DNOW (DNOW) Sidoti September Small-Cap Virtual Conference summary

Financial performance and capital allocation

• EBITDA margins have nearly doubled in recent years, now approaching 8%, supporting significant free cash flow growth.

• The company is debt-free with $197 million in cash and total liquidity of $579 million.

• Free cash flow guidance for 2024 is $200 million, with $98 million generated in the first half.

• An $80 million share buyback program is nearly complete, with $13 million remaining and potential for renewal.

• Capital allocation prioritizes organic growth, accretive acquisitions, and share repurchases over dividends.

Strategic growth and diversification

• Core revenue remains in upstream energy, but midstream, industrial, and Energy Evolution markets are growing.

• Recent acquisition of Whitco, the largest in company history, expanded the PVF distribution business.

• Diversification efforts target water, wastewater, mining, and chemical processing markets.

• Energy transition solutions, including carbon capture and renewable natural gas, are key growth areas.

• Technology and AI are being leveraged to improve efficiency and margins.

Market positioning and operations

• Operates 170 locations in 17 countries, with 2,600 employees and a strong U.S. focus (81% of revenue).

• Super Center strategy enables scalable regional fulfillment and operational flexibility.

• Customer On-Site and Integrated Supply solutions foster sticky, long-term relationships.

• Process Solutions business is expanding, especially in pump distribution and fabrication.

• Inventory management and working capital efficiency have improved, with working capital at 16.5% of revenue.