Now Inc ((DNOW)) has held its Q1 earnings call. Read on for the main highlights of the call.
DNOW’s recent earnings call painted a picture of a robust quarter characterized by significant EBITDA growth and successful strategic initiatives, such as international expansion and digital transformation. Despite facing challenges like tariff uncertainties and regional revenue volatility, the company’s positive achievements led to a cautiously optimistic outlook.
Second-Best First Quarter EBITDA in Company History
DNOW announced an impressive $46 million in EBITDA for Q1 2025, marking the second-best first-quarter EBITDA in its public history. This represents a 2% sequential increase and an 18% year-over-year growth, highlighting the company’s strong financial performance.
Revenue Growth Beats Expectations
The company reported first-quarter revenue of $599 million, a 4.9% increase from the previous quarter and a 6.4% year-over-year rise. This growth exceeded February guidance, showcasing DNOW’s ability to overcome a slow start and deliver strong results.
Gross Margin Resilience
DNOW’s gross margins remained robust at 23.2%, outperforming expectations for the first quarter. This resilience underscores the company’s effective cost management strategies.
Strategic International Acquisition
DNOW completed a strategic acquisition in Singapore, enhancing the MacLean International brand and expanding its market presence in the Asia Pacific region. This move is expected to bolster the company’s international growth.
Increased Share Repurchases
Under a new $160 million program, DNOW repurchased $16 million in shares year-to-date, reflecting its commitment to enhancing shareholder returns and confidence in its financial health.
Digital Revenue Growth
Digital revenue as a percentage of total SAP revenue improved to 53%, demonstrating DNOW’s focus on driving efficiencies and aligning with customer needs through digital transformation.
Tariff Uncertainties
The dynamic tariff environment continues to pose challenges for DNOW. However, the company has repositioned its supply chains to mitigate these impacts, showcasing its adaptability.
Canada Revenue Decline
Canadian revenue experienced a $4 million sequential decline due to non-repeating projects from Q4 2024, highlighting regional revenue volatility.
International Revenue Volatility
While international revenue saw a sequential increase, a $15 million project delivered in Q1 is not expected to repeat, indicating potential volatility in future quarters.
Forward-Looking Guidance
Looking ahead, DNOW reaffirmed its guidance for 2025, projecting revenue to be flat to up in the high-single-digit percent range from 2024, with full-year EBITDA potentially approaching 8% of revenue. The company also targets a free cash flow of $150 million for 2025, emphasizing its strategic focus on growth and efficiency improvements.
In summary, DNOW’s earnings call highlighted a quarter of strong financial performance and strategic initiatives, despite facing some challenges. The company’s achievements in EBITDA growth, revenue increases, and digital transformation contribute to a cautiously optimistic outlook for the future.