DNOW Inc.

What they do

DNOW distributes PVF, gas products, pumps, valve automation and modification, instrumentation, artificial lift and MRO consumables from a network of approximately 300 locations, and also fabricates, assembles and tests process and production equipment. It sells to upstream exploration and production, midstream gathering and transmission, gas utilities, and downstream and industrial customers including refining, petrochemical, mining, water/wastewater, data centers and LNG terminals. The company employs approximately 5,100 people, down from approximately 5,300, and operates primarily under the DNOW and MRC Global brands including the MRCGO digital commerce platform.

Revenue drivers

• U.S. segment — The largest reported geography; management said second-quarter U.S. midstream revenues surpassed $1 billion on an annualized basis for the first time in company history, and U.S. revenue rose 13% year over year in the quarter.
• Midstream — Transmission and gathering infrastructure for oil, gas and water; management cited it as the standout sector, with the annualized $1 billion U.S. midstream milestone called out in the second-quarter 2026 release.
• Gas utilities — Storage and distribution of natural gas, sold through PVF, gas meters and instrumentation; management said this sector delivered its strongest sequential quarter percentage growth since 2022.
• Upstream — MRO consumables, safety and OEM equipment to drilling and workover rigs plus full-suite PVF, pumps and artificial lift for production; also delivered its strongest sequential quarter percentage growth since 2022, per management.

Recent performance

Second-quarter 2026 revenue was $1,307 million, a 10% sequential increase from $1,180 million in the first quarter of 2026. Gross profit was $243 million, or 18.6% of revenue, and adjusted gross profit was $272 million, or 20.8% of revenue. Net loss attributable to DNOW was $21 million, or ($0.11) per diluted share, while adjusted net income was $21 million, or $0.12 per diluted share, and adjusted EBITDA was $60 million, or 4.6% of revenue, up 54% sequentially. Cash flow from operating activities was $133 million, which management called a record second-quarter achievement, and cash and cash equivalents were $114 million against $474 million of total long-term debt at June 30, 2026, for net debt of $360 million and a 1.7x net debt leverage ratio. Full-year 2025 results were $2.82 billion of revenue and a net loss of $89 million, or ($0.76) per diluted share.

Strategy

The central strategic action is the all-stock acquisition of MRC Global, announced June 26, 2025 and completed November 6, 2025, inclusive of MRC Global's debt. DNOW says it is retaining MRC Global's brand equity, customer loyalty and MRCGO digital commerce platform while operating under DNOW corporate stewardship. Management is executing integration and cost management initiatives, which it credited for part of the adjusted EBITDA improvement, alongside inventory streamlining and collection efforts that lifted operating cash flow to $133 million in the second quarter. Capital allocation includes a $160 million share repurchase program, under which $25 million was repurchased in the second quarter and $75 million year to date, a figure management said exceeded the prior 10 quarters combined.

Risks

• Energy capex and commodity prices — DNOW states that decreased capital and other expenditures in the energy industry, which can result from lower oil and natural gas prices, can adversely impact customer demand and revenue.
• Gas utility customer budgets — Demand for gas utilities products and services depends on customers' capital investment programs, which the company says may be reduced or delayed.
• Integration of MRC Global — The 10-Q lists risks that expected benefits, synergies and cost reduction efforts of mergers or acquisitions may not be fully achieved in a timely manner or at all, and that the integration of MRC Global may not succeed.
• Limited customer contracts — DNOW states it does not have long-term contracts or agreements with many customers, and those it has generally do not commit minimum purchase volumes, so the loss of a significant customer could be material.

Outlook

CEO David Cherechinsky said he is confident about the second half of the year, citing encouraging results from integration, customer and supplier relationships, and operational efficiency actions. Management pointed to stronger volumes and the execution of integration and cost management initiatives as drivers of the sequential adjusted EBITDA increase. The company also flagged that it continues to take decisive steps to position DNOW for long-term success, without providing specific numeric guidance in the release.