DNOW (DNOW) 2024 Southwest IDEAS Conference summary

Company overview and market positioning

• Celebrated 10 years as a public company, with roots dating back 160 years and a focus on energy and industrial distribution.

• Diversified from upstream oil and gas into midstream, downstream, and industrial markets, with a growing presence in renewables and decarbonization.

• Operates 165 locations globally, with 80% of revenue from the U.S., and a strong presence in Canada and international markets.

• Expanded midstream exposure from 10% to 20% through acquisitions, notably Whitco in early 2023.

• Process Solutions and pump distribution now represent 26% of U.S. revenue, with plans for further acquisitions in this segment.

Financial performance and strategy

• Achieved significant earnings improvement post-2020, with EBITDA rising from 1% pre-COVID to 7%+ in recent years.

• Ended Q3 with $261 million in cash and $622 million in total liquidity, maintaining a debt-free balance sheet.

• 2023 marked the best year in history, with 7.9% EBITDA and $399 million in cash; free cash flow reached $171 million.

• Instituted an $80 million share buyback program, nearly complete, and upgraded full-year free cash flow guidance twice in 2024.

• Focused on organic and inorganic growth, with a rinse-and-repeat approach to acquisitions and capital allocation.

Operational improvements and efficiency

• Transitioned to a supercenter model for inventory, improving working capital efficiency and customer service.

• Closed underperforming international locations, removing $10 million in unprofitable revenue.

• Reduced headcount by about 200 in 2024, optimizing resources while fueling growth in thriving locations.

• Leveraged technology, including ERP systems, automation, and AI, to drive productivity and revenue per employee.

• Working capital as a percent of revenue reached a historic low of 15.7%, supporting future growth.