Dnow Inc.: Q4 FY2025 earnings call

What management said about Q4 FY2025, from the documents filed with the SEC on 20 February 2026: press release. Guidance figures: 1 new, 1 kept. The quarter’s numbers.

Key takeaways

Fourth-quarter net loss from charges: Net loss attributable to DNOW Inc. was $147 million, or $(0.95) per diluted share, primarily from transaction charges. Source
Full-year Adjusted EBITDA margin 7.4%: Adjusted EBITDA was $209 million for 2025, or 7.4% of revenue, the same margin as the $176 million reported for 2024. Source
Synergies ahead of plan: First-year merger cost synergies are now projected at $23 million, 35% above target, while the $70 million three-year commitment is maintained. Source
U.S. revenue increased year on year: U.S. revenue was $765 million in the fourth quarter, against $451 million a year earlier, and $2,294 million for the year against $1,880 million. Source
Fourth-quarter gross margin at 7.1%: Reported gross profit was $68 million, or 7.1% of revenue, in the fourth quarter. Adjusted gross profit was $217 million, or 22.6% of revenue. Source
ERP transition live since Q3 2025: The U.S. MRC Global ERP system transition went live in the third quarter of 2025, and management describes it as a source of near-term obstacles. Source

“Excluding the contribution from MRC Global in the fourth quarter, 2025 marked DNOW’s fifth consecutive year of revenue growth and its highest Adjusted EBITDA year ever.”
David Cherechinsky, President and CEO of DNOW

Guidance

Area	Period	Figure	Against last quarter
Merger cost synergies Source	first year of the combined business	$23 million	New
Merger cost synergies Source	three years	$70 million	Kept

What changed from last quarter

New: DNOW completed its all-stock acquisition of MRC Global on November 6, 2025. Source
New guidance: A synergy savings projection appears in this release for the first time; the prior release contained none. Source
New: Non-GAAP measures now include adjusted gross profit, Adjusted EBITDA, adjusted net income and net debt leverage. The prior release listed EBITDA excluding other costs and free cash flow. Source

Results and growth drivers

Fourth-quarter net loss from charges: Net loss attributable to DNOW Inc. was $147 million, or $(0.95) per diluted share, primarily from transaction charges. Source
Full-year revenue of $2.8 billion: Full-year revenue was $2,820 million against $2,373 million in 2024. Fourth-quarter revenue was $959 million against $571 million a year earlier. Source
Full-year Adjusted EBITDA margin 7.4%: Adjusted EBITDA was $209 million for 2025, or 7.4% of revenue, the same margin as the $176 million reported for 2024. Source
Adjusted diluted EPS of $0.86: Adjusted net income was $104 million for 2025, after excluding LIFO, transaction, impairment and inventory-related charges. GAAP diluted EPS was $(0.76). Source
Operating loss for the quarter: Operating loss was $170 million in the fourth quarter, against operating profit of $29 million a year earlier. The full year shows an operating loss of $93 million against $109 million of profit. Source

Merger and synergy progress

Synergies ahead of plan: First-year merger cost synergies are now projected at $23 million, 35% above target, while the $70 million three-year commitment is maintained. Source
Inventory step-up excluded from adjusted: Inventory step-up charges of $135 million, recorded in cost of products, are excluded from adjusted gross profit and Adjusted EBITDA. Source
Transaction charges excluded from adjusted results: Transaction-related charges, defined to include retention bonuses and integration costs, were $51 million in the fourth quarter and $62 million for 2025. Source

“While these complexities have created near-term obstacles, we are actively addressing them and remain focused on positioning the business for long-term growth.”
David Cherechinsky, President and CEO of DNOW

Segments and regions

U.S. revenue increased year on year: U.S. revenue was $765 million in the fourth quarter, against $451 million a year earlier, and $2,294 million for the year against $1,880 million. Source
International revenue increased: International revenue was $143 million in the fourth quarter against $54 million a year earlier, and $312 million for 2025 against $240 million. Source
Canada revenue declined: Canada revenue was $51 million in the fourth quarter against $66 million a year earlier, and $214 million for 2025 against $253 million in 2024. Source

Margins and costs

Fourth-quarter gross margin at 7.1%: Reported gross profit was $68 million, or 7.1% of revenue, in the fourth quarter. Adjusted gross profit was $217 million, or 22.6% of revenue. Source
SG&A rose with transaction costs: SG&A was $226 million in the fourth quarter against $103 million a year earlier, and $559 million for the year against $416 million. Transaction-related charges and restructuring costs sit inside SG&A. Source
Foreign subsidiary liquidation charge: Impairment and other charges included $12 million of foreign currency translation losses from substantially completing the liquidation of certain International subsidiaries. Source
LIFO reserve increase added back: The LIFO reserve increase was $9 million in the fourth quarter and $27 million for the year. It is added back in the adjusted measures. Source

“Their dedication gives me confidence in our future as we lay the groundwork for 2026 and beyond.”
David Cherechinsky, President and CEO of DNOW

Balance sheet and cash flow

Operating cash flow of $155 million: Cash provided by operating activities was $155 million for 2025 and $83 million in the fourth quarter. Source
Share repurchases of $37 million: The company repurchased $37 million of common stock in 2025, including $10 million in the fourth quarter. Source
Liquidity of about $588 million: Long-term debt was $411 million at December 31, 2025, against zero at September 30, 2025 in the prior release. Cash was $164 million. Source
Net debt leverage ratio 1.2x: Net debt was $247 million against Adjusted EBITDA of $209 million, a net debt leverage ratio of 1.2x. Source

Integration and ERP transition

ERP transition live since Q3 2025: The U.S. MRC Global ERP system transition went live in the third quarter of 2025, and management describes it as a source of near-term obstacles. Source
Targeted actions taken as 2026 began: Management says it took targeted actions as 2026 started to address the ERP challenges. Source
Synergy initiatives show early progress: Management reports early progress on synergy initiatives, which it expects to create meaningful value for the combined business over time. Source

Workforce and company profile

Headcount described as about 5,300: The company profile now cites about 5,300 employees, against about 2,500 in the prior release. Source
Business described as energy solutions provider: The company now describes itself as a premier energy and industrial solutions provider. The prior release described it as a supplier of energy and industrial products. Source
CEO describes team commitment: The CEO describes representing the company's employees, who serve customers and compete in the market. Source

Coming up, as management said on 20 February 2026

Presentation posted before the call: A results presentation was to be made available on the investor relations website before the call. Source
ERP remediation work continues: Management said it is actively addressing the ERP issues and remains focused on long-term growth. Source

Risks management discussed

Operational: The U.S. MRC Global ERP transition has created persistent challenges that management says are creating near-term obstacles. Source

Earlier plans management reported on

Ahead: Management says first-year synergy savings are ahead of plan and now projected at $23 million. Source
Not stated: Management says it is maintaining the $70 million three-year synergy commitment. Source

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.

As filed with the SEC

Open the filing on EDGAR

DNOW Reports Fourth Quarter and Full-Year 2025 Results

HOUSTON, TX, February 20, 2026 - DNOW Inc. (NYSE: DNOW) announced results for the fourth quarter and year ended December 31, 2025.

Completed Merger with MRC Global Inc.

On November 6, 2025, DNOW completed its acquisition of MRC Global in an all-stock transaction
Annual merger cost synergies are ahead of plan, with first-year savings now projected at $23 million, or 35% above target, while maintaining our $70 million three-year synergy commitment

Full-Year 2025 Highlights

Revenue was $2,820 million
Gross profit was $478 million, or 17.0% of revenue, and adjusted gross profit was $651 million, or 23.1% of revenue
Net loss attributable to DNOW Inc. was $89 million, or $(0.76) per diluted share, primarily due to transaction charges, and adjusted net income attributable to DNOW Inc. was $104 million, or $0.86 per diluted share
Adjusted EBITDA was $209 million, or 7.4% of revenue
Cash provided by operating activities was $155 million
Repurchased $37 million of common stock
Cash and cash equivalents was $164 million and long-term debt was $411 million at December 31, 2025 with total liquidity of approximately $588 million

Fourth Quarter 2025 Highlights

Revenue was $959 million
Gross profit was $68 million, or 7.1% of revenue, and adjusted gross profit was $217 million, or 22.6% of revenue
Net loss attributable to DNOW Inc. was $147 million, or $(0.95) per diluted share, primarily due to transaction charges, and adjusted net income attributable to DNOW Inc. was $23 million, or $0.15 per diluted share
Adjusted EBITDA was $61 million, or 6.4% of revenue
Cash provided by operating activities was $83 million
Repurchased $10 million of common stock

David Cherechinsky, President and CEO of DNOW, added, “DNOW delivered strong financial results in 2025 generating $2.8 billion in revenue, with Adjusted EBITDA totaling 7.4% of revenues. Excluding the contribution from MRC Global in the fourth quarter, 2025 marked DNOW’s fifth consecutive year of revenue growth and its highest Adjusted EBITDA year ever.

The merger with MRC Global expands DNOW’s growth opportunities and strategically positions the Company for long-term success. I am encouraged by the strong start to our integration efforts and the early progress of our synergy realization initiatives, which we expect will create meaningful value for our combined business over time.

As we move into 2026, we have taken targeted actions to address persistent challenges related to the U.S. MRC Global ERP system transition, which went live in the third quarter of 2025. While these complexities have created near-term obstacles, we are actively addressing them and remain focused on positioning the business for long-term growth.

I am humbled to represent the talented women and men of DNOW who work hard every day to serve our customers and compete in the market. Their dedication gives me confidence in our future as we lay the groundwork for 2026 and beyond.”

Prior to the earnings conference call a presentation titled “DNOW Fourth Quarter and Full-Year 2025 Earnings Presentation” will be available on the Company’s Investor Relations website.

About DNOW

DNOW is a premier energy and industrial solutions provider with a legacy of over 160 years as a leading distributor of pipe, valves, fittings (PVF), gas products, pumps and fabricated equipment. Headquartered in Houston, Texas, with approximately 5,300 employees and a global network of distribution and engineering locations; we provide a broad mix of quality products our customers require to build and maintain essential infrastructure across the upstream, midstream, gas utilities, downstream, energy transition and industrial markets. We deliver a comprehensive range of value-added supply chain solutions and technical product expertise, supported by advanced digital offerings. Our products and resources enable our customers to run their operations more efficiently and effectively, helping them to meet and exceed their business goals.

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 DNOW 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.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In millions, except share and per share data)

	December 31,
	2025	2024
ASSETS
Current assets:
Cash and cash equivalents	$164	$256
Receivables, net	874	388
Inventories, net	1,192	352
Prepaid and other current assets	48	32
Total current assets	2,278	1,028
Property, plant and equipment, net	264	157
Operating right-of-use assets	160	40
Deferred income taxes	11	93
Goodwill	617	230
Intangibles, net	565	65
Other assets	29	8
Total assets	$3,924	$1,621
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$653	$300
Accrued liabilities	300	130
Other current liabilities	21	12
Total current liabilities	974	442
Long-term debt	411	-
Long-term operating lease liabilities	129	29
Deferred income taxes	99	-
Other long-term liabilities	73	22
Total liabilities	1,686	493
Commitments and contingencies
Stockholders’ equity:
Common stock - par value $0.01; 330 million shares authorized; 186,125,254 and 105,652,963 shares issued and outstanding at December 31, 2025 and 2024, respectively	2	1
Additional paid-in capital	3,193	2,023
Accumulated deficit	(836)	(747)
Accumulated other comprehensive loss	(126)	(153)
DNOW Inc. stockholders’ equity	2,233	1,124
Noncontrolling interest	5	4
Total stockholders’ equity	2,238	1,128
Total liabilities and stockholders’ equity	$3,924	$1,621

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In millions, except per share data)

	Three Months Ended			Year Ended
	December 31,		September 30,	December 31,
	2025	2024	2025	2025	2024
Revenue	$959	$571	$634	$2,820	$2,373
Cost of products	891	438	491	2,342	1,842
Gross profit	68	133	143	478	531
Selling, general and administrative expenses	226	103	112	559	416
Impairment and other charges	12	1	-	12	6
Operating (loss) profit	(170)	29	31	(93)	109
Other (expense) income	(6)	1	(1)	(7)	1
(Loss) income before income taxes	(176)	30	30	(100)	110
Income tax (benefit) provision	(29)	7	7	(12)	31
Net (loss) income	(147)	23	23	(88)	79
Net income attributable to noncontrolling interest	-	-	-	1	1
Net (loss) income attributable to DNOW Inc.	$(147)	$23	$23	$(89)	$78
(Loss) earnings per share attributable to DNOW Inc. stockholders:
Basic	$(0.95)	$0.22	$0.21	$(0.76)	$0.72
Diluted	$(0.95)	$0.21	$0.21	$(0.76)	$0.71
Weighted-average common shares outstanding, basic	155	106	105	118	106
Weighted-average common shares outstanding, diluted	155	107	106	118	107

SUPPLEMENTAL INFORMATION

BUSINESS SEGMENTS (UNAUDITED)

(In millions)

	Three Months Ended			Year Ended
	December 31,		September 30,	December 31,
	2025	2024	2025	2025	2024
Revenue:
United States	$765	$451	$527	$2,294	$1,880
Canada	51	66	53	214	253
International	143	54	54	312	240
Total revenue	$959	$571	$634	$2,820	$2,373

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

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) adjusted gross profit, (ii) adjusted gross profit as a percentage of revenue, (iii) adjusted earnings before interest, taxes, depreciation and amortization and excluding other costs (Adjusted EBITDA), (iv) Adjusted EBITDA as a percentage of revenue, (v) adjusted net (loss) income attributable to DNOW Inc., (vi) adjusted diluted earnings per share attributable to DNOW Inc. stockholders, (vii) net debt and (viii) net debt leverage ratio. We use these non-GAAP financial measures to evaluate and manage the Company’s operations because we believe they provide useful supplemental information regarding the financial performance of our business. These non-GAAP financial measures are not intended to replace the GAAP financial measures. The Company defines Adjusted Gross profit as revenue, less cost of products, plus amortization of intangibles, plus inventory-related charges incremental to normal operations, plus transaction costs associated with acquisitions, such as inventory fair value step-up or write-downs and plus or minus the impact of our LIFO inventory costing methodology. We define Adjusted EBITDA as net (loss) income plus interest, taxes, depreciation and amortization and excluding other costs, such as stock-based compensation, restructuring and exit costs, transaction related charges, long-lived asset impairments (including goodwill and intangible assets), inventory-related charges incremental to normal operations and plus or minus the impact of our LIFO inventory costing methodology. Transaction-related charges include transaction costs, inventory fair value step-up, retention bonus accruals and integration expenses associated with acquisitions. We define Net Debt as total long-term debt, including current portion, minus cash. We define our net debt leverage ratio as Net Debt divided by trailing twelve months Adjusted EBITDA. The Company believes Net Debt is an indicator of the extent to which the Company’s outstanding debt obligations could be satisfied by cash on hand and a useful metric for investors to evaluate the Company’s leverage position. We believe the net debt leverage ratio is a commonly used metric that management and investors use to assess the borrowing capacity of the Company. A reconciliation of each of these non-GAAP financial measures to its most comparable GAAP financial measure is included in the schedules herein. Totals in the schedules herein may not foot due to rounding.

GROSS PROFIT TO ADJUSTED GROSS PROFIT RECONCILIATION (UNAUDITED)

(In millions)

	Three Months Ended						Year Ended
	December 31,				September 30,		December 31,
	2025	As a % of revenue	2024	As a % of revenue	2025	As a % of revenue	2025	As a % of revenue	2024	As a % of revenue
Gross profit, as reported	$68	7.1%	$133	23.3%	$143	22.6%	$478	17.0%	$531	22.4%
Amortization of intangibles	5		2		2		11		7
Increase in LIFO reserve	9		-		2		27		4
Inventory-related transaction charges	135		1		-		135		7
Adjusted Gross Profit	$217	22.6%	$136	23.8%	$147	23.2%	$651	23.1%	$549	23.1%

NET (LOSS) INCOME ATTRIBUTABLE TO DNOW INC. TO ADJUSTED EBITDA RECONCILIATION (UNAUDITED)

(In millions)

	Three Months Ended						Year Ended
	December 31,				September 30,		December 31,
	2025	As a % of revenue	2024	As a % of revenue	2025	As a % of revenue	2025	As a % of revenue	2024	As a % of revenue
Net (loss) income attributable to DNOW Inc.	$(147)	(15.3)%	$23	4.0%	$23	3.6%	$(89)	(3.2)%	$78	3.3%
Net income attributable to noncontrolling interest	-		-		-		1		1
Interest expense (income), net	4		(2)		-		2		(6)
Income tax (benefit) provision	(29)		7		7		(12)		31
Depreciation and amortization	20		10		11		52		34
Increase in LIFO reserve	9		-		2		27		4
Stock-based compensation	4		4		4		15		13
Transaction-related charges	51		2		4		62		6
Impairment and other charges	12		1		-		12		6
Inventory-related transaction charges	135		1		-		135		7
Restructuring and exit costs	-		-		-		2		2
Other	2		(1)		-		2		-
Adjusted EBITDA	$61	6.4%	$45	7.9%	$51	8.0%	$209	7.4%	$176	7.4%

The year ended December 31, 2024 includes a change in accounting principle adjustment decreasing the previously reported net income attributable to DNOW Inc. by $3 million. The three months ended September 30, 2025 includes a change in accounting principle adjustment decreasing the previously reported net income attributable to DNOW Inc. by $2 million.

For the three months and year ended December 31, 2025, stock-based compensation excludes $13 million and $14 million, respectively, as such amounts were reported in transaction-related charges. For the three months ended September 30, 2025, stock-based compensation excludes less than $1 million, as such amounts were reported in transaction-related charges.

Transaction-related charges and restructuring and exit costs are included in selling, general and administrative expenses.

For the three months and year ended December 31, 2025, impairment and other charges included $12 million of foreign currency translation losses as a result of substantially completing the liquidation of certain foreign subsidiaries in the International segment. For the three months and year ended December 31, 2024, impairment and other charges included $1 million and $6 million, respectively, of International restructuring charges for foreign currency translation losses.

Inventory-related transaction charges are included in cost of products. For the three months and year ended December 31, 2025, inventory-related transaction charges included $135 million of charges related to inventory step-up. For the year ended December 31, 2024, inventory-related transaction charges included $5 million of transaction-related charges, coupled with $2 million of inventory write-downs.

For the three months and year ended December 31, 2025, other costs included $2 million related to foreign currency losses.

NET (LOSS) INCOME ATTRIBUTABLE TO DNOW INC. STOCKHOLDERS TO ADJUSTED NET INCOME ATTRIBUTABLE TO DNOW INC. STOCKHOLDERS RECONCILIATION (UNAUDITED)

(In millions)

	Three Months Ended			Year Ended
	December 31,		September 30,	December 31,
	2025	2024	2025	2025	2024
Net (loss) income attributable to DNOW Inc.	$(147)	$23	$23	$(89)	$78
Increase in LIFO reserve	9	-	2	27	4
Transaction-related charges	51	2	4	62	6
Impairment and other charges	12	1	-	12	6
Inventory-related transaction charges	135	1	-	135	7
Restructuring and exit costs	-	-	-	2	2
Tax benefit	(37)	-	(1)	(45)	(3)
Adjusted net income attributable to DNOW Inc.	$23	$27	$28	$104	$100

The year ended December 31, 2024 and the three months ended September 30, 2025 include a change in accounting principle adjustment decreasing the previously reported net income attributable to DNOW Inc. by $3 million and $2 million, respectively.

The tax effect of non-GAAP reconciling items is calculated based on the nature of the item and/or the tax jurisdiction in which the reconciling item has been incurred and applying the specific tax rate or tax treatment to each item.

DILUTED (LOSS) EARNINGS PER SHARE ATTRIBUTABLE TO DNOW INC. STOCKHOLDERS TO ADJUSTED DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO DNOW INC. STOCKHOLDERS RECONCILIATION (UNAUDITED)

	Three Months Ended			Year Ended
	December 31,		September 30,	December 31,
	2025	2024	2025	2025	2024
Diluted (loss) earnings per share attributable to DNOW Inc. stockholders	$(0.95)	$0.21	$0.21	$(0.76)	$0.71
Increase in LIFO reserve	0.06	-	0.02	0.22	0.04
Transaction-related charges	0.33	0.02	0.04	0.53	0.06
Impairment and other charges	0.08	0.01	-	0.10	0.05
Inventory-related transaction charges	0.87	0.01	-	1.14	0.06
Restructuring and exit costs	-	-	0.01	0.01	0.02
Tax benefit	(0.24)	-	(0.02)	(0.38)	(0.03)
Adjusted diluted earnings per share attributable to DNOW Inc. stockholders	$0.15	$0.25	$0.26	$0.86	$0.91

The year ended December 31, 2024 and the three months ended September 30, 2025 include a change in accounting principle adjustment decreasing the previously reported diluted earnings per share attributable to DNOW Inc. stockholders by $0.03 and $0.02, respectively.

LONG-TERM DEBT TO NET DEBT AND NET DEBT LEVERAGE RATIO CALCULATION (UNAUDITED)

(In millions)

	December 31, 2025
Long-term debt	$411
Plus: current portion of debt obligations	-
Total debt	411
Less: cash	164
Net Debt	$247
Net Debt	$247
Adjusted EBITDA	209
Net Debt Leverage Ratio	1.2x

Contacts
Earnings Conference Call February 20, 2026 8:00 a.m. CT 1 (888) 660-6431 (within North America) 1 (929) 203-2118 (outside of North America) Access Code: 7372055 Webcast: ir.dnow.com
Mark Johnson
Senior Vice President and Chief Financial Officer
(281) 823-4754