Earnings Conference Call February 16, 2023 8:00 a.m. CT 1
(844) 200-6205 (within North America) 1 (929) 526-1599 (outside of
North America) Access Code: 703044 Webcast: ir.dnow.com
NOW Inc. (NYSE: DNOW) announced results for the fourth quarter
and full-year ended December 31, 2022.
Fourth Quarter 2022 Financial Highlights
- Revenue was $547 million for the fourth quarter of 2022
- Net income attributable to NOW Inc. was $32 million and
non-GAAP net income attributable to NOW Inc. excluding other costs
was $29 million for the fourth quarter of 2022
- Diluted earnings per share attributable to NOW Inc.
stockholders was $0.28 and non-GAAP diluted earnings per share
attributable to NOW Inc. stockholders excluding other costs was
$0.25 for the fourth quarter of 2022
- Non-GAAP EBITDA excluding other costs for the fourth quarter of
2022 was $47 million or 8.6% of revenue
- Cash and cash equivalents was $212 million and long-term debt
was zero at December 31, 2022 with total liquidity of approximately
$564 million
- Completed two acquisitions in December 2022 for $59 million in
cash, one with a patented process technology solution that expands
our suite of greenhouse gas emission reduction products, and one
that enhances our pump strategy
- Repurchased $3 million of common stock in the fourth quarter of
2022
David Cherechinsky, President and CEO of NOW Inc., added, “I am
thrilled about our strong fourth quarter results, which capped off
a stellar, record year for DNOW on many fronts. For the year, we
achieved revenue growth of $504 million or 31% compared to 2021,
without consuming cash from operations, as we turned working
capital seven times, delivered impressive gross margins of 23.7%
and generated $175 million in EBITDA excluding other costs, or 8.2%
of revenue.
Our investments in four supercenters equip us to grow in those
regional markets and calibrate product availability to resolve
customer supply chain challenges. Additionally, the three
acquisitions we completed during the year further enhance our
competitive position and importance to suppliers, while deepening
our appeal to customers. In December, we added two of these
acquisitions, one that fortifies our pump position in the Permian
and the other that positions DNOW as a vital energy evolution
partner in reducing greenhouse gas emissions.
Entering 2023, we are in a great place as a company, remain
debt-free with ample liquidity and are well positioned for
continued growth and success. The highly talented women and men of
DNOW show dedication, enthusiasm, resilience and a competitive
spirit toward positioning our company to win the market.”
Prior to the earnings conference call a presentation titled “NOW
Inc. Fourth Quarter and Full-Year 2022 Key Takeaways” will be
available on the Company’s Investor Relations website.
About NOW Inc.
DistributionNOW is a worldwide supplier of energy and industrial
products and packaged, engineered process and production equipment
with a legacy of 160 years. Headquartered in Houston, Texas, with
approximately 2,425 employees and a network of locations worldwide,
we offer a broad set of supply chain solutions combined with a
suite of digital solutions branded as DigitalNOW® that provide
customers world-class technology for digital commerce, data and
information management. Our locations provide products and
solutions to exploration and production companies, midstream
transmission and storage companies, refineries, chemical companies,
utilities, mining, municipal water, manufacturers, engineering and
construction companies as well as companies operating in the
decarbonization, energy transition and renewables end markets.
Statements made in this press release that are forward-looking
in nature are intended to be "forward-looking statements" within
the meaning of Section 21E of the Securities Exchange Act of 1934
and may involve risks and uncertainties. These statements may
differ materially from actual future events or results. Readers are
referred to documents filed by NOW Inc. with the U.S. Securities
and Exchange Commission, which identify significant risk factors
which could cause actual results to differ from those contained in
the forward-looking statements.
NOW INC.
CONSOLIDATED BALANCE
SHEETS
(In millions, except share
data)
December 31,
December 31,
2022
2021
ASSETS Current assets: Cash and cash equivalents
$
212
$
313
Receivables, net
398
304
Inventories, net
381
250
Prepaid and other current assets
26
16
Total current assets
1,017
883
Property, plant and equipment, net
119
111
Goodwill
116
67
Intangibles, net
25
9
Other assets
43
34
Total assets
$
1,320
$
1,104
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable
$
304
$
235
Accrued liabilities
126
112
Other current liabilities
9
22
Total current liabilities
439
369
Long-term operating lease liabilities
25
17
Deferred income taxes
1
−
Other long-term liabilities
11
6
Total liabilities
476
392
Commitments and contingencies Stockholders' equity: Preferred stock
- par value $0.01; 20 million shares authorized; no shares issued
andoutstanding
−
−
Common stock - par value $0.01; 330 million shares authorized;
110,369,266 and 110,558,831shares issued and outstanding at
December 31, 2022 and 2021, respectively
1
1
Additional paid-in capital
2,066
2,060
Accumulated deficit
(1,075
)
(1,203
)
Accumulated other comprehensive loss
(150
)
(147
)
NOW Inc. stockholders' equity
842
711
Noncontrolling interest
2
1
Total stockholders' equity
844
712
Total liabilities and stockholders' equity
$
1,320
$
1,104
NOW INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)
(In millions, except per share
data)
Three Months Ended Year Ended December 31, September 30,
December 31,
2022
2021
2022
2022
2021
Revenue
$
547
$
432
$
577
$
2,136
$
1,632
Operating expenses: Cost of products
415
331
438
1,630
1,275
Warehousing, selling and administrative
97
91
95
365
341
Impairment and other charges
−
3
−
10
7
Operating profit
35
7
44
131
9
Other income (expense)
(1
)
8
−
8
3
Income before income taxes
34
15
44
139
12
Income tax provision
2
3
3
10
7
Net income
32
12
41
129
5
Net income attributable to noncontrolling interest
−
−
1
1
−
Net income attributable to NOW Inc.
$
32
$
12
$
40
$
128
$
5
Earnings per share attributable to NOW Inc. stockholders: Basic
$
0.28
$
0.11
$
0.35
$
1.14
$
0.05
Diluted
$
0.28
$
0.11
$
0.35
$
1.13
$
0.05
Weighted-average common shares outstanding, basic
110
111
111
111
110
Weighted-average common shares outstanding, diluted
111
111
111
111
110
NOW INC.
SUPPLEMENTAL
INFORMATION
BUSINESS SEGMENTS
(UNAUDITED)
(In millions)
Three Months Ended Year Ended December 31, September 30,
December 31,
2022
2021
2022
2022
2021
Revenue: United States
$
414
$
303
$
435
$
1,591
$
1,163
Canada
75
72
86
315
249
International
58
57
56
230
220
Total revenue
$
547
$
432
$
577
$
2,136
$
1,632
NOW INC.
SUPPLEMENTAL INFORMATION
(CONTINUED)
U.S. GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (GAAP) TO NON-GAAP RECONCILIATIONS
NET INCOME ATTRIBUTABLE TO NOW
INC. TO NON-GAAP EBITDA EXCLUDING OTHER COSTS RECONCILIATION
(UNAUDITED)
(In millions)
Three Months Ended Year Ended
December 31,
September 30,
December 31,
2022
2021
2022
2022
2021
GAAP net income attributable to NOW Inc. (1)
$
32
$
12
$
40
$
128
$
5
Net income attributable to noncontrolling interest (2)
−
−
1
1
−
Interest expense (income), net
−
−
(1
)
(1
)
−
Income tax provision
2
3
3
10
7
Depreciation and amortization
5
5
5
19
23
Other costs: Stock-based compensation
4
2
3
11
8
Other (3)
4
(5
)
2
7
2
EBITDA excluding other costs
$
47
$
17
$
53
$
175
$
45
EBITDA % excluding other costs (4)
8.6
%
3.9
%
9.2
%
8.2
%
2.8
%
NET INCOME ATTRIBUTABLE TO NOW
INC. TO NON-GAAP NET INCOME ATTRIBUTABLE TO NOW INC. EXCLUDING
OTHER COSTS RECONCILIATION (UNAUDITED)
(In millions)
Three Months Ended Year Ended December 31, September 30,
December 31,
2022
2021
2022
2022
2021
GAAP net income attributable to NOW Inc. (1)
$
32
$
12
$
40
$
128
$
5
Other, net of tax (5) (6)
(3
)
(4
)
(6
)
(21
)
4
Net income attributable to NOW Inc. excluding other costs (6)
$
29
$
8
$
34
$
107
$
9
DILUTED EARNINGS PER SHARE
ATTRIBUTABLE TO NOW INC. STOCKHOLDERS TO NON-GAAP DILUTED EARNINGS
PER SHARE ATTRIBUTABLE TO NOW INC. STOCKHOLDERS EXCLUDING OTHER
COSTS RECONCILIATION (UNAUDITED)
Three Months Ended Year Ended December 31, September 30,
December 31,
2022
2021
2022
2022
2021
GAAP diluted earnings per share attributable to NOW Inc.
stockholders (1)
$
0.28
$
0.11
$
0.35
$
1.13
$
0.05
Other, net of tax (5) (6)
(0.03
)
(0.04
)
(0.05
)
(0.18
)
0.03
Diluted earnings per share attributable to NOW Inc. stockholders
excluding other costs (6)
$
0.25
$
0.07
$
0.30
$
0.95
$
0.08
(1)
In an effort to provide investors
with additional information regarding our results as determined by
GAAP, we disclose various non-GAAP financial measures in our
quarterly earnings press releases and other public disclosures. The
non-GAAP financial measures include: (i) earnings before interest,
taxes, depreciation and amortization (EBITDA) excluding other
costs, (ii) net income attributable to NOW Inc. excluding other
costs and (iii) diluted earnings per share attributable to NOW Inc.
stockholders excluding other costs. Each of these financial
measures excludes the impact of certain other costs and therefore
has not been calculated in accordance with GAAP. A reconciliation
of each of these non-GAAP financial measures to its most comparable
GAAP financial measure is included in the schedules herein.
(2)
Net income attributable to
noncontrolling interest represents the income retained by the
noncontrolling party of a joint venture in our international
segment which we consolidate into our financials as we are the
primary beneficiary and controlling member.
(3)
Other includes certain income and
expenses not included in stock-based compensation.
For the three months ended
December 31, 2022, Other included approximately $4 million
(included in warehousing, selling and administrative), of which
approximately $3 million related to legal fees for litigation
matters that were not ordinary or routine to the operations of the
business where the Company is seeking damages and approximately $1
million related to separation and transaction-related charges.
For the year ended December 31,
2022, Other included approximately $10 million (included in
impairment and other charges) related to the reclassification of
accumulated foreign currency translation losses due to the
substantial liquidation of certain foreign subsidiaries; as well
as, approximately $10 million (included in warehousing, selling and
administrative), of which approximately $5 million related to legal
fees for litigation matters that were not ordinary or routine to
the operations of the business where the Company is seeking damages
and approximately $5 million related to separation and
transaction-related charges; partially offset by a benefit of
approximately $13 million (included in other income) related to the
decrease of contingent consideration liability.
(4)
EBITDA % excluding other costs is
defined as EBITDA excluding other costs divided by Revenue.
(5)
For the three months ended
December 31, 2022, Other, net of tax included a benefit of
approximately $7 million from changes in the valuation allowance
recorded against the Company’s deferred tax assets, partially
offset by approximately $3 million related to legal fees for
litigation matters that were not ordinary or routine to the
operations of the business where the Company is seeking damages and
approximately $1 million related to separation and
transaction-related charges.
For the year ended December 31,
2022, Other, net of tax included a benefit of approximately $28
million from changes in the valuation allowance recorded against
the Company’s deferred tax assets, as well as, a benefit of
approximately $13 million related to the decrease of contingent
consideration liability, partially offset by approximately $10
million of impairment and other charges, approximately $5 million
in separation and transaction-related charges and $5 million
related to legal fees for litigation matters discussed above.
The Company has excluded the
impact of these items on its valuation allowance in computing net
income excluding other costs.
(6)
Totals may not foot due to
rounding.
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version on businesswire.com: https://www.businesswire.com/news/home/20230216005292/en/
Mark Johnson Senior Vice President and Chief Financial Officer
(281) 823-4754
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