Oilfield products distributor and energy services provider NOW Inc. — which drastically downsized its business and company footprint between late 2019 and early 2020 — reported its 2021 third quarter financial results on Nov. 3, led by continued year-over-year and sequential sales gains, and a long-awaited return to net profit growth after years of losses.
Houston-based NOW — No. 13 on Industrial Distribution's 2021 Big 50 List — reported Q3 revenue of $439 million, up a whopping 35 percent year-over-year and up 10 percent from Q2. Geographically, US revenue surged 36.8 percent year-over-year and gained 5 percent from Q2. Energy represented 80 percent of Q3 US revenue; Canada revenue jumped 61.9 percent year-over-year and 33 percent from Q2; International revenue increased 5.3 percent year-over-year and 11 percent from Q2.
NOW's Q3 gross margin was 21.9 percent — a company record that was up 290 basis points from a year earlier and up 60 basis points from Q2. Q3 operating profit of $10 million was a reversal of a $21 million loss a year earlier and up from flat in Q2.
NOW's Q3 net profit was $5 million, marking its first such gain in several years. The company took a $2 million loss in Q2 and a $22 million loss in Q3 2020. The current state of the company's financials is a remarkable turnaround after it took losses of $331 million in Q1 2020 and $139 million in Q4 2019.
NOW has zero long-term debt, and a $312 cash balance as of Sept. 30.
"I am delighted to report this quarter that the company once again achieved solid results with better-than-expected sequential revenue growth of 10 percent, a third consecutive quarter of record-breaking gross margins and EBITDA excluding other costs of $15 million, well above expectations," said David Cherechinsky, NOW president and CEO. "Our strategic execution accelerated these results and generated $22 million in free cash flow in a period where we would have historically consumed cash."
Looking forward, NOW expects Q4 sequential revenue will range from flat to down mid-single digits amid headwinds of seasonality, customer budget exhaustion and product availability constraints, and that the company expects a seasonal sequential revenue rebound in Q1 2022.