Dnow Inc (NYSE:DNOW)

Q2 2026 DNOW Inc. Earnings Call Transcript

Aug 6, 2026 / 01:00 PM GMT

Release Date Price: $15.39 (+8.23%)

Transcript 10-Q8-K

Key Points

Positve

Revenue of $1.3 billion in Q2 2026, up 10% sequentially, with U.S. revenue growing 13%.
Adjusted EBITDA rose 54% sequentially to $60 million, with margin improving 130 basis points to 4.6%.
Record Q2 cash flow from operations of $133 million, driving a positive $38 million year-to-date cash inflow.
U.S. midstream revenue surpassed $1 billion annualized for the first time, and gas utilities grew 15% sequentially.
Progress on ERP integration with 17 MRC locations converted to SAP, supporting revenue recapture and synergy realization.
Strong working capital management: DSO improved by 7 days to 62 days, and inventory reduced by $131 million.
Raised full-year 2026 guidance, expecting revenue of $5.0-$5.1 billion and EBITDA margin approaching 4.5%.
Cost synergies on track, with year-one exit rate expected at $30 million, exceeding original estimate of $17 million.
Net debt leverage improved to 1.7x, and $25 million in shares repurchased during the quarter.
Process Solutions delivered its highest-ever quarterly revenue, led by water solutions and other product lines.

Negative

Adjusted gross margin declined sequentially to 20.8% due to $4 million in inventory-related charges and lower vendor consideration.
Canada revenue fell 8% sequentially due to seasonal spring breakup, though better than expected.
Downstream industrial revenue declined $12 million sequentially, impacted by a large non-repeating project and weak chemical demand.
Middle East operations face geopolitical instability, causing project delays and slower customer engagement.
Temporary elevated costs from MRC ERP implementation and integration continue to pressure near-term profitability.
Fourth quarter is expected to see seasonal revenue decline, with guidance implying a sequential drop.
International revenue growth was modest at 3% sequentially, with some markets experiencing timing-driven softness.
Full-year effective tax rate is revised to mid-to-high single digits, reflecting LIFO charges and geographic mix.
Inventory levels remain high, with plans to reduce by another $25-$50 million in the second half.
The company expects continued near-term headwinds from ERP-related costs, though they should decline over time.

Refinitiv StreetEvents Event Transcript
E D I T E D V E R S I O N

DNOW.N - DNOW Inc.
Q2 2026 DNOW Inc. Earnings Call
Aug 06, 2026 / 01:00PM GMT

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Presentation
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Unidentified_1 [1]
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Good day. My name is Greg and I will be your conference operator today. At this time, I would like to welcome everyone to the DNOW second quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. And if you'd like to withdraw your question, simply press star one again.

Thank you.

Mr. Brad Wise, Vice President of Digital Strategy and Investor Relations, you may begin your conference.

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Unidentified_2 [2]

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