Earnings Conference Call

May 5, 2022

8:00 a.m. CT

1 (833) 927-1758 (within North America)

1 (929) 526-1599 (outside of North America)

Access Code: 990303

Webcast: ir.dnow.com

Revenue was $473 million for the first quarter of 2022

Net income was $30 million and non-GAAP net income excluding other costs was $15 million for the first quarter of 2022

Diluted earnings per share was $0.27 and non-GAAP diluted earnings per share excluding other costs was $0.14 for the first quarter of 2022

Non-GAAP EBITDA excluding other costs for the first quarter of 2022 was $28 million or 5.9 percent of revenue

Cash and cash equivalents was $293 million and long-term debt was zero at March 31, 2022

Raising guidance for full-year 2022 revenue to now increase 20 percent with EBITDA to revenue incrementals approximating 20 percent, compared to full-year 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

Deferred income taxes

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; 110,669,457 and 110,558,831 shares issued and outstanding at March 31, 2022 and December 31, 2021, 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

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

Other ⁽²⁾

EBITDA excluding other costs

EBITDA % excluding other costs ⁽³⁾

GAAP net income (loss) ⁽¹⁾

Other, net of tax ^{(4) (5)}

Net income (loss) excluding other costs ⁽⁵⁾

GAAP diluted earnings (loss) per share ⁽¹⁾

Other, net of tax ^{(4) (5)}

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

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.

For the three months ended March 31, 2022, Other primarily included a benefit of approximately $13 million related to the decrease of contingent consideration liability, which was included in other income, partially offset by separation and transaction-related charges.

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

For the three months ended March 31, 2022, Other, net of tax included a benefit of approximately $4 million from changes in the valuation allowance recorded against the Company’s deferred tax assets, as well as, a benefit of approximately $13 million related to the decrease of contingent consideration liability, partially offset by approximately $2 million in separation and transaction-related charges. 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.