DNOW (DNOW) Q3 2024 earnings summary

Executive summary

• Revenue reached $606 million in Q3 2024, up 3% year-over-year, with strong EBITDA of $42 million (6.9% margin) and free cash flow of $72 million, despite market headwinds and project delays.

• Net income attributable was $13 million ($0.12 per share); adjusted net income was $22 million ($0.21 per share), with year-to-date net income at $58 million.

• U.S. Process Solutions delivered record performance, driven by M&A and integration, while Canada and International segments saw revenue and profit declines due to weaker activity and restructuring.

• Completed the $185 million Whitco Supply acquisition, adding $53 million in goodwill and $30 million in intangibles.

• Free cash flow for the trailing four quarters was $273 million; cash on hand totaled $261 million with no debt.

Financial highlights

• Q3 2024 revenue was $606 million, up 3% year-over-year; gross margin was approximately 22.3%.

• Net income for Q3 was $13 million; non-GAAP net income was $22 million.

• EBITDA for Q3 was $42 million (6.9% of revenue); year-to-date EBITDA was $131 million (7.3% of revenue).

• Cash provided by operating activities was $74 million in Q3 and $176 million year-to-date.

• Working capital (excluding cash) was $329 million, 15.7% of revenue at quarter-end.

Outlook and guidance

• Q4 2024 revenue expected to decline high single digits sequentially due to seasonality, but full-year 2024 revenue to show modest growth over 2023.

• Full-year 2024 EBITDA margin could approach 7%; cash from operations guidance upgraded to approach $225 million, with CapEx near $10 million.

• Focus on expanding midstream revenues and targeting energy transition markets, including carbon capture, renewables, and new energy streams.