Houston-based NOW Inc., which does business as DistributionNOW, reported its 2017 third quarter fiscal performance on Wednesday, led by a continued spike in year-over-year sales and a net loss that continues to shrink.
The company posted Q3 sales of $697 million, up 34.0 percent year-over-year (YoY) and up 7.1 percent from Q2. That outpaces a YoY sales rise of 30.0 percent in Q2, which was up 3.2 percent sequentially. Meanwhile, NOW took a Q3 net loss of $9 million, a continued improvement from a $56 million loss a year earlier, and losses of $17 million in Q2 and $23 million in Q1. The company posted its first positive EBITDA since the oil and gas downturn, improving $7 million sequentially to a gain of $5 million in Q3 — which was up $45 million YoY.
Q3 was the company's third straight quarter of YoY sales growth, following 11 straight quarters of decline that dated back to the company’s inception. Q3 had the highest sales since Q3 2015 ($753 million) and the smallest net loss since the company began in 2014.
The company also reduced its branch count by six during Q3.
"I’m pleased with the earnings growth our team produced this quarter. These results reflect our focus on higher product margins, capturing business from new customers and culling costs in areas left behind by the market recovery," NOW Inc. president and CEO Robert Workman said. "Despite weak oil prices in the third quarter and rig counts now softening, we believe consistent execution on improving our core operations, coupled with operators ramping up completions, will enable positive earnings momentum."
Here's how the past three years of quarterly performance have fared for DNOW, which is No. 13 on Industrial Distribution's Big 50 List.
|
Quarter |
Sales |
YOY Sales Change |
Net Profit/Loss |
| Q3 2017 | $697 million | +34.0% | -$9 million |
|
Q2 2017 |
$651 million |
+30.0% |
-$17 million |
|
Q1 2017 |
$631 million |
+15.1% |
-$23 million |
|
Q4 2016 |
$538 million |
-16.5% |
-$71 million |
|
Q3 2016 |
$520 million |
-30.9% |
-$56 million |
|
Q2 2016 |
$501 million |
-33.2% |
-$44 million |
|
Q1 2016 |
$548 million |
-36.5% |
-$63 million |
|
Q4 2015 |
$644 million |
-36% |
-$249 million |
|
Q3 2015 |
$753 million |
-29.6% |
-$224 million |
|
Q2 2015 |
$750 million |
-21.2% |
-$19 million |
|
Q1 2015 |
$863 million |
-24.8% |
-$10 million |
|
Q4 2014 |
$1.01 billion |
-3.4% |
+16 million |
By geographic segment in Q3 2017:
-
U.S. sales of $506 million (72.6 percent of total) increased 36.0 percent YoY and 5.2 percent from Q2. The company attributes the sequential gain mostly to increased rig count and growth related to the integration of its Power Service acquisition into the Process Solution business. Operating loss was $10 million, following a loss of $16 million in Q2 and a loss of $46 million a year earlier.
-
International sales of $95 million (13.6 percent of total) increased 43.3 percent YoY and 4.4 percent from Q2. The company attributes the sequential gain to electrical project sales in Europe and increased customer penetration throughout the Middle East and Europe. Operating margins were flat.
-
Canada sales of $96 million (13.8 percent of total) increased 43.6 percent year-over-year and increased 21.5 percent from Q2. The company attributes the sequential gain primarily to rig count improvement. Operating profit was $4 million, compared to $2 million in Q2.
On Tuesday, DNOW announced a master distribution agreement with Global Tubing, a Forum Energy Technologies company. Under the agreement, DNOW becomes Global Tubing's preferred partner to distribute its portfolio of coiled line pipe products in the U.S.
"We are excited to partner with Global Tubing on their API-licensed steel coiled line pipe product offering," said Scott Hauck, NOW Inc.'s president of Energy Centers. "This agreement is another example of our ability to bring innovative solutions to our established customer base. Global Tubing's capability to produce and deliver world-class coated steel line pipe for use in high pressure oil & gas applications gives our customers a great opportunity to reduce installation time and mitigate numerous supply chain risks associated with laying other pipe products."
