Release Details

NOW Inc. Reports Third Quarter 2019 Results

November 6, 2019
PDF Version

HOUSTON--(BUSINESS WIRE)--Nov. 6, 2019-- NOW Inc. (NYSE: DNOW) announced results for the third quarter ended September 30, 2019.

Earnings Conference Call
November 6, 2019
8:00 a.m. CST
1 (800) 446-1671 (North America)
1 (847) 413-3362 (Outside North America)
Webcast: ir.distributionnow.com

Third Quarter 2019 Financial Highlights

  • Revenue was $751 million for the third quarter of 2019
  • Net income was $10 million and non-GAAP net income excluding other costs was $9 million for the third quarter of 2019
  • Diluted earnings per share was $0.09 and non-GAAP diluted earnings per share excluding other costs was $0.08 for the third quarter of 2019
  • Non-GAAP EBITDA excluding other costs for the third quarter of 2019 was $24 million
  • Net cash provided by operating activities was $101 million for third quarter of 2019
  • Cash and cash equivalents was $113 million and long-term debt was zero at September 30, 2019

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

Dick Alario, Interim CEO of NOW Inc., noted, “The Company generated strong cash flow, improved gross margins and reduced operating costs this quarter, thanks to the hard work of our dedicated employees. We are excited that we achieved a debt-free position this quarter, which showcases the strength of our balance sheet. Even though market conditions have become more challenging as we close out 2019, we believe our expansive customer and supplier base, strong balance sheet, global distribution network and especially our proven and long-serving management team and employees, place the Company in a good position to advance its market strategy.”

Prior to the earnings conference call a presentation titled “NOW Inc., Third Quarter 2019 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 255 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,

2019

 

2018

(Unaudited)

 

ASSETS

Current assets:
Cash and cash equivalents

$

113

 

$

116

 

Receivables, net

 

466

 

 

482

 

Inventories, net

 

548

 

 

602

 

Prepaid and other current assets

 

21

 

 

19

 

Total current assets

 

1,148

 

 

1,219

 

Property, plant and equipment, net

 

117

 

 

106

 

Deferred income taxes

 

2

 

 

2

 

Goodwill

 

320

 

 

314

 

Intangibles, net

 

133

 

 

144

 

Other assets

 

70

 

 

10

 

Total assets

$

1,790

 

$

1,795

 

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable

$

326

 

$

329

 

Accrued liabilities

 

136

 

 

110

 

Other current liabilities

 

8

 

 

2

 

Total current liabilities

 

470

 

 

441

 

Long-term debt

−

 

 

132

 

Long-term operating lease liabilities

 

36

 

−

 

Deferred income taxes

 

5

 

 

6

 

Other long-term liabilities

 

12

 

 

2

 

Total liabilities

 

523

 

 

581

 

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; 108,798,362 and
108,426,962 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively

 

1

 

 

1

 

Additional paid-in capital

 

2,045

 

 

2,034

 

Accumulated deficit

 

(636

)

 

(678

)

Accumulated other comprehensive loss

 

(143

)

 

(143

)

Total stockholders' equity

 

1,267

 

 

1,214

 

Total liabilities and stockholders' equity

$

1,790

 

$

1,795

 

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,

2019

 

2018

 

2019

 

2019

 

2018

 
Revenue

$

751

 

$

822

 

$

776

 

$

2,312

 

$

2,363

 

Operating expenses:
Cost of products

 

601

 

 

654

 

 

623

 

 

1,851

 

 

1,890

 

Warehousing, selling and administrative

 

136

 

 

142

 

 

136

 

 

407

 

 

422

 

Operating profit

 

14

 

 

26

 

 

17

 

 

54

 

 

51

 

Other expense

 

(2

)

 

(4

)

 

(2

)

 

(8

)

 

(11

)

Income before income taxes

 

12

 

 

22

 

 

15

 

 

46

 

 

40

 

Income tax provision

 

2

 

 

2

 

 

1

 

 

4

 

 

4

 

Net income

$

10

 

$

20

 

$

14

 

$

42

 

$

36

 

Earnings per share:
Basic earnings per common share

$

0.09

 

$

0.18

 

$

0.12

 

$

0.38

 

$

0.33

 

Diluted earnings per common share

$

0.09

 

$

0.18

 

$

0.12

 

$

0.38

 

$

0.33

 

Weighted-average common shares outstanding, basic

 

109

 

 

108

 

 

109

 

 

109

 

 

108

 

Weighted-average common shares outstanding, diluted

 

109

 

 

109

 

 

109

 

 

109

 

 

109

 

NOW INC.
SUPPLEMENTAL INFORMATION
 
BUSINESS SEGMENTS (UNAUDITED)
(In millions)
 

Three Months Ended

Nine Months Ended

September 30,

 

June 30,

 

September 30,

2019

 

2018

 

2019

 

2019

 

2018

Revenue:
United States

$

567

$

630

$

605

$

1,772

$

1,792

Canada

 

83

 

93

 

74

 

243

 

270

International

 

101

 

99

 

97

 

297

 

301

Total revenue

$

751

$

822

$

776

$

2,312

$

2,363

NOW INC.
SUPPLEMENTAL INFORMATION (CONTINUED)
 
U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) TO NON-GAAP RECONCILIATIONS
 
NET INCOME TO NON-GAAP EBITDA EXCLUDING OTHER COSTS RECONCILIATION (UNAUDITED)
(In millions)

Three Months Ended

 

Nine Months Ended

September 30,

 

June 30,

 

September 30,

2019

 

2018

 

2019

 

2019

 

2018

 
GAAP net income (1)

$

10

 

$

20

 

$

14

 

$

42

 

$

36

 

Interest, net

 

1

 

 

2

 

 

1

 

 

4

 

 

6

 

Income tax provision

 

2

 

 

2

 

 

1

 

 

4

 

 

4

 

Depreciation and amortization

 

10

 

 

9

 

 

10

 

 

30

 

 

31

 

Other costs (2)

 

1

 

−

 

1

 

 

2

 

 

1

 

EBITDA excluding other costs

$

24

 

$

33

 

$

27

 

$

82

 

$

78

 

EBITDA % excluding other costs (3)

 

3.2

%

 

4.0

%

 

3.5

%

 

3.5

%

 

3.3

%

NET INCOME TO NON-GAAP NET INCOME EXCLUDING OTHER COSTS RECONCILIATION (UNAUDITED)
(In millions)
Three Months Ended Nine Months Ended
September 30, June 30, September 30,

2019

 

2018

 

2019

 

2019

 

2018

 
GAAP net income (1)

$

10

 

$

20

 

$

14

 

$

42

 

$

36

 

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

 

(1

)

 

(3

)

 

(4

)

 

(10

)

 

(8

)

Net income excluding other costs (5)

$

9

 

$

17

 

$

10

 

$

32

 

$

28

 

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

Three Months Ended

 

Nine Months Ended

September 30,

 

June 30,

 

September 30,

2019

 

2018

 

2019

 

2019

 

2018

 
GAAP diluted earnings per share (1)

$

0.09

 

$

0.18

 

$

0.12

 

$

0.38

 

$

0.33

 

Other costs, net of tax (4)

 

(0.01

)

 

(0.03

)

 

(0.03

)

 

(0.09

)

 

(0.08

)

Diluted earnings per share excluding other costs (5)

$

0.08

 

$

0.15

 

$

0.09

 

$

0.29

 

$

0.25

 

(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 excluding other costs and (iii) diluted earnings 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 the transaction costs associated with acquisition activity and severance expenses which are included in operating profit.

(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, 2019, included a benefit of $2 million and $12 million, after tax, respectively, from changes in the valuation allowance recorded against the Company’s deferred tax assets; as well as, $1 million and $2 million, respectively, after tax, related to transaction costs associated with acquisition activity and severance expenses, which are included in operating profit.

(5)

Totals may not foot due to rounding.

 

Source: NOW Inc.

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