DNOW Q2 Earnings Call Highlights

Second-quarter performance improved sharply: Revenue rose 10% sequentially to $1.3 billion, adjusted EBITDA increased 54% to $60 million, and operating cash flow reached a record $133 million. U.S. midstream, gas utilities and upstream businesses led growth. Integration and cash management advanced: DNOW continued migrating MRC Global locations to SAP and expects first-year synergies of about $30 million, above its original estimate. Inventory and net debt declined, while the company repurchased $25 million of shares during the quarter. 2026 outlook was raised: DNOW now expects full-year revenue to approach $5.0 billion-$5.1 billion and EBITDA margins to approach 4.5%; third-quarter revenue is projected to grow at a low- to mid-single-digit sequential rate. DNOW NYSE: DNOW reported second-quarter 2026 revenue of $1.3 billion, up $124 million, or 10%, sequentially, as growth in its U.S. upstream, midstream and gas utility businesses exceeded management’s expectations. Adjusted EBITDA rose 54% from the first quarter to $60 million, while operating cash flow reached a second-quarter company record of $133 million. President and Chief Executive Officer David Cherechinsky said the quarter marked a “meaningful improvement” from the first quarter, which was the company’s first full quarter as a combined organization following its MRC Global combination. He attributed the results to revenue recovery efforts, integration actions, working-capital management and continued progress on system optimization. “Our ability to execute our strategic plans across multiple fronts resulted in stellar results for the second quarter,” Cherechinsky said. U.S. Growth Led by Midstream, Gas Utilities and Upstream U.S. revenue totaled $1.1 billion, increasing $124 million, or 13%, from the prior quarter. Chief Financial Officer Mark Johnson said upstream represented about 36% of second-quarter U.S. revenue, followed by gas utilities at 28%, midstream at 23%, and downstream and industrial markets at 13%. Cherechinsky said midstream reached its highest revenue level ever for the company, surpassing a $1 billion annualized revenue rate in the U.S. He cited investment in natural-gas infrastructure, LNG-related activity, power generation and feed-gas infrastructure for data centers as demand drivers. The company reported activity in pipeline-related work, compressor-station packages, fabricated solutions and valve automation. Gas utility revenue increased 15% sequentially to an 11-quarter high. Management said results reflected seasonal construction demand, rising capital expenditures among key customers, improved execution and share gains with new customers. DNOW also opened a distribution center to support 15 locations for one of its largest gas utility customers. Upstream activity improved as the company recovered customer business and gained market share, according to Cherechinsky. He said DNOW’s broader product availability, field relationships and geographic footprint have strengthened its ability to serve customers in the sector. Downstream revenue declined $12 million sequentially. However, management said revenue was flat excluding the effect of a large, non-recurring first-quarter project and market-share recovery initiatives. The company expects downstream activity to improve in coming quarters as customers prepare for seasonal refinery turnarounds, with pre-buying activity typically beginning late in the third quarter ahead of first-quarter execution. ERP Conversion and Integration Progress DNOW continued to integrate MRC Global’s operations and systems during the quarter. In July, the company transitioned its first MRC Global location to SAP.