DNOW (DNOW) Q1 2026 earnings summary

Executive summary

• Q1 2026 was the first full quarter post-MRC Global merger, with ERP integration and operational stabilization ongoing; revenue reached $1,183 million, nearly doubling year-over-year, but profitability was impacted by ERP disruptions and higher SG&A expenses.

• Adjusted EBITDA was $39 million (3.3% margin), with a net loss of $44 million ($0.24 per share), mainly due to inventory-related charges, LIFO impacts, and merger-related costs.

• Cost synergy realization is ahead of schedule, with annualized synergy expectations raised to $30 million for 2026.

• Completed the $46 million acquisition of Edge Controls, expanding automation and controls capabilities.

• Repurchased $50 million in shares during the quarter, bringing cumulative repurchases to $87 million under the current program and $167 million total since late 2022.

Financial highlights

• Q1 2026 revenue was $1.183 billion, up 23% sequentially, driven by the MRC Global merger, but down from $1.311 billion in Q1 2025 due to ERP disruptions and market softness.

• Adjusted gross profit was $256 million (21.6% margin), while gross profit was $193 million (16.3% margin); adjusted EBITDA was $39 million (3.3% margin).

• Net loss attributable to shareholders was $44 million, impacted by $41 million in merger-related inventory step-up amortization.

• Adjusted net income was $3 million ($0.01 per share).

• Cash used in operating activities was $95 million; cash and equivalents at quarter-end were $116 million.

Outlook and guidance

• Q2 2026 U.S. and international revenues are expected to grow sequentially, with Canada declining seasonally but less than usual.

• Q2 revenues projected to rise mid to high single digits sequentially, with EBITDA flow-throughs to revenue near 25%.

• Full-year 2026 revenue expected to approach $5 billion, with EBITDA margin near 4.5% and cash from operations forecasted at $100–$200 million.

• 2026 is a transition year; 2027 expected to see normalized earnings, 7% revenue growth, and up to $350 million EBITDA.

• Management expects continued operational efficiencies, synergy capture, and growth in water management, energy transition, and data center projects.