Now Stock Earnings Reports

Key points for investors:

- Integration & ERP: DNOW completed its first full quarter post-merger with MRC Global and has largely stabilized the MRC U.S. ERP environment. Management is accelerating migration of select upstream/midstream MRC locations to DNOW's SAP platform (Permian conversions complete) to improve service, visibility and inventory deployment.

- Commercial benefits unlocked: Migration of Permian locations made ~ $40 million of additional MRC inventory visible and deployable, which management cites as a near-term commercial lever to speed fulfillment and recover revenue/margins.

- Financial results & metrics: Q1 2026 total revenue was ~$1.2 billion (benefitting from a full quarter of MRC). Adjusted EBITDA was $39 million (3.3% of revenue). GAAP net loss was $44 million (impacted by $41 million of inventory step-up amortization); adjusted net income was $3 million. Operating cash used was $95 million in Q1. Inventory was $1.2 billion (annualized churn ~3.3x); DSO 69 days; accounts receivable $889 million. Total debt was $571 million; net debt $455 million (trailing 12-month leverage ~2.3x). Liquidity was $379 million (cash $116 million + $263 million revolver availability).

- Capital allocation & buybacks: Management accelerated buybacks, repurchasing $50 million in Q1 and $87 million year-to-date against a $160 million authorization (total repurchases since late 2022: $167 million). They used debt for buybacks for the first time, arguing the stock is meaningfully undervalued while cash flow is temporarily suppressed by ERP issues.

- Synergies, costs and outlook: Management raised the near-term annualized synergy realization to roughly $30 million (from an earlier lower estimate) while maintaining a three-year target of $70 million. They disclosed temporary ERP stabilization costs (operational teams, overtime, temps, warehouse support) and expect these to moderate through the year. Q2 revenue is expected to be up sequentially mid- to high-single digits; DNOW expects full-year 2026 revenue to approach $5 billion with EBITDA margin approaching ~4.5% and operating cash flow for the year in the $100–$200 million range.

- Market dynamics & growth opportunities: Management is optimistic about recovering upstream and midstream revenues (notably Permian), sees durable growth in midstream and gas utilities (including opportunities tied to data centers and LNG-related infrastructure), and is expanding Process Solutions (recent Edge Controls acquisition) to broaden addressable markets.

- Risks & near-term headwinds: ERP-related disruptions materially pressured MRC U.S. revenue and margins in Q1 (noted as the primary cause of near-term revenue declines), downstream/industrial markets remain challenged, and recovery depends on successful ERP remediation, working capital improvements and execution of account-level recovery plans.