looking statements made in this report are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed in this report will increase with the passage of time. We undertake no obligation, and disclaim any duty, to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changes in our expectations or otherwise, except to the extent required by applicable law.
The accompanying consolidated financial information includeincludes the accounts of the Company and its consolidated subsidiaries. All significant intercompany transactions and accounts have been eliminated. Variable interest entities for which the Company is the primary beneficiary are fully consolidated with the equity held by the outside stockholders and their portion of net income (loss) income reflected as noncontrolling interest in the accompanying consolidated financial statements.
Reclassification
Certain amounts in the prior period financial statements have been reclassified to conform with the Company's current period presentation. Specifically, amounts previously reported in “Other assets” have been reclassified to “Operating right-of-use assets”. In the fourth quarter of 2025, the Company elected to begin presenting a subtotal for gross profit and changed the terminology used in our reporting from “warehousing, selling and administrative” to “selling, general and administrative expenses” on the consolidated statements of operations. These reclassifications have no effect on previously reported total assets, total liabilities and stockholders’ equity, or net (loss) income on the Company's consolidated financial statements.
Change in Accounting Principles
During the fourth quarter of 2025, DNOW changed its inventory valuation method for U.S. inventories from the moving average cost method to the Last-In, First-Out (“LIFO”) method. The Company determined that retrospective application for periods prior to fiscal year 2023 was impracticable due to the need to establish a base-year cost and reconstruct historical layers because records of inventory purchases and sales are no longer available for all prior years. However, the Company has all of the information necessary to apply the LIFO method on a prospective basis beginning in 2023. The Company determined that LIFO is preferable under ASC 250 because it better reflects the current cost of inventory in cost of goods sold, given the commodity-like nature of DNOW’s products and the frequent price fluctuations driven by pricing pressure, global supply dynamics, tariffs and inflation. Prior period amounts were updated to conform to the current year presentation for the change in accounting principle. See Note 1 “Organization and Basis of Presentation” of the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Form 10-K) for additional information.
We are a premier provider of energy and industrial solutions with a legacy of over 160 years as a global leader in the distribution of PVF, pumps and fabricated equipment. We provide quality products customers require to build and maintain essential infrastructure and operating equipment across the upstream, midstream, gas utilities, downstream, energy transition and industrial markets as well as innovative supply chain solutions, technical product expertise and a robust digital platform to customers globally through our leading position across each of our diversified end-markets including the following sectors:
Upstream: exploration, production and extraction of oil and gas, as well as the use and disposal of produced water Midstream: transmission and gathering infrastructure for processing and transmission of oil, gas or water Gas Utilities: gas utilities (storage and distribution of natural gas) Downstream and Industrial: downstream and industrial including crude oil refining, petrochemical and chemical processing, general industrials, pharmaceutical, mining, water/wastewater treatment, data centers, LNG terminals and RNG facilities We offer a comprehensive portfolio of products, including an extensive array of PVF, pumps, fabricated equipment, oilfield supply, valve automation and modification, measurement, instrumentation and other general and specialty products from our global network of thousands of suppliers. With over 160 years of history, our approximately 5,300 employees serve our customers through approximately 300 strategic locations including regional distribution centers, super centers, branches and corporate offices.
We are a distributor to the oil and gas, energy transition and industrial markets with a legacy of over 160 years. We operate primarily under the DNOW brand along with several affiliated brands operating in local, regional or international markets that are tied to prior acquisitions. Through our network of approximately 165 locations and approximately 2,575 employees worldwide, we stock and sell a comprehensive offering of energy products as well as a selection of products for industrial applications. Our product and service offerings are consumed throughout the energy industry – from upstream drilling and completion, E&P, midstream transmission, gas and crude oil processing infrastructure development to downstream petroleum refining and petrochemicals – as well as in other industries, such as chemical processing, mining, water/wastewater, food and beverage, gas utilities and the evolution of energy transition markets inclusive of greenhouse gas reduction and emissions capture and storage, renewable fuels such as biofuels, RNG, wind, solar, production of hydrogen as a fuel to power equipment and select industrial markets. The energy and industrial distribution end markets we serve are inclusive of engineering and construction firms that perform capital and maintenance projects for their clients. We also provide supply chain and materials management solutions to the same markets where we sell products.
Our global product offering includes pipe, manual and automated valves, fittings, flanges, gaskets, fasteners, electrical, instrumentation, artificial lift, pumping solutions and modular process, production, measurement, automation, control equipment and consumable MRO supplies. We also offer sourcing, procurement, warehouse and inventory management solutions as part of our supply chain and materials management offering. We have developed expertise in providing application systems, work processes, parts integration, optimization solutions and after-sales support that provide more efficient and productive solutions for our customers.
Our customers use our supply chain solutions, PVF, pumps, fabricated equipment and other infrastructure products that we supply in mission critical process applications that require us to provide a high degree of product knowledge, technical expertise and comprehensive value-added services to our customers. We seek to provide best-in-class service for customers by satisfying the most complex, multi-site needs of many of the largest companies in the energy, industrial and gas utilities sectors as their primary PVF, pump and gas products supplier. Our solutions include outsourcing portions or entire functions of our customers’ procurement, warehouse and inventory management, logistics, point of issue technology, project management, business process and performance metrics reporting. These solutions allow us to leverage the infrastructure of our SAP™ ERP systemsystems and other technologies to streamline our customers’ purchasing process, from requisition to procurement to payment, by digitally managing workflow, improving approval routing and providing robust reporting functionality. We believe the critical role we play in our customers' supply chain, together with our extensive product and service offerings, broad global presence, customer-linked scalable information systems and efficient distribution capabilities, serve to solidify our long-standing customer relationships and drive our growth.
Key Drivers of Our Business
We derive our revenue predominantly from the sale of PVF, pumps, and fabricated equipment to upstream, midstream, gas utilities, downstream, and industrial markets customers globally. Our business is dependent upon both the current conditions and future prospects in these industries and, in particular, our customers' maintenance and expansionary operating and capital expenditures. The outlook for customer spending is influenced by numerous factors, including the following:
Oil and Natural Gas Demand and Prices. Sales of PVF and infrastructure products to the oil and natural gas industry constitute a significant portion of our sales. As a result, we depend upon the maintenance and capital expenditures of oil and natural gas companies to explore for, produce and process oil, natural gas and refined products. Demand for oil and natural gas, current and projected commodity prices and the costs necessary to produce oil and gas impact customer capital spending, additions to and maintenance of pipelines, refinery utilization and petrochemical processing activity. Additionally, as these participants rebalance their capital investment away from traditional, carbon-based energy toward alternative sources, we expect to continue to supply them and enhance our product and service offerings to support their changing requirements, including in areas such as carbon capture utilization and storage, biofuels, offshore wind and hydrogen processing.
Gas Utility and Energy Infrastructure Integrity and Modernization. Ongoing maintenance and upgrading of existing energy facilities, pipelines and other infrastructure equipment is a meaningful driver for business across the sectors we serve. This is particularly true for the Gas Utilities sector. Activity with customers in this sector is driven by upgrades and replacement of existing infrastructure as well as new residential and commercial development. Continual maintenance of an aging network of pipelines and local distribution networks is a critical requirement for these customers irrespective of broader economic conditions. As a result, this business tends to be more stable over time than our traditional oilfield-dependent businesses and moves independently of commodity prices.
Economic Conditions. Changes in the general economy or in the energy sector (domestically or internationally) can cause demand for fuels, feedstocks and petroleum-derived products to vary, thereby causing demand for the products we distribute to materially change.
Manufacturer and Distributor Inventory Levels of PVF, Pumps, Fabricated Equipment and Related Products. Manufacturer and distributor inventory levels of PVF and related products can change significantly from period to period. Increased inventory levels by manufacturers or other distributors can cause an oversupply of PVF and related products in the industry sectors we serve and reduce the prices that we are able to charge for the products we distribute. Reduced prices, in turn, would likely reduce our profitability. Conversely, decreased manufacturer inventory levels may ultimately lead to increased demand for our products and often result in increased revenue, higher PVF pricing and improved profitability.
Steel Prices, Availability and Supply and Demand. Fluctuations in steel prices can lead to volatility in the pricing of the products we distribute, especially carbon steel line pipe products, which can influence the buying patterns of our customers. A majority of the products we distribute contain various types of steel. The worldwide supply and demand for these products and other steel products that we do not supply, impact the pricing and availability of our products and, ultimately, our sales and operating profitability. Additionally, supply chain disruptions with key manufacturers or in markets in which we source products can impact the availability of inventory we require to support our customers. Furthermore, logistical challenges, including inflation and availability of freight providers and containers for shipping can also significantly impact our profitability and inventory lead-times. These constraints can also present an opportunity, as our supply chain expertise allows us to meet customer expectations when the competition may not.
We support land and offshore operations for the major oil and gas producing regions around the world through our network of locations. Our key markets include the U.S., Canada, UK, Norway, Australia, the Netherlands, Singapore and the Middle East area with the ability to provide products through an export model to operators with operations in Southeast Asia and West Africa. Products sold through our locations support brownfield and greenfield expansion upstream capital projects, midstream infrastructure and transmission and MRO consumables used in day-to-day production. We provide downstream energy and industrial products for petroleum refining, chemical processing, LNG terminals, power generation, gas utilities serviced by a combination of customer on-site locations and off-site service locations in combination with our digital offerings.
Our supplier network consists of thousands of vendors in approximately 30 countries. From our operations, we sell to customers operating in approximately 80 countries. The supplies and equipment stocked by each of our locations are customized to meet varied and changing local customer demands. The breadth, scale and availability of our product offering enhances our value proposition to our customers, suppliers and shareholders.
We employ advanced information technologies, including a common ERP platform across most of our business, to provide complete procurement, warehouse and inventory management and logistics coordination to our customers around the globe. Having a common ERP platform allows immediate visibility into our inventory assets, operations and financials worldwide, enhancing decision making and efficiency.
Our revenue and operating results are related to the level of worldwide oil and gas drilling and production activities and the profitability and cash flow of oil and gas companies and drilling contractors, which in turn are affected by current and anticipated prices of oil and gas. Oil and gas prices have been and are likely to continue to be volatile. See Item 1A. “Risk Factors.” We conduct our operations through three business segments: U.S., Canada and International. See Item 1. “Business—Summary of Reportable Segments” for a discussion of each of these business segments.
Unless indicated otherwise, results of operations data are presented in accordance with accounting principles generally accepted in the United States (“GAAP”). In an effort to provide investors with additional information regarding our results as determined by GAAP, we may disclose non-GAAP financial measures. The primary non-GAAP financial measuremeasures we focusdisclose onare isAdjusted earningsGross beforeProfit, interest,Adjusted taxes,Gross depreciationProfit as a percentage of revenue, Adjusted EBITDA and amortization, excluding other costs (“EBITDA excluding other costs”), andAdjusted EBITDA excluding other costs as a percentage of revenue. This financial measure excludes the impact of certain amounts and is not calculated in accordance with GAAP. See “Non-GAAP Financial Measures and Reconciliations” in Results of Operations for an explanation of our use of non-GAAP financial measures and reconciliations to the corresponding measures calculated in accordance with GAAP.
We define Adjusted Gross Profit as revenue, less cost of products, plus amortization of intangibles, plus inventory-related charges incremental to normal operations, plus transaction costs associated with acquisitions, such as inventory fair value step-up or write-downs, and plus or minus the impact of our LIFO inventory costing methodology. We present Adjusted Gross Profit because we believe it is a useful indicator of our operating performance without regard to items, such as amortization of intangibles that can vary substantially from company to company depending upon the nature and extent of acquisitions. Similarly, the impact of the LIFO inventory costing method can cause results to vary substantially from company to company depending upon whether they elect to utilize LIFO and depending upon which method they may elect. We use Adjusted Gross Profit as a key performance indicator in managing our business. We believe that gross profit is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to Adjusted Gross Profit.
We define Adjusted EBITDA as net (loss) income plus interest, taxes, depreciation and amortization and excluding other costs, such as stock-based compensation, restructuring and exit costs, transaction-related charges, long-lived asset impairments (including goodwill and intangible assets), inventory-related charges incremental to normal operations and plus or minus the impact of our LIFO inventory costing methodology. Transaction-related charges include transaction costs, inventory fair value step-up or write-down, retention bonus accruals and integration expenses associated with acquisitions. This financial measure excludes the impact of certain amounts and is not calculated in accordance with GAAP. See Results of Operations for an explanation of our use of non-GAAP financial measures and reconciliations to the corresponding measures calculated in accordance with GAAP.
Recent Trends and Outlook
On January 3, 2026, the U.S. government intervened in Venezuela and announced it intends to support a new Venezuela leader while managing their oil resources inviting American companies to assist. Previously embargoed oil cargoes from Venezuela have now shipped for various destinations. The effects of these actions are still unfolding; however, in the short-term, having extra oil available tends to have a negative impact on upstream operations by driving down the price of oil. In the medium to long-term, our business could experience increased product sales in our Upstream and Downstream and Industrial sectors as American companies re-invest in the Venezuelan oil and gas infrastructure.
Oil and gas producers have generally remained disciplined in their capital expenditures and have generally not increased production beyond their ability to fund their expenditures from prudent borrowings and cash flow from operations. We expect this trend to continue.
The U.S. government has imposed tariffs on steel products, which were expanded throughout 2025. A significant portion of the products that we sell are made from steel. In addition, a portion of the products that we sell are sourced from China and India, including certain valve sub-assemblies that are finished in the U.S. The tariffs on products from Canada and Mexico have a lesser direct impact on our business as they do not represent a significant portion of the products that we purchase from those countries for resale to our customers. Even so, a significant portion of our U.S. inventory and products are domestically made but some products, such as valves and pumps, often have a significant portion of non-U.S. components, and we do import some valves, pumps and other products. In many instances, we have successfully collaborated with our customers to implement tariff pass-throughs throughout 2025. However, in some instances, tariffs raised infrastructure costs for our customers, making projects less viable and resulting in delays or cancellations among certain downstream clients in the second half of 2025.
The U.S. Supreme Court has now invalidated the use of the International Emergency Economic Powers Act (“IEEPA”) to impose tariffs. The overall impact on tariffs is unknown at this time. The administration has already relied on other statutory authorities to maintain or adjust tariffs, and those sector-specific tariffs remain fully in in effect. Notably, Section 232 tariffs on steel and aluminum remain in effect.
The Upstream sector of our business includes the traditional exploration, production and extraction of oil and gas, as well as the use and disposal of produced water, and is the most cyclical of our markets. In 2025, this sector represented 62% of our total Company revenue. The Upstream sector revenue increased 5% in 2025 compared to 2024. During 2025, West Texas Intermediate (“WTI”) oil prices averaged $65.46 per barrel, down 14.5% from 2024. In 2025, oil prices fell due to a surplus in global supply, which was driven by record levels of U.S. shale production and the gradual ending of OPEC+'s production cuts. Natural gas prices also drive customer activity and have experienced volatility but increased throughout 2025, driven by increased LNG exports and lower storage levels.
Recent industry reports have projected flat to lower customer spending levels in 2026, due to current supply and demand projections. We also expect our larger public customers will remain disciplined and consistent with their commitments to their budgets, maintaining returns to their shareholders and operating within their cash flow requirements. Despite this, we expect opportunities for revenue synergies from cross-selling products related to our acquisitions will support growth in this sector. We also expect incremental growth in water management and disposal solutions, supported by our Flex Flow and Trojan offerings, as customers seek to optimize operating costs and manage produced water volumes more effectively.
The majority of the revenue in this sector comes from large independents and major exploration and production companies, which are expected to strongly influence the increase in capital spending in the coming years for this sector.
DNOW’s Midstream sector is primarily U.S. based and driven by the increased demand for pipelines and gathering systems. In 2025, this sector represented 21% of our total Company revenue. The Midstream sector revenue increased 31% in 2025 compared to 2024. The outlook in 2026 is expected to have growth primarily driven by demand for natural gas infrastructure as LNG exports continue to rise and gas fired power generation increases for data centers. This market driver is anticipated to positively impact the Midstream sector, contributing to growth. The revenue profile for this sector tends to be volatile between quarters, as it can often be tied to large projects.
Furthermore, as new LNG capacity comes online this drives the need for associated pipeline infrastructure, which several LNG projects are expected to do in 2026. U.S. natural gas production is expected to rise, leading to the need for additional pipeline infrastructure and gathering systems. Rising electricity consumption from AI-driven data centers creates the need for additional natural gas transportation, which is also expected to drive growth in this sector.
In some cases, the market drivers for the Midstream sector are also tied to the same drivers as the Upstream sector, but on a one to two quarter lag. To the extent completion activity and related production increase, this could also have the impact of improving our revenue opportunities in the Midstream sector. New well completions and higher production levels drive the need for additional surface equipment and gathering and processing infrastructure, benefiting this sector's revenue. Following the merger with MRC Global, we have enhanced our capabilities in large-bore valves, larger outside diameter pipe, measurement and instrumentation and valve actuation and automation. We believe the combined company is well positioned to capture midstream growth opportunities both domestically and internationally, supported by an expanded footprint and integrated solutions offering.
The Gas Utilities sector contributed 7% of our total Company revenue in 2025 and will represent a greater proportion of revenue in 2026 following the November 2025 acquisition of MRC Global. Market growth fundamentals of this sector are positive due to the demand for natural gas, distribution integrity upgrade programs as well as new home construction in certain U.S. states. The majority of the work we perform with our gas utility customers are multi-year programs where they continually evaluate, monitor and implement measures to improve their pipeline distribution networks, ensuring the safety and the integrity of their system. As of 2024, which is the most recently available information, the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) estimates approximately 34% of the gas distribution main and service line miles are over 40 years old or of unknown origin. This infrastructure requires continuous replacement and maintenance as these gas distribution networks continue to age. We supply many of the replacement products including valves, line pipe, smart meters, risers and other gas products. A large percentage of the line pipe we sell is sold to our gas utilities customers for line replacement and new sections of their distribution network. As our gas utility customers connect new homes and businesses to their gas distribution network, the growth in the housing market creates new revenue opportunities for our business to supply the related infrastructure products. Some of our customers in this sector support both gas and electric distribution, and certain customers have announced allocating a higher proportion of their capital budget to electric distribution. However, based on market fundamentals, the need for natural gas to fuel new electric generation facilities and new market share opportunities, we expect the Gas Utilities sector to continue to have steady growth in the coming years. Additionally, due to its reduced dependency on energy demand and commodity prices this sector is less volatile than the others.
Downstream and Industrial sector generated 10% of our total Company revenue for 2025 and increased 41% from 2024. We expect this sector to deliver strong growth in the coming years driven by increased customer activity levels related to maintenance, repair and operations (“MRO”) activities, project turnaround activity in refineries and chemical plants and new energy transition related projects. Additionally, we have expanded into new markets, including mining and data centers. We are also negotiating master service agreements with targeted owners and subcontractors for PVF work in new data center cooling systems. While still early, we are seeing encouraging momentum in both areas. This sector has a significant amount of project activity, which can create substantial variability between quarters.
The outlook for energy transition projects within the Downstream and Industrial sector is supported by government incentives and policies. Many of our customers have made commitments to net zero emissions to address climate change. Our customer base represents many of the primary leaders in the energy transition movement, and they are positioned to lead the effort to decarbonize through nearer-term efforts such as renewable or biodiesel refineries and offshore wind power generation as well as longer-term efforts such as carbon capture and storage and hydrogen. However, as U.S. government support is waning for these projects even while European government support continues, we are monitoring our customers plans for, and the pace of development of, these projects.
Supply Chain
Occasionally, the U.S. imposes tariffs on certain imported products that we distribute. These tariffs typically lead to an increase in the prices we pay for these products. Despite these cost pressures, we are generally able to mitigate the impact by leveraging our long-standing relationships with suppliers and the substantial volume of our purchases. These factors enable us to secure market-competitive pricing even in the face of rising costs.
Our supply chain expertise, strong relationships with key suppliers, and effective inventory management allow us to navigate both inflationary and deflationary market conditions. This strategic approach ensures that we can maintain stability in our operations despite external economic pressures. Furthermore, our contracts with customers typically include provisions that allow us to respond quickly to price increases. These contractual mechanisms enable us to pass along cost increases to our customers.
It is important to note that these challenges are dynamic and continue to evolve. If additional pricing fluctuations arise due to tariffs or quotas, the ultimate effect on our revenue and cost of products—which are determined using the LIFO inventory costing methodology—remains uncertain and subject to volatility.
* AveragesMonthly averages for the years indicated, except for U.S. Wells Completed. See sources on the following page.
The following table details the U.S., Canadian and international rig activity and WTI oil prices for the past nine quarters ended December 31, 2025. During the third quarter of 2025, Baker Hughes’s methodology for calculating rig counts in the Kingdom of Saudi Arabia has been updated effective for periods beginning January 2024. As a result, previously reported international rig counts have been recast to conform to the updated methodology.
The following table details the U.S., Canadian, and international rig activity and West Texas Intermediate (“WTI”) oil prices for the past nine quarters ended December 31, 2024:
The worldwide average rig count declined 4.4%6.7% (from 1,8141,948 rigs to 1,7351,818 rigs) and the U.S. declined 13.1%6.3% (from 689599 rigs to 599561 rigs) in 20242025 compared to 2023.2024. The average price of WTI crude declined 1.4%14.5% (from $77.64$76.55 per barrel to $76.55$65.46 per barrel), and natural gas prices declinedincreased 13.8%61.2% (from $2.54$2.19 per MMBtu to $2.19$3.53 per MMBtu) in 20242025 compared to 2023.2024. The average price of Hot-Rolled Coil declinedincreased 12.0%6.5% (from $887.47$781.00 per short ton to $781.00$831.52 per short ton) in 20242025 compared to 2023.2024. U.S. Wells Completed declined 8.7%0.4% (from 12,84711,901 completion count to 11,73111,859 completion count) in 20242025 compared to 2023.2024.
U.S. rig count at January 24, 2025 was 576 rigs, down 23 rigs from the 2024 average. The price for WTI crude was $74.97 per barrel at January 24, 2025, down 2.1% from the 2024 average. The price for natural gas was $3.84 per MMBtu at January 24, 2025, up 75.3% from the 2024 average. The price for Hot-Rolled Coil was $710.00 per short ton at January 27, 2025, down 9.1% from the 2024 average. As released on February 11, 2025, U.S. Wells Completed for January 2025 was 927, down 5.2% on an annualized basis compared to 2024.
Executive Summary
For the year ended December 31, 2024, the Company generated net income attributable to DNOW Inc. of $81 million, or $0.74 per fully diluted share on $2,373 million in revenue. Net income attributable to DNOW Inc. declined for the year ended December 31, 2024, by $166 million when compared to the corresponding period of 2023. Revenue increased for the year ended December 31, 2024, by $52 million, or 2.2%, when compared to the corresponding period of 2023. For the year ended December 31, 2024, operating profit was $113 million compared to $140 million for the corresponding period of 2023.
Longer Term Outlook
We play a vital role in supporting customers’ supply chains, providing essential products for energy and industrial markets, including infrastructure across upstream, midstream, gas utilities, downstream and energy transition sectors. Our business depends on both capital and maintenance spending by our customers. Global oil and gas consumption is rising due to population growth and expanding energy needs in emerging markets. The EIA projects world energy consumption to increase 34% between 2022 and 2050, with significant growth in renewables (118%), natural gas (29%) and hydrocarbon-based liquids (23%). U.S. oil production is expected to peak at 14 million barrels per day in 2027 and gradually decline, while natural gas production will grow, largely driven by LNG expansion and power generation. The U.S. midstream sector is expanding, particularly in natural gas infrastructure to meet LNG export and power demands. Federal policies have accelerated project reviews and simplified processes for pipeline development. Globally, refining capacity—especially in Asia and the Middle East—is projected to outpace demand growth later in the decade; the U.S. market remains stable but faces planned capacity reductions. As refineries age or convert to renewable fuels, we supply critical infrastructure for continued operations and conversions. The U.S. chemicals market is expected to grow steadily, while short term cycles will exist, and remain globally competitive through 2040, advantaged due to feedstock cost advantage from shale gas and NGLs. The European market is transitioning toward specialty and sustainable chemicals with commodity chemicals declining. Demand for our products is shaped by operational budgets, capacity expansions, and compliance needs. The gas utilities industry is expected to grow as aging distribution networks prompt replacement and modernization. PHMSA estimates that roughly 34% of gas distribution lines are over 40 years old or of unknown origin, driving ongoing maintenance. Housing market growth further increases demand for related infrastructure products. According to the EIA, the U.S. will remain a net exporter of petroleum products due to expanded terminal capacity, with strong markets for our goods and services. This projected increase in oil and gas to meet the rise in international energy demand continues to provide a robust market for our existing goods and services. We anticipate future growth from energy transition projects, as traditional energy customers shift capital to these areas. Our established relationships and experience position us well for this evolving market.
Our outlook for the Company remains tied to crude oil and natural gas commodity prices, global oil and gas drilling and completions activity, oil and gas spending, and global demand for oil, its refined petroleum products, crude oil, natural gas liquids and natural gas production and decline rates. Crude oil and natural gas prices as well as crude oil and natural gas storage levels are primary catalysts for determining customer activity. In recent years, oil prices have remained volatile and economic and geopolitical uncertainty continues to drive commodity price volatility globally. Despite lower North American rig count resulting from enhancements in technology leading to increased rig efficiencies, we maintain a constructive outlook for our market. Amid these dynamics, we will continue to support our customers, optimize our operations, advance our strategic goals and manage the Company based on market conditions.
Years Ended December 31, 2025 and December 31, 2024
The results of operations are presented before consideration of the noncontrolling interest. Our results of operations for 2025 and 2024 are as follows (in millions):
Adjusted Gross Profit and Adjusted EBITDA are non-GAAP financial measures. For a reconciliation of these measures to an equivalent GAAP measure, see pages 42-44 herein.
Revenue. Our revenue was $2,820 million for 2025, as compared to $2,373 million for 2024, an increase of $447 million or 18.8%.
U.S. Segment—Revenue was $2,294 million for the year ended December 31, 2025, an increase of $414 million or 22.0% compared to the year ended December 31, 2024. The increase in the period was primarily driven by incremental revenue from the MRC Global acquisition completed in the fourth quarter of 2025 and the Trojan Rentals, LLC acquisition completed in the fourth quarter of 2024.
Canada Segment—Revenue was $214 million for the year ended December 31, 2025, a decrease of $39 million or 15.4% compared to the year ended December 31, 2024. The decrease was primarily due to lower project related activity as a result of rig count and commodity price declines.
Our Canadian revenue was approximately 8% of total revenue in 2025, compared to 11% in 2024. We are subject to fluctuations in foreign currency exchange rates relative to the U.S. dollar. Our Canadian revenue is favorably impacted as the U.S. dollar weakens relative to the Canadian dollar, and unfavorably impacted as the U.S. dollar strengthens relative to the Canadian dollar. Our Canadian segment revenue was unfavorably impacted by approximately $5 million due to changes in foreign currency exchange rates over the prior year.
What changed in the latest 10-Q
Risk Factors
The Company and its operations are affected by risks specific to the Company as well as factors that affect all businesses operating in a global market. The significant factors known to the Company that could materially adversely affect its business, financial condition or operating results are contained in Part 1, Item 1A “Risk Factors” in our 2025 Annual Report on Form 10-K for the year ended December 31, 2025.
No wording changes found in this section.
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Management's Discussion & Analysis (MD&A)
Removed heading “Downstream and Industrial”
Largest changes
“Occasionally, the U.S. imposes tariffs on certain imported products that we distribute. These tariffs typically lead to an increase in the prices we pay for these products. Despite these cost pressures, we are generally able to mitigate the impact by leveraging our long-standing relationships with suppliers and the substantial volume of our purchases. These factors enable us to secure market-competitive pricing even in the face of rising costs.”see in full comparison
“Impairment and other charges. Impairment and other charges were $4 million for both the three and six months ended June 30, 2026, compared to nil for the corresponding periods of 2025. These impairment charges were related to the operating right-of-use asset associated with a corporate office lease in Houston, Texas. The impairment resulted from the Company's decision to permanently vacate the leased premises.”see in full comparison
The U.S. Supreme Court hassee in full comparisonnowinvalidated the use of the International Emergency Economic Powers Act (“IEEPA”) to impose tariffs. The overall impact on IEEPA tariffsishadunknownbeenatlimited,thisastime. Thethe administrationhasquicklyalreadyenactedreliedoronannounced other statutory authorities to maintain or adjusttariffs,tariffs.andBesidesthose sector-specific tariffs remain fully in effect. Notably,the Section 232 tariffs on steel and aluminumremainnotedinabove,effect.Section 122 and 301 tariffs, along with pointed anti-dumping and countervailing duties, have been imposed to varying degrees.
For the three and six months endedsee in full comparisonMarchJune31,30, 2026, impairment and othercostschargesincludedincludes$2$4 million of impairment charges related toforeignthecurrencyoperatinglosses.right-of-use asset associated with a corporate office lease in Houston, Texas.
Inventory-related transaction charges are included in cost of products. For the three and six months endedsee in full comparisonMarchJune31,30, 2026, inventory-related transaction chargesincludedincludes$41$3 million and $44 million, respectively, of charges related to inventorystep-up.step-up and inventory write-downs.
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DNOW is a holding company headquartered in Houston, Texas that was incorporated in Delaware on November 22, 2013. We operate primarily under the DNOW and MRC Global brands along with several affiliated and acquired brands operating in local, regional or international markets that are tied to prior acquisitions.markets.
We are a premier provider of energy and industrial solutions with a legacy of over 160 years as a globalleading leader in the distributiondistributor of PVF, gas products, pumps and fabricated process and production equipment and a wide range of MRO consumables and related products. We operate across diversified sectors of the energy value chain and industrial end-markets, including:
Upstream: exploration, production and extraction of oil and gas, as well as the useuse, transfer and disposal of produced water Gas Utilities: gas utilities (storage and distribution of natural gas) Downstream and Industrial: downstream and industrial including crude oil refining, petrochemical and chemical processing, general industrials, pharmaceutical, mining, water/wastewater treatment, data centers, LNG terminals and RNG facilities Midstream: gathering and transmission infrastructure for processing and transmission of oil, gas or water We offer aOur comprehensive portfolioproducts ofand products,solutions includingofferings includes an extensive array of PVF, gas products, pumps, fabricated equipment, valve automation, valve modification, gaskets, fasteners, electrical components, measurement, instrumentation, artificial lift, pumping systems, process and production equipment, production measurement technology, MRO consumables and a variety of bothother general and specialty products. Our team of approximately 5,2005,100 employees support our customers through approximately 300 strategic locations including regional distribution centers, super centers, branches and corporate offices.
Oil and Natural Gas Demand and Prices. Sales of PVF and infrastructure products to the oil and natural gas industry constitute a significant portion of our sales. As a result, we depend upon the maintenance and capital expenditures of oil and natural gas companies to explore for, extract, produce and process oil, natural gas and refined products. Demand for oil and natural gas, current and projected commodity prices and the costs necessary to produce oil and natural gas impact customer capital spending, additions to and maintenance of pipelines, refinery utilization and petrochemical processing activity. Additionally, as some of these participants rebalance their capital investment away from traditional, carbon-based energy toward alternative sources, we expect to continue to supply them and enhance our product and service offerings to support their changing requirements, including in areas such as carbon capture utilizationutilization, sequestration and storage, biofuels, RNG, offshore wind and hydrogen processing.
Recent geopolitical developments, including military conflict involving Iran, have contributed to increased volatility in global energy markets, financial markets and international supply chains. While the full impact of these conditions continues to evolve, management is actively monitoring potential effects on customer demand, costs, logistics and overall macroeconomic conditions. OilThe majority of our publicly traded oil and gas producersproducer customers have generally remained disciplined in their capital expenditures and have generally not increased production beyond their ability to fund their expenditures from prudent borrowings and cash flow from operations. We expect this trend to continue.
The U.S. Supreme Court has now invalidated the use of the International Emergency Economic Powers Act (“IEEPA”) to impose tariffs. The overall impact on IEEPA tariffs ishad unknownbeen atlimited, thisas time. Thethe administration hasquickly alreadyenacted reliedor onannounced other statutory authorities to maintain or adjust tariffs,tariffs. andBesides those sector-specific tariffs remain fully in effect. Notably,the Section 232 tariffs on steel and aluminum remainnoted inabove, effect.Section 122 and 301 tariffs, along with pointed anti-dumping and countervailing duties, have been imposed to varying degrees.
Upstream
The Upstream sector of our business includes the traditional exploration, production and extraction of oil and gas, as well as the useuse, transfer and disposal of produced water, and is the most cyclical of our markets. In the threesix months ended MarchJune 31,30, 2026, this sector represented 39% of our total Company revenue. The Upstream sector revenue increased 12%17% in the threesix months ended MarchJune 31,30, 2026 compared to the corresponding period of 2025. During the threesix months ended MarchJune 31,30, 2026, West Texas Intermediate (“WTI”) oil prices averaged $71.98$83.87 per barrel, up 0.2%22.9% from the corresponding period of 2025. Natural gas prices also drive customer activity and have experienced volatility but increased throughout 2025, driven by climate and seasonal weather patterns, increased LNG exports and lower storage levels.
Recent industry reports have projected flat to lower upstream customer spending levels in 2026, due to current supply and demand projections. We also expect majority of our largerpublicly publictraded oil and gas producer customers will remain disciplined and consistent with their commitments to their budgets, maintaining returns to their shareholders and operating within their cash flow requirements. Despite this, we expect opportunities for revenue synergies from cross-selling products related to our acquisitions will support growth in this sector. We also expect incremental growth in water management and disposal solutions, supported by our Flex FlowFlow, Trojan and TrojanEdge Controls offerings, as customers seek to optimize operating costs and manage produced water volumes more effectively.
Gas Utilities
The Gas Utilities sector contributed 23% of our total Company revenue in the threesix months ended MarchJune 31,30, 2026, and willwe represent a greater proportion ofexpect revenue from this sector to increase in thefuture futureperiods following the November 2025 acquisition of MRC Global. Market growth fundamentals of this sector are positive due to the demand for natural gas, distribution integrity upgrade programs as well as new home construction in certain U.S. states. The majority of the work we perform with our gas utility customers are multi-year programs where they continually evaluate, monitor and implement measures to improve their pipeline distribution networks, ensuring the safety and the integrity of their system. As of 2025, which is the most recently available information, the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) estimates approximately 33% of the gas distribution main and service line miles are over 40 years old or of unknown origin. This infrastructure requires continuous replacement and maintenance as these gas distribution networks continue to age. We supply many of the replacement products including valves, line pipe, smart meters, risers and other gas products. A large percentage of the line pipe we sell is sold to our gas utilities customers for line replacement and new sections of their distribution network. As our gas utility customers connect new homes and businesses to their gas distribution network, the growth in the housing market creates new revenue opportunities for our business to supply the related infrastructure products. Some of our customers in this sector support both gas and electric distribution, and certain customers have announced allocating a higher proportion of their capital budget to electric distribution. However, based on market fundamentals, the need for natural gas to fuel new electric generation facilities and new market share opportunities, we expect the Gas Utilities sector to continue to have steady growth in the coming years. Additionally, due to its reduced dependency on energy demand and commodity prices, this sector is less volatile than the others.
Downstream and Industrial
Downstream and Industrial sector generated 20%18% of our total Company revenue in the threesix months ended MarchJune 31,30, 2026. We expect this sector to deliver strong growth in the coming years driven by increased customer activity levels related to maintenance, repair and operations (“MRO”) activities, project turnaround activity in refineries and chemical plants and new energy transition related projects. Additionally, we have expanded into new markets, including mining and data centers. We are also negotiating master service agreements with targeted owners and subcontractors for PVF work in new data center cooling systems. While still early, we are seeing encouraging momentum in both areas. This sector has a significant amount of project activity, which can create substantial variability between quarters.
The outlook for energy transition projects within the Downstream and Industrial sector is supported by government incentives and policies. Many of our customers have made commitments to net zero emissions to address climate change. Our customer base represents many of the primary leaders in the energy transition movement, and they are positioned to lead the effort to decarbonize through nearer-term efforts such as renewable or biodiesel refineries and offshore wind power generation as well as longer-term efforts such as carbon capturecapture, sequestration and storage and hydrogen. However, as U.S. government support is waning for these projects even while European government support continues, we are monitoring our customers' plans for, and the pace of development of, these projects.
Midstream
DNOW’s Midstream sector is primarily U.S. based and driven by the increased demand for pipelines and gathering systems. In the threesix months ended MarchJune 31,30, 2026, this sector represented 18%20% of our total Company revenue. The Midstream sector revenue increased 70%71% in the threesix months ended MarchJune 31,30, 2026 compared to the corresponding period of 2025 primarily as a result of the acquisition of MRC Global in November 2025. The outlook in 2026 is expected to have growth primarily driven by demand for natural gas infrastructure as LNG exports continue to rise and gas fired power generation increases for data centers. According to a 2025 Interstate Natural Gas Association of American ("INGAA") Foundation report, to meet energy demand through 2052, North America will require more than $1 trillion in capital investment across natural gas, oil, natural gas liquids, hydrogen and CO2 infrastructure, averaging $40 billion to $48 billion annually, varying by investment. This market driver is anticipated to positively impact theour Midstream sector, contributing to opportunities for growth. The revenue profile for this sector tends to be volatile between quarters, as it can often be tied to large projects.
Furthermore, as new LNG capacity comes onlineonline, this drives the need for associated pipeline infrastructure, which several LNG projects are expected to do in 2026. U.S. natural gas production is expected to rise, leading to the need for additional pipeline infrastructure and gathering systems. Rising electricity consumption from AI-driven data centers creates the need for additional natural gas transportation, which is also expected to drive growth in this sector.
Occasionally, the U.S. imposes tariffs on certain imported products that we distribute. These tariffs typically lead to an increase in the prices we pay for these products. Despite these cost pressures, we are generally able to mitigate the impact by leveraging our long-standing relationships with suppliers and the substantial volume of our purchases. These factors enable us to secure market-competitive pricing even in the face of rising costs.
Our results are dependent on, among other factors, the level of worldwide oil and gas drilling and completions, well remediation activity, crude oil and natural gas prices, capital spending by oilfield service companies and drilling contractors, and the worldwide oil and gas inventory levels. Key industry indicators for the firstsecond quarter of 2026 and 2025 and the fourthfirst quarter of 20252026 include the following:
The following table details the U.S., Canadian and international rig activity and West Texas Intermediate oil prices for the past nine quarters ended MarchJune 31,30, 2026. DuringIn the third quarter of 2025, Baker Hughes’s methodology for calculating rig counts in the Kingdom of Saudi Arabia has been updated effective for periods beginning January 2024. As a result, previously reported international rig counts have been recast to conform to the updated methodology.
The worldwide quarterly average rig count increaseddeclined 1.8%3.9% (from 1,7991,832 rigs to 1,8321,760 rigs) and the U.S. remainedincreased flat1.1% (atfrom 548 to 554 rigs) in the firstsecond quarter of 2026 compared to the fourthfirst quarter of 2025.2026. The average price per barrel of WTI Crude increased 20.7%33.0% (from $59.64$71.98 per barrel to $71.98$95.75 per barrel), and average natural gas prices increaseddeclined 27.7%38.4% (from $3.75$4.79 per MMBtu to $4.79$2.95 per MMBtu) in the firstsecond quarter of 2026 compared to the fourthfirst quarter of 2025.2026. The average price per short ton of Hot-Rolled Coil increased 11.4%13.2% (from $828.78$923.51 per short ton to $923.51$1,045.84 per short ton) in the firstsecond quarter of 2026 compared to the fourthfirst quarter of 2025.2026. U.S. Wells Completed declinedincreased 5.6%2.5% (from 3,0552,943 completion count to 2,8853,018 completion count) in the firstsecond quarter of 2026 compared to the fourthfirst quarter of 2025.2026.
We play a vital role in supporting customers’ supply chains, providing essential products for energy and industrial markets, including infrastructure across upstream, gas utilities, midstream, downstream, energy transitiondownstream and industrial sectors. Our business depends on both capital and maintenance spending by our customers. Global oil and gas consumption is rising due to population growth and expanding energy needs in emerging markets. The EIA projects world energy consumption to increase 34% between 2022 and 2050, with significant growth in renewables (118%), natural gas (29%) and hydrocarbon-based liquids (23%). U.S. oil production is expected to peak at 14 million barrels per day in 2028 and gradually decline, while natural gas production will grow, largely driven by LNG expansion and power generation. The gas utilities industry is expected to grow as aging distribution networks prompt replacement and modernization. PHMSA estimates that roughly 33% of gas distribution lines are over 40 years old or of unknown origin, driving ongoing maintenance. Housing market growth further increases demand for related infrastructure products. According to the EIA, the U.S. will remain a net exporter of petroleum products due to expanded terminal capacity, with strong markets for our goods and services. This projected increase in oil and gas to meet the rise in international energy demand continues to provide a robust market for our existing goods and services. We anticipate future growth from energy transition projects, as traditional energy customers shift capital to these areas. Our established relationships and experience position us well for this evolving market. The U.S. midstream sector is expanding, particularly in natural gas infrastructure to meet LNG export and power demands. Federal policies have accelerated project reviews and simplified processes for pipeline development. According to a 2025 INGAA Foundation report, to meet energy demand through 2052, North America will require more than $1 trillion in capital investment across natural gas, oil, natural gas liquids, hydrogen and CO2 infrastructure, averaging $40 billion to $48 billion annually, varying by investment. Globally, refining capacity—especially in Asia and the Middle East—is projected to outpace demand growth later in the decade; the U.S. market remains stable but faces planned capacity reductions. As refineries age or convert to renewable fuels, we supply critical infrastructure for continued operations and conversions. The U.S. chemicals market is expected to grow steadily, while short term cycles will exist,exist and remain globally competitive through 2040, due to feedstock cost advantage from shale gas and natural gas liquids (“NGLs”). The European market is transitioning toward specialty and sustainable chemicals with commodity chemicals declining. Demand for our products is shaped by operational budgets, capacity expansions, and compliance needs.
Revenue. Our revenue was $1,183$1,307 million and $2,490 million for the three and six months ended MarchJune 31,30, 2026,2026 as compared to $599$628 million and $1,227 million for the corresponding periodperiods of 2025, an increase of $584$679 millionmillion, or 97.5%.108.1%, and an increase of $1,263 million, or 102.9%, respectively.
U.S. Segment—Revenue was $985$1,109 million and $2,094 million for the three and six months ended MarchJune 31,30, 2026, an increase of $511$581 million orand 107.8%an increase of $1,092 million compared to the corresponding periodperiods of 2025. The increase for the three and six months ended June 30, 2026 was primarily driven by incremental revenue from the MRC Global acquisition completed in the fourth quarter of 2025.
Canada Segment—Revenue was $51$47 million and $98 million for the three and six months ended MarchJune 31,30, 2026, a decrease of $11$1 millionmillion, or 17.7%2.1% and a decrease of $12 million, or 10.9%, compared to the corresponding periodperiods of 2025. TheFor the six months ended June 30, 2026, the decrease was primarily due to lower project-related activity.
Our Canadian revenue was approximately 4% of total revenue for both the three and six months ended MarchJune 31,30, 2026, compared to 10%8% and 9% for the three and six months ended MarchJune 31,30, 2025.2025, respectively. We are subject to fluctuations in foreign currency exchange rates relative to the U.S. dollar. Our Canadian revenue is favorably impacted as the U.S. dollar weakens relative to the Canadian dollar, and unfavorably impacted as the U.S. dollar strengthens relative to the Canadian dollar. OurFor the three and six months ended June 30, 2026, our Canadian segment revenue was unfavorably impacted by less than $1 million and favorably impacted by approximately $2 millionmillion, respectively, due to changes in foreign currency exchange rates over the prior year.rates.
International Segment—Revenue was $147$151 million and $298 million for the three and six months ended MarchJune 31,30, 2026, an increase of $84$99 million orand 133.3%an increase of $183 million compared to the corresponding periodperiods of 2025. The increase was primarily due to the acquisition of MRC Global in the fourth quarter of 2025.
Our international revenue was approximately 13%11% and 12% of total revenue for the three and six months ended MarchJune 31,30, 2026, compared to 11%8% and 9% for the three and six months ended MarchJune 31,30, 2025.2025, respectively. We are subject to fluctuations in foreign currency exchange rates relative to the U.S. dollar. Our international revenue is favorably impacted as the U.S. dollar weakens relative to other foreign currencies, and unfavorably impacted as the U.S. dollar strengthens relative to other foreign currencies. OurFor the three and six months ended June 30, 2026, our international segment revenue was favorably impacted by approximately $3$1 million and $4 million, respectively, due to changes in foreign currency exchange rates over the prior year.rates.
Gross Profit. Our gross profit was $193$243 million (16.3%18.6% of revenue) and $436 million (17.5% of revenue) for the three and six months ended MarchJune 31,30, 2026, respectively, as compared to $138$129 million (23.0%20.5% of revenue) and $267 million (21.8% of revenue) for the three and six months ended MarchJune 31,30, 2025.2025, respectively. The $55 million increase was primarily attributable to an increase inincremental revenue due to the acquisition of MRC Global in November 2025. Compared to average cost, our LIFO inventory costing methodology increased cost of products by $16$19 million and $35 million for the three and six months ended MarchJune 31,30, 2026, respectively, as compared to a $1$15 million and $16 million increase in cost of products for the three and six months ended MarchJune 31,30, 2025.2025, respectively.
Adjusted Gross Profit. Adjusted Gross Profit increased to $256$272 million (21.6%20.8% of revenue) and $528 million (21.2% of revenue) for the three and six months ended MarchJune 31,30, 2026 from $141$146 million (23.5%23.2% of revenue) and $287 million (23.4% of revenue) for the three and six months ended MarchJune 31,30, 2025, an increase of $115$126 million.million Theand $241 million, respectively. For the three and six months ended June 30, 2026, the increase was primarily driven by the U.S. and International segments, partially offset by the Canada segment. The reduced margin percentage is primarily drivendue byto changes in product and customer mix resulting from the impactintegration of MRC GlobalGlobal's contributions.product portfolio into the Company's expanded offering.
Selling, general and administrative (“SG&A”) expenses. SG&A expenses were $243$238 million and $481 million for the three and six months ended MarchJune 31,30, 2026, compared to $109$112 million and $221 million for the corresponding periodperiods of 2025, an increase of $134$126 million.million and $260 million, respectively. The increase was primarily driven by incremental expenses from the MRC Global acquisition completed in the fourth quarter of 2025. SG&A expenses include branch location, distribution center and regional expenses (including costs such as compensation, benefits and rent) as well as depreciation and corporate selling, general and administrative expenses.
Impairment and other charges. Impairment and other charges were $4 million for both the three and six months ended June 30, 2026, compared to nil for the corresponding periods of 2025. These impairment charges were related to the operating right-of-use asset associated with a corporate office lease in Houston, Texas. The impairment resulted from the Company's decision to permanently vacate the leased premises.
Operating profit (loss). Our operating profit (loss) profit. Our operating loss was $50$1 million and ($49) million for the three and six months ended MarchJune 31,30, 2026, compared to an operating profit of $29$17 million and $46 million for the corresponding periodperiods of 2025, a decrease of $79$16 million and $95 million, respectively, primarily due to inventory-related transaction charges, our LIFO inventory costing methodology, reduced margins and increases in incremental SG&A expenses associated with the MRC Global acquisition.
U.S. Segment—Operating loss was $54$8 million and $62 million for the three and six months ended MarchJune 31,30, 2026, a decrease of $75$23 million and a decrease of $98 million compared to the corresponding periodperiods of 2025. Operating profit decreased primarily due to inventory-related transaction charges, our LIFO inventory costing methodology and increases in incremental expenses associated with the MRC Global acquisition.
Canada Segment—Operating profit was $1 million and $2 million for the three and six months ended MarchJune 31,30, 2026, an increase of $1 million and a decrease of $3$2 million compared to the corresponding periodperiods of 2025. Operating profit decreasedincreased primarily due to a reduction in SG&A expenses for three months ended June 30, 2026. For the six months ended June 30, 2026 the decline in operating profit was driven by the decline in revenue discussed above.
International Segment—Operating profit ofwas $3$8 million and $11 million for the three and six months ended MarchJune 31,30, 2026, aan decreaseincrease of $1$6 million and an increase of $5 million compared to the corresponding periodperiods of 2025.
Other (expense) income.income, net. Other expense was $10 million and $20 million for the three and six months ended MarchJune 31,30, 2026 and was primarily attributable to interest expense on borrowings associated with the acquisition of MRC Global completed in the fourth quarter of 2025. Other (expense) income was nil for the corresponding periodperiods of 2025.
Income tax provision (benefit) provision.. The effective tax rate for the three and six months ended MarchJune 31,30, 2026, was 26.7%(133.3%) and 5.8%, respectively, compared to 24.1%17.6% and 21.7%, respectively, for the corresponding periodperiods of 2025. In general, the Company's effective tax rate differs from the U.S. statutory rate due to recurring items, such as differing tax rates on income earned in foreign jurisdictions, nondeductible expenses and state income taxes. The effective tax rate for the three and six months ended MarchJune 31,30, 2026,2026 waswere higherimpacted thanby changes in forecasted annual earnings and the geographic mix of those earnings, which resulted in a change in the estimated annual effective tax rate from the estimate used during the first quarter of 2026. The revised estimated annual effective tax rate contributed to income tax expense during the second quarter of 2026 despite a pretax loss for the quarter, resulting in a negative effective tax rate for the three months ended MarchJune 31,30, 2025, primarily due to discrete tax benefits recognized in the quarter which increase the effective tax rate as a result of the loss before income taxes reported in the period.2026.
Net (loss) income attributable to DNOW Inc. Our net loss attributable to DNOW Inc. was $44$21 million and $65 million for the three and six months ended MarchJune 31,30, 2026, compared to net income attributable to DNOW Inc. of $21$14 million and $35 million for the three and six months ended MarchJune 31,30, 2025, a decrease of $65$35 million and $100 million, respectively, due to inventory-related transaction charges, our LIFO inventory costing methodology, reduced margins and increases in incremental SG&A expenses associated with the MRC Global acquisition.
Adjusted EBITDA. Adjusted EBITDA, a non-GAAP financial measure, was $39$60 million (3.3%4.6% of revenue) and $99 million (4.0% of revenue) for the three and six months ended MarchJune 31,30, 2026, compared to $46$51 million (7.7%8.1% of revenue) and $97 million (7.9% of revenue) for the three and six months ended MarchJune 31,30, 2025. Our Adjusted EBITDA decreasedincreased $7$9 million and $2 million, respectively, over the periodperiods primarily due to increased revenue associated with the MRC Global acquisition partially offset by reduced margins and increases inincreased incremental SG&A expensescosts associated with the MRC Global acquisition.
We define Adjusted EBITDA as net (loss) income plus interest, taxes, depreciation and amortization and excluding other costs, such as stock-based compensation, restructuring and exit costs, transaction-related charges, inventory-related charges incremental to normal operations, long-lived asset impairments (including goodwill and intangible assets), inventory-related charges incremental to normal operations and plus or minus the impact of our LIFO inventory costing methodology. Transaction-related charges include transaction costs, inventory fair value step-up and write-down, retention bonus accruals and integration expenses associated with acquisitions. This financial measure excludes the impact of certain amounts and is not calculated in accordance with GAAP. A reconciliation of this non-GAAP financial measure, to its most comparable GAAP financial measure, is included below.
For the three and six months ended MarchJune 31,30, 2026 and 2025,2026, stock-based compensation excludes $1 million and $2 million, respectively, and for the corresponding periods of 2025, stock-based compensation excludes less than $1 million and $1 million, respectively, as such amounts were reported in transaction-related charges.
Inventory-related transaction charges are included in cost of products. For the three and six months ended MarchJune 31,30, 2026, inventory-related transaction charges includedincludes $41$3 million and $44 million, respectively, of charges related to inventory step-up.step-up and inventory write-downs.
For the three and six months ended MarchJune 31,30, 2026, impairment and other costscharges includedincludes $2$4 million of impairment charges related to foreignthe currencyoperating losses.right-of-use asset associated with a corporate office lease in Houston, Texas.
(5)
For the three and six months ended June 30, 2026, other costs includes $1 million and $3 million, respectively, related to foreign currency losses.
We assess liquidity in terms of our ability to generate cash to fund operating, investing and financing activities. We expect resources to be available to reinvest in existing businesses, strategic acquisitions and capital expenditures to meet short and long-term objectives. We believe that cash on hand, cash generated from expected results of operations and amounts available under our revolving credit facility will be sufficient to fund operations, anticipated working capital needs and other cash requirements, including capital expenditures and repurchases under our share repurchase program.
As of MarchJune 31,30, 2026 and December 31, 2025, we had cash and cash equivalents of $116$114 million and $164 million, respectively. As of MarchJune 31,30, 2026, $108 million of our cash and cash equivalents were maintained in the accounts of our various foreign subsidiaries. During the first threesix months of 2026, we repatriated $31$41 million from our foreign subsidiaries. The Company makes a determination each period concerning its intent and ability to indefinitely reinvest the cash held by its foreign subsidiaries. The Company has not recorded deferred income taxes on undistributed foreign earnings that it considers to be indefinitely reinvested. Future changes to our indefinite reinvestment assertion could result in additional taxestaxes, (such as withholding and/or state taxes),taxes, offset by any available foreign tax credits.
We maintain an $850 million five-year senior secured revolving credit facility that will mature on November 6, 2030. Availability under the revolving credit facility is limited to the lesser of the commitments and a borrowing base comprised of eligible account receivables, eligible inventory and eligible rental equipment assets of the Borrowers and subsidiary guarantors. As of MarchJune 31,30, 2026, we had $571$474 million borrowings against our revolving credit facility and had approximately $263$358 million in availability (as defined in the Amended Credit AgreementFacility). The credit facility includes a springing financial covenant that requires us to maintain, during any period when availability falls below specified thresholds, a minimum fixed charge coverage ratio (as defined in the Amended Credit AgreementFacility). The credit facility contains usual and customary affirmative and negative covenants for credit facilities of this type including financial covenants. As of MarchJune 31,30, 2026, we were in compliance with all covenants. We continuously monitor compliance with our debt covenants. A default, if not waived or amended, would prevent us from taking certain actions, such as incurring additional debt.
The following table summarizes our net cash flows provided by (used in) provided by operating activities, investing activities and financing activities for the periods presented (in millions):
For the threesix months ended MarchJune 31,30, 2026, net cash usedprovided inby operating activities was $95$38 million compared to $16$29 million net cash used in operating activities in the corresponding period of 2025. For the threesix months ended MarchJune 31,30, 2026, net cash usedprovided inby operating activities was primarily driven by a net decreaseincrease of $115$31 million in working capitalcapital, inmainly 2026.resulting Thefrom decrease in working capital primarily related to a decreasedecreases in accrued liabilities for severance and legal and professional fees associated with the acquisition of MRC Global, alongas withwell increasesas an increase in accounts receivablereceivable. andThese inventoryimpacts were offset by an increase in accounts payable and a reductiondecrease in income taxes payable.inventory. For the threesix months ended MarchJune 31,30, 2025, net cash usedprovided inby operating activities was primarily driven by a net decreaseincrease of $65$70 million in working capital in 2025. The decreaseincrease in working capital primarily related toreflected a proactive investment of $32$28 million in inventory to support customer demand, coupled with $52$45 million growthincrease in accounts receivable due to revenue growth and timing of collections.growth.
For the threesix months ended MarchJune 31,30, 2026, net cash used in investing activities was $53$61 million compared to $5$16 million net cash used in investing activities in the corresponding period of 2025. For the threesix months ended MarchJune 31,30, 2026, net cash used in investing activities was primarily related to business acquisitions of $46 million and purchases of property, plant and equipment of $8$17 million. Net cash used in investing activities in the corresponding period of 2025 was primarily related to purchases of property, plant and equipment of $6$10 million and business acquisitions of $8 million.
For the threesix months ended MarchJune 31,30, 2026, net cash provided by financing activities was $101 million compared to $17 million net cash used in financing activities was $24 million compared to $40 million in the corresponding period of 2025. For the threesix months ended MarchJune 31,30, 2026, net cash providedused byin financing activities primarily related to net borrowings under the revolving credit facility of $160 million, partially offset by share repurchases of $50$75 million and shares withheld for taxes for employee awards of $5 million, partially offset by net borrowings under the revolving credit facility of $63 million. Net cash used in financing activities in the corresponding period of 2025 was primarily related to share repurchases of $8$27 million and shares withheld for taxes for employee awards of $7$8 million.
On January 24, 2025, the Company’s Board of Directors authorized a new share repurchase program to purchase up to $160 million of its outstanding common stock. We expect to fund share repurchases primarily with cash on hand, cash flow from operations and the usage of the available portion of the revolving credit facility. The timing and amount of any repurchases will be made at our discretion, taking into account a number of factors, including market conditions. The share repurchase program does not obligate the Company to repurchase shares and may be suspended or discontinued at any time at our discretion. All shares repurchased shall be retired pursuant to the terms of the share repurchase program. For the threesix months ended MarchJune 31,30, 2026, we repurchased 4,201,9286,057,772 shares of our common stock for a total of approximately $50$75 million. As of MarchJune 31,30, 2026, we had approximately $73$48 million remaining under the program’s authorization.
DNOW insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 3 filings (3 insiders, 1 trade date, 445,221 shares, about $7.5M). Net open-market shares: -445,221 (purchases minus sales); net value about -$7.5M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-08-10 | Chang Raymond W |
Option exercise | 43,621 | $9.53 | $415.7K |
| 2026-08-10 | Chang Raymond W |
Option exercise | 32,617 | $10.26 | $334.7K |
| 2026-08-10 | Chang Raymond W |
Open-market sale | 43,621 | $16.98 | $740.7K |
| 2026-08-10 | Chang Raymond W |
Open-market sale | 32,617 | $16.98 | $553.8K |
| 2026-08-10 | Cherechinsky David A |
Open-market sale | 198,213 | $16.73 | $3.3M |
| 2026-08-10 | Cherechinsky David A |
Option exercise | 57,929 | $9.53 | $552.1K |
| 2026-08-10 | Cherechinsky David A |
Open-market sale | 57,929 | $16.73 | $969.2K |
| 2026-08-10 | Cherechinsky David A |
Option exercise | 198,213 | $10.26 | $2.0M |
| 2026-08-10 | Johnson Mark B |
Open-market sale | 40,675 | $16.79 | $682.9K |
| 2026-08-10 | Johnson Mark B |
Open-market sale | 50,181 | $16.79 | $842.5K |
| 2026-08-10 | Johnson Mark B |
Open-market sale | 21,985 | $16.79 | $369.1K |
| 2026-08-10 | Johnson Mark B |
Option exercise | 21,985 | $9.53 | $209.5K |
| 2026-08-10 | Johnson Mark B |
Option exercise | 50,181 | $10.26 | $514.9K |
| 2026-05-20 | Alario Richard J |
Grant/award | 17,122 | — | — |
| 2026-05-20 | Bonno Terry |
Grant/award | 12,122 | — | — |
| 2026-05-20 | Jadin Ronald L |
Grant/award | 12,122 | — | — |
| 2026-05-20 | Coppinger Paul M |
Grant/award | 12,122 | — | — |
| 2026-05-20 | David-Green Karen |
Grant/award | 12,122 | — | — |
| 2026-05-20 | Cobb Galen |
Grant/award | 12,122 | — | — |
| 2026-05-20 | Damiris George John |
Grant/award | 12,122 | — | — |
| 2026-05-20 | Reed Sonya |
Grant/award | 12,122 | — | — |
Well-known investors holding DNOW (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Renaissance Technologies | 2026-06-30 | 4,697,825 | $60.9M | 0.08% | Added 5% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 992,114 | $12.9M | 0.01% | Added 54% |
| Millennium Management (Israel Englander) | 2026-06-30 | 934,594 | $12.1M | 0.01% | Added 224% |
| First Eagle Investment Management | 2026-06-30 | 599,906 | $7.8M | 0.01% | Added 70% |
| D. E. Shaw & Co. | 2026-06-30 | 374,552 | $4.9M | 0.0% | Added 14% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 253,003 | $3.3M | 0.0% | Added 563% |
| Two Sigma Investments | 2026-06-30 | 52,152 | $676.4K | 0.0% | New position |
| Baupost Group (Seth Klarman) | 2026-06-30 | 2,788,000 | $36.2K | 0.67% | Reduced 23% |