The following is a summary of the DNOW Inc. (DNOW) Q2 2024 Earnings Call Transcript:
Financial Performance:
Total Q2 2024 revenue was $633 million, a 12% increase from Q1 2024, primarily driven by full quarter contributions from the Whitco acquisition and growth in both the U.S. Energy Centers and Process Solutions.
EBITDA for Q2 was $50 million, or 7.9% of revenue, aided by $2 million in favorable items not expected to recur in Q3.
Net income attributable to DNOW Inc. for Q2 was $24 million, or $0.21 per fully diluted share. On a non-GAAP basis, excluding other costs, net income was $28 million, or $0.25 per fully diluted share.Generated $18 million of free cash flow during the quarter, bringing the year-to-date amount to $98 million, with trailing four quarters free cash flow totaling $201 million.
Business Progress:
The Whitco acquisition significantly enhanced DNOW's midstream coverage, more than doubling it.
Focused on growing opportunities in the energy evolution space, specifically targeting to double energy evolution sales in 2024.
Achieved inventory velocity of five turns in the quarter despite a slowing market, and recorded the best DSOs since 2020.
Expanded into industrial adjacent markets, increasing participation in the mining sector and municipal water and chemicals markets.
Invested in DigitalNOW initiatives, enhancing e-commerce and automated inventory solutions.
Opportunities:
The Whitco acquisition expanded the business in the midstream market, which is a sprawling, geographically diverse network with aging infrastructure, offering opportunities for MRO business and capital projects.
The shift towards energy evolution technologies, such as CO2 usage and direct air capture, presents growth opportunities, as evidenced by increasing orders and a focus to double energy evolution sales in 2024.
Expanding into industrial adjacent markets and international regions with high growth potential.
Risks:
Challenging onshore oil and gas activity in the U.S. due to E&P consolidation and low natural gas prices impacted by geopolitical factors and lack of infrastructure.
The potential slowdown in customer activity as large customers may curtail spending in the second half of the year similar to what was experienced last year.
More details: DNOW Inc IR
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