Earnings Conference Call

February 17, 2022

8:00 a.m. CT

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

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

Webcast: ir.dnow.com

Revenue was $432 million for the fourth quarter of 2021

Net income was $12 million and non-GAAP net income excluding other costs was $8 million for the fourth quarter of 2021

Diluted earnings per share was $0.11 and non-GAAP diluted earnings per share excluding other costs was $0.07 for the fourth quarter of 2021

Non-GAAP EBITDA excluding other costs for the fourth quarter of 2021 was $17 million

Cash and cash equivalents was $313 million and long-term debt was zero at December 31, 2021

Current assets:

Cash and cash equivalents

Receivables, net

Inventories, net

Prepaid and other current assets

Total current assets

Property, plant and equipment, net

Deferred income taxes

Goodwill

Intangibles, net

Other assets

Total assets

Current liabilities:

Accounts payable

Accrued liabilities

Other current liabilities

Total current liabilities

Long-term operating lease liabilities

Other long-term liabilities

Total liabilities

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 December 31, 2021 and 2020, respectively

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive loss

Total stockholders’ equity

Total liabilities and stockholders’ equity

Revenue

Operating expenses:

Cost of products

Warehousing, selling and administrative

Impairment and other charges

Operating profit (loss)

Other income (expense)

Income (loss) before income taxes

Income tax provision (benefit)

Net income (loss)

Earnings (loss) per share:

Basic earnings (loss) per common share

Diluted earnings (loss) per common share

Weighted-average common shares outstanding, basic

Weighted-average common shares outstanding, diluted

Revenue:

United States

Canada

International

Total revenue

GAAP net income (loss) ⁽¹⁾

Interest, net

Income tax provision (benefit)

Depreciation and amortization

Other costs:

Stock-based compensation ⁽²⁾

Other ⁽³⁾

EBITDA excluding other costs

EBITDA % excluding other costs ⁽⁴⁾

GAAP net income (loss) ⁽¹⁾

Other, net of tax ^{(5) (6)}

Net income (loss) excluding other costs ⁽⁶⁾

GAAP diluted earnings (loss) per share ⁽¹⁾

Other, net of tax ^{(5) (6)}

Diluted earnings (loss) per share excluding other costs ⁽⁶⁾

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.

In an effort to better align with management’s evaluation of the Company’s performance and to facilitate comparison of our results to those of peer companies, beginning for the fourth quarter and full-year ended December 31, 2021, EBITDA excluding other costs excludes non-cash stock-based compensation expense. Prior periods presented have been adjusted to conform with the current period presentation. Stock-based compensation excludes net credits of $4 million for 2020 as such separation amounts were included in Other.

Other includes certain income and expenses not included in stock-based compensation. For three months ended December 31, 2021, Other primarily included $3 million of impairment and other charges and $3 million in separation and transaction-related expenses, which were included in operating profit, partially offset by a benefit of $11 million related to the decrease in the fair value of contingent consideration liabilities, which was included in other income (expense). Other for 2021 primarily included $7 million of impairment and other charges and $5 million in separation and transaction-related expenses, which were included in operating profit, partially offset by a benefit of $10 million related to the decrease in the fair value of contingent consideration liabilities, which was included in other income (expense). Other for 2020 included $321 million of impairment charges and $18 million in net separation and transaction-related expenses, which were included in operating profit (loss) and $6 million in pension expense related to the de-risking of our defined benefit plans which was included in other expense.

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

For the three months ended December 31, 2021, Other, net of tax included an expense of $1 million from changes in the valuation allowance recorded against the Company’s deferred tax assets, as well as $3 million related to impairment and other charges and $3 million related to net separation and transaction-related expenses, partially offset by a benefit of $11 million related to a decrease in the fair value of contingent consideration liabilities. Other, net of tax for 2021 included an expense of $2 million from changes in the valuation allowance recorded against the Company’s deferred tax assets, as well as $7 million related to impairment and other charges and $5 million related to net separation and transaction-related expenses, partially offset by a benefit of $10 million related to a decrease in the fair value of contingent consideration liabilities. The Company has excluded the impact of these items on its valuation allowance in computing net income (loss) excluding other costs.

Totals may not foot due to rounding.