DNOW (DNOW) Q1 2026 earnings summary

Executive summary

• Q1 2026 was the first full quarter post-MRC Global merger, with integration and ERP stabilization as top priorities; ERP conversion to DNOW SAP platform is progressing, unlocking $40 million in inventory and improving service levels.

• Revenue for Q1 2026 was $1.183 billion, up 23% sequentially and nearly double year-over-year, mainly due to the MRC Global acquisition.

• Adjusted EBITDA was $39 million (3.3% margin), with a net loss attributable to shareholders of $44 million ($0.24 per share); adjusted net income was $3 million ($0.01 per share).

• $50 million in share repurchases and $46 million acquisition of Edge Controls were completed, enhancing automation and controls capabilities.

• Cost synergies are being realized faster than expected, with annualized synergy expectations raised to $30 million for 2026.

Financial highlights

• Q1 2026 revenue was $1.183 billion, up from $959 million in Q4 2025 and $599 million in Q1 2025.

• Adjusted gross profit was $256 million (21.6% margin), while gross profit was $193 million (16.3% margin); adjusted EBITDA margin was 3.3%.

• Net loss attributable to shareholders was $44 million, with adjusted net income at $3 million.

• Net cash used in operations was $95 million, reflecting working capital outflows and merger-related costs.

• SG&A expenses rose to $243 million, mainly due to incremental costs from the MRC Global acquisition.

Outlook and guidance

• Sequential revenue growth is expected in the U.S. and International segments for Q2 2026, with a seasonal decline in Canada.

• Full-year 2026 revenue is expected to approach $5 billion, with adjusted EBITDA margin near 4.5%.

• Full-year cash from operations projected at $100–$200 million, driven by inventory reduction and improved collections.

• 2026 is a transition year, with 2027 expected to show significant earnings improvement as ERP issues subside.

• Management expects continued operational efficiencies and earnings growth from integration and ERP enhancements.