NOW Inc. Reports First Quarter 2021 Results

May 05, 2021 at 06:45 AM EDT

NOW Inc. (NYSE: DNOW) announced results for the first quarter ended March 31, 2021.

First Quarter 2021 Financial Highlights

Revenue was $361 million for the first quarter of 2021
Net loss was $10 million and non-GAAP net loss excluding other costs was $5 million for the first quarter of 2021
Diluted loss per share was $0.09 and non-GAAP diluted loss per share excluding other costs was $0.04 for the first quarter of 2021
Non-GAAP EBITDA excluding other costs for the first quarter of 2021 was $1 million
Cash and cash equivalents was $374 million and long-term debt was zero at March 31, 2021

David Cherechinsky, President and CEO of NOW Inc., added, “We are very pleased with the positive results we achieved this quarter, driven by strong 13% sequential revenue growth. We closed our second acquisition this year in April and remain debt free. Without the heavy cost of debt burden, we have plenty of strategic and balance sheet flexibility with ample liquidity to fund organic growth and to pursue additional acquisition opportunities.

Last year, we committed to achieve break-even EBITDA in the first half of 2021 and achieved our goal a quarter early. I am proud of every one of our employees as their contributions drove such strong results.

We will continue to innovate, focus on both legacy and emerging end-markets, invest in our DigitalNOW® technologies and advance a customer order fulfillment migration to improve our competitiveness as we build a compelling suite of solutions we believe will be unmatched in our industry.”

Prior to the earnings conference call a presentation titled “NOW Inc. First Quarter 2021 Key Takeaways” will be available on the Company’s Investor Relations website.

About NOW Inc.

NOW Inc. is one of the largest distributors to energy and industrial markets on a worldwide basis, with a legacy of over 150 years. NOW Inc. operates primarily under the DistributionNOW and DNOW brands. Through its network of approximately 195 locations and 2,450 employees worldwide, NOW Inc. offers a comprehensive line of products and solutions for the upstream, midstream and downstream energy and industrial sectors. Our locations provide products and solutions to exploration and production companies, energy transportation companies, refineries, chemical companies, utilities, manufacturers and engineering and construction companies.

Statements made in this press release that are forward-looking in nature are intended to be "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 and may involve risks and uncertainties. These statements may differ materially from actual future events or results. Readers are referred to documents filed by NOW Inc. with the U.S. Securities and Exchange Commission, which identify significant risk factors which could cause actual results to differ from those contained in the forward-looking statements.

NOW INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except share data)

	March 31,			December 31,
	2021			2020

ASSETS
Current assets:
Cash and cash equivalents	$	374		$	387
Receivables, net		245			198
Inventories, net		247			262
Prepaid and other current assets		16			14
Total current assets		882			861
Property, plant and equipment, net		89			98
Deferred income taxes		1			1
Goodwill		7			−
Other assets		47			48
Total assets	$	1,026		$	1,008
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	200		$	172
Accrued liabilities		92			95
Other current liabilities		6			5
Total current liabilities		298			272
Long-term operating lease liabilities		22			25
Other long-term liabilities		14			12
Total liabilities		334			309
Commitments and contingencies
Stockholders' equity:
Preferred stock - par value $0.01; 20 million shares authorized;
no shares issued and outstanding		−			−
Common stock - par value $0.01; 330 million shares authorized; 110,255,003 and
109,951,610 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively		1			1
Additional paid-in capital		2,053			2,051
Accumulated deficit		(1,218	)		(1,208	)
Accumulated other comprehensive loss		(144	)		(145	)
Total stockholders' equity		692			699
Total liabilities and stockholders' equity	$	1,026		$	1,008

NOW INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In millions, except per share data)

	Three Months Ended
	March 31,						December 31,
	2021			2020			2020

Revenue	$	361		$	604		$	319
Operating expenses:
Cost of products		286			487			274
Warehousing, selling and administrative		79			130			81
Impairment charges		4			320			1
Operating profit (loss)		(8	)		(333	)		(37	)
Other expense		(1	)		−			(8	)
Income (loss) before income taxes		(9	)		(333	)		(45	)
Income tax provision (benefit)		1			(2	)		(1	)
Net income (loss)	$	(10	)	$	(331	)	$	(44	)
Earnings (loss) per share:
Basic earnings (loss) per common share	$	(0.09	)	$	(3.03	)	$	(0.40	)
Diluted earnings (loss) per common share	$	(0.09	)	$	(3.03	)	$	(0.40	)
Weighted-average common shares outstanding, basic		110			109			110
Weighted-average common shares outstanding, diluted		110			109			110

NOW INC.
SUPPLEMENTAL INFORMATION

BUSINESS SEGMENTS (UNAUDITED)
(In millions)

	Three Months Ended
	March 31,				December 31,
	2021		2020		2020
Revenue:
United States	$	252	$	441	$	224
Canada		58		78		48
International		51		85		47
Total revenue	$	361	$	604	$	319

NOW INC.
SUPPLEMENTAL INFORMATION (CONTINUED)

U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) TO NON-GAAP RECONCILIATIONS

NET INCOME (LOSS) TO NON-GAAP EBITDA EXCLUDING OTHER COSTS RECONCILIATION (UNAUDITED)
(In millions)

	Three Months Ended
	March 31,						December 31,
	2021			2020			2020

GAAP net income (loss) ⁽¹⁾	$	(10	)	$	(331	)	$	(44	)
Interest, net		−			−			−
Income tax provision (benefit)		1			(2	)		(1	)
Depreciation and amortization		6			10			5
Other costs ⁽²⁾		4			325			11
EBITDA excluding other costs	$	1		$	2		$	(29	)
EBITDA % excluding other costs ⁽³⁾		0.3	%		0.3	%		(9.1	%)

NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS) EXCLUDING OTHER COSTS RECONCILIATION (UNAUDITED)
(In millions)

	Three Months Ended
	March 31,						December 31,
	2021			2020			2020

GAAP net income (loss)⁽¹⁾	$	(10	)	$	(331	)	$	(44	)
Other costs, net of tax ^{(4) (5)}		5			323			16
Net income (loss) excluding other costs ⁽⁵⁾	$	(5	)	$	(8	)	$	(28	)

DILUTED EARNINGS (LOSS) PER SHARE TO NON-GAAP DILUTED EARNINGS (LOSS) PER SHARE EXCLUDING OTHER COSTS
RECONCILIATION (UNAUDITED)

	Three Months Ended
	March 31,						December 31,
	2021			2020			2020

GAAP diluted earnings (loss) per share ⁽¹⁾	$	(0.09	)	$	(3.03	)	$	(0.40	)
Other costs, net of tax ⁽⁴⁾		0.05			2.96			0.15
Diluted earnings (loss) per share excluding other costs⁽⁵⁾	$	(0.04	)	$	(0.07	)	$	(0.25	)

(1)		In an effort to provide investors with additional information regarding our results as determined by GAAP, we disclose various non-GAAP financial measures in our quarterly earnings press releases and other public disclosures. The non-GAAP financial measures include: (i) earnings before interest, taxes, depreciation and amortization (EBITDA) excluding other costs, (ii) net income (loss) excluding other costs and (iii) diluted earnings (loss) per share excluding other costs. Each of these financial measures excludes the impact of certain other costs and therefore has not been calculated in accordance with GAAP. A reconciliation of each of these non-GAAP financial measures to its most comparable GAAP financial measure is included in the schedules herein.
(2)		Other costs primarily included impairment charges, as well as net separation and transaction-related expenses, which were included in operating loss.
(3)		EBITDA % excluding other costs is defined as EBITDA excluding other costs divided by Revenue.
(4)		Other costs, net of tax, for the three months ended March 31, 2021 included an expense of $1 million from changes in the valuation allowance recorded against the Company’s deferred tax assets; and $4 million related to the impairment charges, as well as net separation and transaction-related expenses. The Company has excluded the impact of these items on its valuation allowance in computing net income (loss) excluding other costs.
(5)		Totals may not foot due to rounding.