NOW Inc. (NYSE: DNOW) announced results for the third quarter
ended September 30, 2018.
Earnings Conference CallNovember 1,
20188:00 a.m. CST1 (800) 446-1671 (North America)1 (847) 413-3362
(Outside North America)Webcast: ir.distributionnow.com
Third Quarter 2018 Financial Highlights
- Revenue was $822 million for the third
quarter of 2018, up 18 percent year over year.
- Net income was $20 million for the
third quarter of 2018, versus a net loss of $9 million a year ago.
Non-GAAP net income excluding other costs was $17 million for the
third quarter of 2018 compared to a loss of $3 million a year
ago.
- Diluted earnings per share was $0.18
for the third quarter of 2018 compared to a loss per share of $0.08
a year ago. Non-GAAP diluted earnings per share excluding other
costs was $0.15 for the third quarter of 2018 compared to a loss
per share of $0.03 a year ago.
- Non-GAAP EBITDA excluding other costs
for the third quarter of 2018 was $33 million compared to $5
million a year ago.
Refer to Supplemental Information in this release for GAAP to
non-GAAP reconciliations.
Robert Workman, President and CEO of NOW Inc., added, “We’re
pleased to announce the highest levels of quarterly revenue,
operating profit and EBITDA excluding other costs since early 2015,
with working capital turns nearing five and positive free cash flow
posted again in the third quarter of 2018. As we move into the
seasonally slower fourth quarter due to holidays and budget
exhaustion, exacerbated by temporary regional takeaway capacity
issues in the Permian and Canada, conditions could portend a softer
than normal close to the year. We remain encouraged, however, by
the stable land rig count and continued growing inventory of
drilled but uncompleted wells, which provide a runway of future
work for DNOW and therefore should enable us to achieve higher
levels of activity in 2019.”
Prior to the earnings conference call a presentation titled “NOW
Inc., Third Quarter 2018 Review & Key Takeaways” will be
available on the Company’s Investor Relations website.
About NOW Inc.
NOW Inc. is one of the largest distributors to energy and
industrial markets on a worldwide basis, with a legacy of over 150
years. NOW Inc. operates primarily under the DistributionNOW and
Wilson Export brands. Through its network of approximately 265
locations and 4,500 employees worldwide, NOW Inc. offers a
comprehensive line of products and solutions for the upstream,
midstream and downstream energy and industrial sectors. Our
locations provide products and solutions to exploration and
production companies, energy transportation companies, refineries,
chemical companies, utilities, manufacturers and engineering and
construction companies.
Statements made in this press release that are
forward-looking in nature are intended to be "forward-looking
statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934 and may involve risks and uncertainties. These
statements may differ materially from actual future events or
results. Readers are referred to documents filed by NOW Inc. with
the U.S. Securities and Exchange Commission, which identify
significant risk factors which could cause actual results to differ
from those contained in the forward-looking statements.
NOW INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except share
data)
September 30, December
31,
2018 2017 (Unaudited) ASSETS Current
assets: Cash and cash equivalents $ 91 $ 98 Receivables, net 559
423 Inventories, net 599 590 Prepaid and other current assets
23 18 Total
current assets 1,272 1,129 Property, plant and equipment, net 105
119 Deferred income taxes 2 2 Goodwill 322 328 Intangibles, net 150
166 Other assets
10
5 Total assets
$
1,861 $ 1,749
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $ 356 $ 290 Accrued
liabilities 108 103 Other current liabilities
3
1 Total current liabilities 467
394 Long-term debt 170 162 Deferred income taxes 6 7 Other
long-term liabilities
1
1 Total liabilities 644 564 Commitments and
contingencies Stockholders' equity: Preferred stock - par value
$0.01; 20 million shares authorized;
no shares issued and outstanding
− − Common stock - par value $0.01; 330 million shares authorized;
108,420,106 and 108,030,438 shares issued and outstanding at
September 30, 2018 and December 31, 2017, respectively 1 1
Additional paid-in capital 2,030 2,019 Accumulated deficit (694 )
(730 ) Accumulated other comprehensive loss
(120 ) (105
) Total stockholders' equity
1,217
1,185 Total liabilities and
stockholders' equity
$ 1,861
$ 1,749
NOW INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In millions, except per share
data)
Three Months Ended Nine Months
Ended September 30, June 30,
September 30, 2018 2017
2018 2018 2017
Revenue $ 822 $ 697 $ 777 $ 2,363 $ 1,979 Operating expenses: Cost
of products 654 562 620 1,890 1,606 Warehousing, selling and
administrative
142
141 139
422 414 Operating
profit (loss) 26 (6 ) 18 51 (41 ) Other expense
(4 ) (3
) (3 )
(11 ) (8
) Income (loss) before income taxes 22 (9 ) 15 40 (49
) Income tax provision (benefit)
2
− 1
4 − Net income
(loss)
$ 20 $
(9 ) $ 14
$ 36 $
(49 ) Earnings (loss) per share: Basic
earnings (loss) per common share
$ 0.18
$ (0.08 )
$ 0.12 $
0.33 $ (0.45
) Diluted earnings (loss) per common share
$ 0.18 $
(0.08 ) $ 0.12
$ 0.33 $
(0.45 ) Weighted-average common shares
outstanding, basic
108
108 108
108 108
Weighted-average common shares outstanding, diluted
109 108
108 109
108
NOW INC.
SUPPLEMENTAL INFORMATION
BUSINESS SEGMENTS (UNAUDITED)
(In millions)
Three Months Ended Nine Months
Ended September 30, June 30,
September 30, 2018 2017
2018 2018 2017
Revenue: United States $ 630 $ 506 $ 600 $ 1,792 $ 1,426 Canada 93
96 75 270 271 International
99
95 102 301
282 Total revenue
$
822 $ 697 $
777 $ 2,363 $
1,979
NOW INC.
SUPPLEMENTAL INFORMATION
(CONTINUED)
U.S. GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (GAAP) TO NON-GAAP RECONCILIATIONS
NET INCOME (LOSS) TO NON-GAAP EBITDA
EXCLUDING OTHER COSTS RECONCILIATION (UNAUDITED)
(In millions)
Three Months Ended Nine Months
Ended September 30, June 30,
September 30, 2018 2017
2018 2018 2017 GAAP
net income (loss) (1) $ 20 $ (9 ) $ 14 $ 36 $ (49 ) Interest, net 2
2 2 6 4 Income tax provision (benefit) 2 − 1 4 − Depreciation and
amortization 9 12 11 31 38 Other costs (2)
−
− 1
1 1 EBITDA
excluding other costs
$ 33
$ 5 $ 29
$ 78 $
(6 ) EBITDA % excluding other costs (3)
4.0 % 0.7 % 3.7 % 3.3 % (0.3 %)
NET INCOME (LOSS) TO NON-GAAP NET
INCOME (LOSS) EXCLUDING OTHER COSTS RECONCILIATION
(UNAUDITED)
(In millions)
Three Months Ended Nine Months
Ended September 30, June 30,
September 30, 2018 2017
2018 2018 2017 GAAP
net income (loss) (1) $ 20 $ (9 ) $ 14 $ 36 $ (49 ) Other costs,
net of tax (4) (5)
(3 )
6 (4 )
(8 ) 19 Net
income (loss) excluding other costs (5)
$
17 $ (3
) $ 10 $
28 $ (30
)
DILUTED EARNINGS (LOSS) PER SHARE TO
NON-GAAP DILUTED EARNINGS (LOSS) PER SHARE EXCLUDING
OTHER COSTS RECONCILIATION
(UNAUDITED)
Three Months Ended Nine Months
Ended September 30, June 30,
September 30, 2018 2017
2018 2018 2017 GAAP
diluted earnings (loss) per share (1) $ 0.18 $ (0.08 ) $ 0.12 $
0.33 $ (0.45 ) Other costs, net of tax (4)
(0.03 ) 0.05
(0.02 ) (0.08
) 0.17 Diluted earnings
(loss) per share excluding other costs (5)
$
0.15 $ (0.03
) $ 0.10
$ 0.25 $
(0.28 )
(1) In an effort to provide investors with additional
information regarding our results as determined by GAAP, we
disclose various non-GAAP financial measures in our quarterly
earnings press releases and other public disclosures. The non-GAAP
financial measures include: (i) earnings before interest, taxes,
depreciation and amortization (EBITDA) excluding other costs, (ii)
net income (loss) excluding other costs and (iii) diluted earnings
(loss) per share excluding other costs. Each of these financial
measures excludes the impact of certain other costs and therefore
has not been calculated in accordance with GAAP. A reconciliation
of each of these non-GAAP financial measures to its most comparable
GAAP financial measure is included in the schedules herein.
(2) Other costs includes severance expenses and accelerated debt
issuance costs, which are included in operating profit (loss) and
other expense, respectively.
(3) EBITDA % excluding other costs is defined as EBITDA
excluding other costs divided by Revenue.
(4) Other costs, net of tax, for the three and nine months ended
September 30, 2018, included a benefit of $3 million and $9
million, after tax, respectively, from changes in the valuation
allowance recorded against the Company's deferred tax assets; as
well as, nil and $1 million, respectively, after tax, in severance
expenses and accelerated debt issuance costs, which are included in
operating profit (loss) and other expense, respectively. The
Company has excluded the impact of a $9 million tax charge related
to the Tax Cuts and Jobs Act and a $4 million tax charge related to
the write-off of a previously recognized deferred tax asset on its
valuation allowance in computing net income (loss) excluding other
costs for the nine months ended September 30, 2018.
(5) Totals may not foot due to rounding.
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version on businesswire.com: https://www.businesswire.com/news/home/20181101005280/en/
NOW Inc.David Cherechinsky, (281) 823-4722Senior Vice President
and Chief Financial Officer
DNOW (NYSE:DNOW)
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