DistributionNOW’s third quarter results reflected steady execution in a subdued energy market, with management attributing performance to disciplined cost control, operational leverage, and targeted customer focus. CEO David Cherechinsky noted the company’s “solutions-oriented approach” and highlighted growth in midstream and process solutions, along with efficient working capital management and improved inventory turns. Management acknowledged ongoing competitive pressure in core U.S. markets and cited customer consolidation as an industry headwind.
Is now the time to buy DNOW? Find out in our full research report (it’s free for active Edge members).
DistributionNOW (DNOW) Q3 CY2025 Highlights:
- Revenue: $634 million vs analyst estimates of $634.1 million (4.6% year-on-year growth, in line)
- Adjusted EPS: $0.26 vs analyst estimates of $0.23 (11.4% beat)
- Adjusted EBITDA: $51 million vs analyst estimates of $49.5 million (8% margin, 3% beat)
- Operating Margin: 5.2%, up from 3.8% in the same quarter last year
- Market Capitalization: $1.35 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From DistributionNOW’s Q3 Earnings Call
- Adam Farley (Stifel, Nicolaus & Company, Incorporated) asked about the most challenging aspects of the MRC Global integration. CEO David Cherechinsky replied that retaining top talent and minimizing revenue leakage during the transition were primary concerns, with a focus on engaging employees in the combined company’s future.
- Jeffrey Robertson (Water Tower Research LLC) inquired whether the combined company could expand its share among E&P operator customers. Cherechinsky noted opportunities to deploy overlapping resources more efficiently, aiming to capture greater market share, especially in upstream markets.
- Jeffrey Robertson (Water Tower Research LLC) asked about extending digital platforms to MRC Global’s customer base. Vice President Brad Wise said integrating DigitalNOW analytics and leveraging MRC’s new ERP could enhance supply chain optimization and customer service for the combined entity.
- Nathan Jones (Stifel, Nicolaus & Company, Incorporated) requested details on gross margin trends and product line inflation. Cherechinsky explained that the company is targeting higher-margin lines and services but faces intense price competition, with tariffs and input costs influencing resale prices.
- Nathan Jones (Stifel, Nicolaus & Company, Incorporated) queried the company’s exposure to data centers and related infrastructure opportunities. Wise highlighted recent wins in supplying pipe, valves, and fabricated equipment for data center-driven power projects, with further growth expected as demand for cooling and power infrastructure increases.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts are closely watching (1) the pace and quality of the MRC Global integration, especially efforts to retain key personnel and achieve targeted cost synergies; (2) signs of sustained momentum in midstream and LNG-related capital spending; and (3) the adoption rate of digital tools and new product lines, such as EcoVapor and Flex Flow. Developments in energy transition projects and progress on inventory optimization will also be important indicators.
DistributionNOW currently trades at $12.90, down from $14.62 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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