Houston-based oilfield products distributor and energy services provider NOW Inc. reported its 2020 first quarter financial results on Wednesday, showing an accelerated considerable decrease in year-over-year sales and a massive net loss amid impacts from the COVID-19 pandemic on top of underlying weakened industrial demand.
NOW Inc., which does business primarily under the DistributionNOW brand, posted Q1 total sales of $604 million, down 23.1 percent year-over-year (YoY) and down 5.5 percent sequentially from Q4 2019. The company took a net loss of $331 million in Q1, compared to a $18 million profit a year earlier and a $139 net loss in Q4 2019.
“The market faces a challenging environment due to steep declines in oil prices, rig counts and worldwide oil demand," commented Dick Alario, who was appointed NOW Inc. interim CEO on Nov. 1, 2019. "Through our financial discipline, we entered this unprecedented period with zero debt, over $200 million in cash and access to ample liquidity under our credit facility. We have accelerated our structural transformation, which includes streamlining our organization and deploying technology to create additional customer value and revenue through our DigitalNOW investment."
“While the timing of a recovery is uncertain, I am confident DNOW will be a much leaner, transformed company, well-positioned to capitalize on the next market upswing," Alario added.
By geography in Q1, NOW's US sales of $441 million were down 26.5 YoY and down 5.8 percent from Q4. International sales of $85 million were down 14.1 percent, while Canada sales of $78 million were down 9.3 percent.
Responding to business impacts of COVID-19, NOW said it has enacted initiatives that are expected to generate about $100 million of warehousing, selling and administrative savings in 2020 compared to 2019, with those actions including cutting 1,250 jobs in 2020. Those headcount reductions will exceed 1,450 since June 2019.
In its Q1 earnings presentation, NOW said it has adjusted its physical footprint to reflect current lower demand. Now reduced its locations were reduced to 220 during Q1 by consolidating, closing or divesting approximately 25 locations since the end of 2019.
As part of NOW's structural transformation, its productivity actions include offshoring lower-level back-office labor and deploying technology to augment labor content.