DNOW — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue for the quarter ended September 30, 2026, was $1,337 million, compared to $634 million in the same period in 2025 and $1,307 million in the second quarter of 2026.
• Gross profit was $265 million (19.8% of revenue), while adjusted gross profit was $283 million (21.2% of revenue).
• Net income attributable to DNOW Inc. was $26 million ($0.14 per diluted share), compared to $23 million ($0.21 per diluted share) in Q3 2025.
• Adjusted net income attributable to DNOW Inc. was $34 million ($0.18 per diluted share).
• Adjusted EBITDA was $76 million (5.7% of revenue), nearly double the $38 million reported in Q1 2026 and up from $51 million (8.0% of revenue) in Q3 2025.
• Cash flow from operating activities was $120 million for the quarter.
• Free cash flow was $106 million for the quarter, calculated as operating cash flow of $120 million less $14 million in capital expenditures.
• Cash and cash equivalents were $112 million, and total long-term debt was $377 million at September 30, 2026.
• Net debt was $265 million, resulting in a net debt leverage ratio of 1.1 times based on trailing twelve-month adjusted EBITDA of $236 million.
• For the nine months ended September 30, 2026, revenue was $3,827 million compared to $1,861 million in the prior year period.

Business Segments and Product Lines:

• Sales increased sequentially in all three geographic segments: United States, Canada, and International.
• The gas utilities business achieved its highest quarterly revenue in three years.
• Solid growth was reported in the downstream, industrial, and midstream businesses.
• Revenue by geography for Q3 2026 was $1,125 million in the United States, $56 million in Canada, and $156 million internationally.

Management Commentary and Tone:

• President and CEO David Cherechinsky described the quarter as demonstrating "outstanding execution" and "broad-based strength across the company."
• Management attributed strong operating cash flow to "substantial improvements in working capital velocity."
• The CEO expressed confidence in the business, citing an "even stronger balance sheet," "improving end-market fundamentals," and a "positive outlook across our business."
• Management stated the company is well-positioned to continue gaining share, expanding profitability, and creating long-term value.
• Year-to-date share repurchases totaled $92 million, exceeding the combined amount returned through repurchases over the prior eleven quarters by 24 percent.

Other Key Points:

• The company repurchased $17 million of common stock in the third quarter of 2026 under its $160 million share repurchase program.
• In the second quarter of 2026, the company permanently vacated its leased corporate office in Houston, Texas, recognizing a $4 million impairment charge related to the operating right-of-use asset.
• The company changed its inventory valuation method for U.S. inventories from the moving average cost method to the LIFO method in the fourth quarter of 2025, with retrospective application to all periods presented.
• Inventory-related transaction charges for the nine months ended September 30, 2026, included $44 million of charges related to inventory step-up and write-downs.
• Foreign currency losses included $2 million in the third quarter of 2026 and $5 million for the nine-month period.