Release Details

NOW Inc. Reports First Quarter 2020 Results

May 6, 2020
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HOUSTON--(BUSINESS WIRE)--May 6, 2020-- NOW Inc. (NYSE: DNOW) announced results for the first quarter ended March 31, 2020.

Financial Highlights

  • Revenue was $604 million for the first quarter of 2020
  • Net loss was $331 million and non-GAAP net loss excluding other costs was $8 million for the first quarter of 2020
  • Diluted loss per share was $3.03 and non-GAAP diluted loss per share excluding other costs was $0.07 for the first quarter of 2020
  • Non-GAAP EBITDA excluding other costs for the first quarter of 2020 was $2 million
  • Cash provided by operating and investing activities was $28 million for the first quarter of 2020
  • Cash and cash equivalents was $202 million and long-term debt was zero at March 31, 2020
  • Current initiatives expected to generate approximately $100 million of warehousing, selling and administrative savings in 2020 compared to 2019, including 1,250 completed headcount reductions this year

Refer to Supplemental Information in this release for GAAP to non-GAAP reconciliations.

Dick Alario, Interim CEO of NOW Inc., noted, “The market faces a challenging environment due to steep declines in oil prices, rig counts and worldwide oil demand. Through our financial discipline, we entered this unprecedented period with zero debt, over $200 million in cash and access to ample liquidity under our credit facility. We have accelerated our structural transformation, which includes streamlining our organization and deploying technology to create additional customer value and revenue through our DigitalNOW® investment.

“While the timing of a recovery is uncertain, I am confident DNOW will be a much leaner, transformed company, well-positioned to capitalize on the next market upswing.”

Prior to the earnings conference call a presentation titled “NOW Inc. First Quarter 2020 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 DNOW brands. Through its network of approximately 220 locations and 3,150 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)
 

March 31,

December 31,

2020

2019

(Unaudited)

ASSETS

Current assets:
Cash and cash equivalents

$

202

 

$

183

 

Receivables, net

 

366

 

 

370

 

Inventories, net

 

434

 

 

465

 

Assets held-for-sale

−

 

34

 

Prepaid and other current assets

 

18

 

 

15

 

Total current assets

 

1,020

 

 

1,067

 

Property, plant and equipment, net

 

112

 

 

120

 

Deferred income taxes

 

2

 

 

2

 

Goodwill

−

 

245

 

Intangibles, net

−

 

90

 

Other assets

 

62

 

 

67

 

Total assets

$

1,196

 

$

1,591

 

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable

$

258

 

$

255

 

Accrued liabilities

 

119

 

 

127

 

Liabilities held-for-sale

−

 

6

 

Other current liabilities

 

8

 

 

8

 

Total current liabilities

 

385

 

 

396

 

Long-term operating lease liabilities

 

31

 

 

34

 

Deferred income taxes

−

 

4

 

Other long-term liabilities

 

12

 

 

13

 

Total liabilities

 

428

 

 

447

 

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; 109,308,266 and 109,207,678 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively

 

1

 

 

1

 

Additional paid-in capital

 

2,046

 

 

2,046

 

Accumulated deficit

 

(1,112

)

 

(775

)

Accumulated other comprehensive loss

 

(167

)

 

(128

)

Total stockholders' equity

 

768

 

 

1,144

 

Total liabilities and stockholders' equity

$

1,196

 

$

1,591

 

NOW INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In millions, except per share data)
 

Three Months Ended

March 31,

December 31,

2020

2019

2019

 
Revenue

$

604

 

$

785

 

$

639

 

Operating expenses:
Cost of products

 

487

 

 

627

 

 

514

 

Warehousing, selling and administrative

 

130

 

 

135

 

 

134

 

Impairment charges

 

320

 

−

 

128

 

Operating profit (loss)

 

(333

)

 

23

 

 

(137

)

Other expense

−

 

(4

)

 

(2

)

Income (loss) before income taxes

 

(333

)

 

19

 

 

(139

)

Income tax provision (benefit)

 

(2

)

 

1

 

−

Net income (loss)

$

(331

)

$

18

 

$

(139

)

Earnings (loss) per share:
Basic earnings (loss) per common share

$

(3.03

)

$

0.17

 

$

(1.27

)

Diluted earnings (loss) per common share

$

(3.03

)

$

0.16

 

$

(1.27

)

Weighted-average common shares outstanding, basic

 

109

 

 

109

 

 

109

 

Weighted-average common shares outstanding, diluted

 

109

 

 

109

 

 

109

 

NOW INC.

SUPPLEMENTAL INFORMATION

 
 

BUSINESS SEGMENTS (UNAUDITED)

(In millions)

 

Three Months Ended

March 31,

December 31,

2020

2019

2019

Revenue:
United States

$

441

 

 

600

 

$

468

 

Canada

 

78

 

 

86

 

 

76

 

International

 

85

 

 

99

 

 

95

 

Total revenue

$

604

 

 

$

785

 

$

639

 

 

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

March 31,

December 31,

2020

2019

2019

 
GAAP net income (loss) (1)

$

(331

)

$

18

 

$

(139

)

Interest, net

−

 

2

 

−

Income tax provision (benefit)

 

(2

)

 

1

 

−

Depreciation and amortization

 

10

 

 

10

 

 

11

 

Other costs (2)

 

325

 

−

 

133

 

EBITDA excluding other costs

$

2

 

$

31

 

$

5

 

EBITDA % excluding other costs (3)

 

0.3

%

 

3.9

%

 

0.8

%

 

NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS) EXCLUDING OTHER COSTS RECONCILIATION UNAUDITED)

(In millions)

Three Months Ended

March 31,

December 31,

2020

2019

2019

GAAP net income (loss) (1)

$

(331

)

$

18

 

$

(139

)

Other costs, net of tax (4) (5)

 

323

 

 

(5

)

 

133

 

Net income (loss) excluding other costs (5)

$

(8

)

$

13

 

$

(6

)

 

DILUTED EARNINGS (LOSS) PER SHARE TO NON-GAAP DILUTED EARNINGS (LOSS) PER SHARE EXCLUDING OTHER COSTS

RECONCILIATION (UNAUDITED)

Three Months Ended

March 31,

December 31,

2020

2019

2019

 
GAAP diluted earnings (loss) per share (1)

$

(3.03

)

$

0.16

 

$

(1.27

)

Other costs, net of tax (4)

 

2.96

 

 

(0.04

)

 

1.22

 

Diluted earnings (loss) per share excluding other costs (5)

$

(0.07

)

$

0.12

 

$

(0.05

)

(1)

In an effort to provide investors with additional information regarding our results as determined by GAAP, we disclose various non-GAAP financial measures in our quarterly earnings press releases and other public disclosures. The non-GAAP financial measures include: (i) earnings before interest, taxes, depreciation and amortization (EBITDA) excluding other costs, (ii) net income (loss) excluding other costs and (iii) diluted earnings (loss) per share excluding other costs. Each of these financial measures excludes the impact of certain other costs and therefore has not been calculated in accordance with GAAP. A reconciliation of each of these non-GAAP financial measures to its most comparable GAAP financial measure is included in the schedules herein.

(2)

Other costs for the three months ended March 31, 2020 included impairment charges, as well as, net separation and transaction-related expenses, which are included in operating loss.

(3)

EBITDA % excluding other costs is defined as EBITDA excluding other costs divided by Revenue.

(4)

Other costs, net of tax, for the three months ended March 31, 2020 included an expense of $2 million from changes in the valuation allowance recorded against the Company’s deferred tax assets; as well as, $316 million related to the impairment charges of goodwill, intangibles and other assets and $5 million in net separation and transaction-related expenses. The Company has excluded the impact of these items on its valuation allowance in computing net income (loss) excluding other costs.

(5)

Totals may not foot due to rounding.

 

David Cherechinsky
Senior Vice President and Chief Financial Officer
(281) 823-4722

Source: NOW Inc.