8-K
false 0001599617 0001599617 2021-11-03 2021-11-03

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) November 3, 2021

 

 

NOW INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-36325   46-4191184

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

7402 North Eldridge Parkway

Houston, Texas

  77041
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: 281-823-4700

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

  

Trading

Symbol(s)

  

Name of each exchange

on which registered

Common Stock, par value $0.01    DNOW    New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 


Item 2.02 Results of Operations and Financial Condition

On November 3, 2021, NOW Inc. issued a press release announcing earnings for the quarter ended September 30, 2021 and conference call in connection therewith. A copy of the release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.

The information contained in this Current Report shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

The following exhibit is provided as part of the information furnished under Item 2.02 of this Current Report on Form 8-K:

 

99.1    NOW Inc. press release dated November 3, 2021 announcing the earnings results for the third quarter ended September 30, 2021.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: November 3, 2021       NOW INC.
     

/s/ Raymond W. Chang

     

Raymond W. Chang

Vice President & General Counsel

EX-99.1

Exhibit 99.1

 

LOGO   

Earnings Conference Call

November 3, 2021

8:00 a.m. CT

1 (800) 446-1671 (within North America)

1 (847) 413-3362 (outside of North America)

Webcast: ir.dnow.com

NOW Inc. Reports Third Quarter 2021 Results

HOUSTON, TX, November 3, 2021 - NOW Inc. (NYSE: DNOW) announced results for the third quarter ended September 30, 2021.

Third Quarter 2021 Financial Highlights

 

   

Revenue was $439 million for the third quarter of 2021

 

   

Net income was $5 million and non-GAAP net income excluding other costs was $6 million for the third quarter of 2021

 

   

Diluted earnings per share was $0.05 and non-GAAP diluted earnings per share excluding other costs was $0.05 for the third quarter of 2021

 

   

Non-GAAP EBITDA excluding other costs for the third quarter of 2021 was $15 million

 

   

Cash and cash equivalents was $312 million and long-term debt was zero at September 30, 2021

 

   

Free cash flow for the third quarter of 2021 was $22 million

David Cherechinsky, President and CEO of NOW Inc., added, “I am delighted to report this quarter that the Company once again achieved solid results with better-than-expected sequential revenue growth of 10 percent, a third consecutive quarter of record-breaking gross margins and EBITDA excluding other costs of $15 million, well above expectations. Our strategic execution accelerated these results and generated $22 million in free cash flow in a period where we would have historically consumed cash.

Despite facing the pervasive effects of the continued worldwide pandemic, particularly global supply chain disruptions, product scarcity, industry labor shortages and elevated transportation costs, our global DNOW team delivered as a reliable source of critical products and services for our customers amid growing demand.

Looking ahead to full-year 2021 results, we expect revenue to be largely unchanged from full-year 2020. However, with stronger gross margins and a now much leaner cost structure, we anticipate full-year 2021 EBITDA improvement over full-year 2020 to be near $90 million, representing a fundamental shift in the capabilities of the Company and its earnings potential, laying the groundwork for a strong 2022.”

Prior to the earnings conference call a presentation titled “NOW Inc. Third Quarter 2021 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 195 locations and 2,400 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.

Contact:

Mark Johnson

Senior Vice President and Chief Financial Officer

(281) 823-4754


NOW INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

 

     September 30,     December 31,  
     2021     2020  
     (Unaudited)        
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 312     $ 387  

Receivables, net

     299       198  

Inventories, net

     244       262  

Prepaid and other current assets

     19       14  
  

 

 

   

 

 

 

Total current assets

     874       861  

Property, plant and equipment, net

     115       98  

Deferred income taxes

     1       1  

Goodwill

     66       —    

Intangibles, net

     11       —    

Other assets

     37       48  
  

 

 

   

 

 

 

Total assets

   $ 1,104     $ 1,008  
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY     

Current liabilities:

    

Accounts payable

   $ 243     $ 172  

Accrued liabilities

     105       95  

Other current liabilities

     27       5  
  

 

 

   

 

 

 

Total current liabilities

     375       272  

Long-term operating lease liabilities

     17       25  

Other long-term liabilities

     13       12  
  

 

 

   

 

 

 

Total liabilities

     405       309  

Commitments and contingencies

    

Stockholders’ equity:

    

Preferred stock - par value $0.01; 20 million shares authorized; no shares issued and outstanding

     —         —    

Common stock - par value $0.01; 330 million shares authorized; 110,558,831 and 109,951,610 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

     1       1  

Additional paid-in capital

     2,059       2,051  

Accumulated deficit

     (1,215     (1,208

Accumulated other comprehensive loss

     (146     (145
  

 

 

   

 

 

 

Total stockholders’ equity

     699       699  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 1,104     $ 1,008  
  

 

 

   

 

 

 

 

2


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,  
     2021     2020     2021     2021     2020  

Revenue

   $ 439     $ 326     $ 400     $ 1,200     $ 1,300  

Operating expenses:

          

Cost of products

     343       264       315       944       1,053  

Warehousing, selling and administrative

     86       83       85       250       310  

Impairment charges

     —         —         —         4       320  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit (loss)

     10       (21     —         2       (383

Other expense

     (3     —         (1     (5     (2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     7       (21     (1     (3     (385

Income tax provision (benefit)

     2       1       1       4       (2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 5     $ (22   $ (2   $ (7   $ (383
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) per share:

          

Basic earnings (loss) per common share

   $ 0.05     $ (0.20   $ (0.02   $ (0.06   $ (3.50
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings (loss) per common share

   $ 0.05     $ (0.20   $ (0.02   $ (0.06   $ (3.50
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average common shares outstanding, basic

     111       109       110       110       109  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average common shares outstanding, diluted

     111       109       110       110       109  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NOW INC.

SUPPLEMENTAL INFORMATION

BUSINESS SEGMENTS (UNAUDITED)

(In millions)

 

     Three Months Ended      Nine Months Ended  
     September 30,      June 30,      September 30,  
     2021      2020      2021      2021      2020  

Revenue:

              

United States

   $ 312      $ 228      $ 296      $ 860      $ 929  

Canada

     68        42        51        177        161  

International

     59        56        53        163        210  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

   $ 439      $ 326      $ 400      $ 1,200      $ 1,300  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

3


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,  
     2021     2020     2021     2021     2020  

GAAP net income (loss) (1)

   $ 5     $ (22   $ (2   $ (7   $ (383

Interest, net

     —         —         —         —         —    

Income tax provision (benefit)

     2       1       1       4       (2

Depreciation and amortization

     6       6       6       18       23  

Other costs (2)

     2             1       7       334  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA excluding other costs

   $ 15     $ (15   $ 6     $ 22     $ (28
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA % excluding other costs (3)

     3.4     (4.6 %)      1.5     1.8     (2.2 %) 

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,  
     2021      2020     2021     2021     2020  

GAAP net income (loss) (1)

   $ 5      $ (22   $ (2   $ (7   $ (383

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

     1        5       2       8       340  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) excluding other costs (5)

   $ 6      $ (17   $ —       $ 1     $ (43
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

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,  
     2021      2020     2021     2021     2020  

GAAP diluted earnings (loss) per share (1)

   $ 0.05      $ (0.20   $ (0.02   $ (0.06   $ (3.50

Other costs, net of tax (4)

     —          0.04       0.02       0.07       3.10  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ 0.05      $ (0.16   $ —       $ 0.01     $ (0.40
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

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

(2)

For the nine months ended September 30, 2021, other costs primarily included impairment charges and transaction-related expenses, which were included in operating profit, and the increase in the fair value of contingent consideration liabilities, which was included in other expense.

(3)

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

(4)

For the nine months ended September 30, 2021, other costs, net of tax, primarily included expenses of $1 million from changes in the valuation allowance recorded against the Company’s deferred tax assets and $7 million related to impairment charges 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.

 

4