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Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

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<ul><li>The 1Q24 Whitco Supply acquisition diversified DNOW’s customer base and added new revenue opportunities in the midstream markets.</li><li>Management now expects FY24 revenue to increase in the mid- to high single digits range from FY23 and for adjusted EBITDA margin to be in line with FY23.</li><li>Management lifted its FY24 free cash flow outlook to ~$200 million from ~$150 million.</li></ul>

The 1Q24 Whitco Supply acquisition diversified DNOW’s customer base and added new revenue opportunities in the midstream markets.Management now expects FY24 revenue to increase in the mid- to high single digits range from FY23 and for adjusted EBITDA margin to be in line with FY23.Management lifted its FY24 free cash flow outlook to ~$200 million from ~$150 million.

DNOW, Inc. - FY24 Free Cash Flow Outlook Lifted

<ul><li>DNOW’s FY23 financial results benefited from the initiatives management put in place several years ago to position the company as a strategic supply chain partner for its vendors and customers.</li><li>FY23 revenue increased 9% Y/Y, including +20% and +11% gains in its drilling and production and fittings and flanges product lines.</li><li>Capital spending cycles across all segments of the energy industry drive the majority of DNOW’s revenue. </li></ul>

DNOW’s FY23 financial results benefited from the initiatives management put in place several years ago to position the company as a strategic supply chain partner for its vendors and customers.FY23 revenue increased 9% Y/Y, including +20% and +11% gains in its drilling and production and fittings and flanges product lines.Capital spending cycles across all segments of the energy industry drive the majority of DNOW’s revenue. 

DNOW, Inc. - Customer-Driven Model Drives Market Share Gains

<ul><li>DNOW’s business has been resilient in the face of a declining US rig count through the first three quarters of 2023.</li><li>3Q23 US revenue was $448 million, 3% higher than 3Q22 despite an 11% fall in the average rig count.</li><li>On a per rig basis, US 3Q23 revenue averaged ~<span style="font-size: var(--content-font-size);">$689,000, a 20% Y/Y gain</span></li></ul>

DNOW’s business has been resilient in the face of a declining US rig count through the first three quarters of 2023.3Q23 US revenue was $448 million, 3% higher than 3Q22 despite an 11% fall in the average rig count.On a per rig basis, US 3Q23 revenue averaged ~$689,000, a 20% Y/Y gain

NOW, Inc. - Resilient Model Withstands Industry Headwinds

<div><div><div><div><ul style="list-style-type: disc;"><li><p>We hosted a fireside chat with DNOW on September 12, 2023.</p></li><li><p>We were joined by President and Chief Executive Officer David Cherechinsky and Vice President Digital Strategy and Investor Relations Brad Wise. </p></li><li><p>DNOW’s transformed fulfillment model is driving sustainable earnings traction as the company increases its market share.</p></li></ul></div></div></div></div>

We hosted a fireside chat with DNOW on September 12, 2023.We were joined by President and Chief Executive Officer David Cherechinsky and Vice President Digital Strategy and Investor Relations Brad Wise. DNOW’s transformed fulfillment model is driving sustainable earnings traction as the company increases its market share.

NOW, Inc. - Leveraging Existing Model to Supply Energy Evolution

<div><div><div><div><ul style="list-style-type: disc;"><li><p>DistributionNOW gained share during 2Q23 as US drilling activity slowed. US revenue per rig averaged ~$631k, up from ~$561k in 1Q23 and ~$570k in 2Q22.</p></li><li><p>Gains reflect the benefits of the company’s fulfillment model, geared to make DistributionNOW the supply chain solution provider of choice for customers by supplying the products they require in the quantities they need by increasing the efficiency of their procurement process, lowering transactions costs, and increasing returns on their investments.</p></li><li><p>2Q23 total revenue grew 10% Y/Y and 2% from 1Q22 revenue. </p></li></ul></div></div></div></div>

DistributionNOW gained share during 2Q23 as US drilling activity slowed. US revenue per rig averaged ~$631k, up from ~$561k in 1Q23 and ~$570k in 2Q22.Gains reflect the benefits of the company’s fulfillment model, geared to make DistributionNOW the supply chain solution provider of choice for customers by supplying the products they require in the quantities they need by increasing the efficiency of their procurement process, lowering transactions costs, and increasing returns on their investments.2Q23 total revenue grew 10% Y/Y and 2% from 1Q22 revenue. 

NOW, Inc. - Fulfillment Model to Meet Customers' Evolving Needs August 16, 2023 Jeff Robertson

United States

NOW Inc distributes oil drilling equipment across the globe. The Company provides maintenance, repair, and operating supplies for the global energy and industrial markets.

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NOW Inc (DNOW US)

DNOW, Inc. - FY24 Free Cash Flow Outlook Lifted

The 1Q24 Whitco Supply acquisition diversified DNOW’s customer base and added new revenue opportunities in the midstream markets.

Water Tower Research

NOW, Inc. - Resilient Model Withstands Industry Headwinds

DNOW’s business has been resilient in the face of a declining US rig count through the first three quarters of 2023. 3Q23 US revenue was $448...

Water Tower Research

NOW, Inc. - Leveraging Existing Model to Supply Energy Evolution

DNOW’s transformed fulfillment model is driving sustainable earnings traction as the company increases its market share.

Water Tower Research

NOW, Inc. - Fulfillment Model to Meet Customers' Evolving Needs August 16, 2023 Jeff Robertson

DistributionNOW gained share during 2Q23 as US drilling activity slowed. US revenue per rig averaged ~$631k, up from ~$561k in 1Q23 and ~$570k in...

Water Tower Research

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DNOW, Inc. - FY24 Free Cash Flow Outlook Lifted

The 1Q24 Whitco Supply acquisition diversified DNOW’s customer base and added new revenue opportunities in the midstream markets.

Water Tower Research

DNOW, Inc. - Customer-Driven Model Drives Market Share Gains

DNOW’s FY23 financial results benefited from the initiatives management put in place several years ago to position the company as a strategic...

Water Tower Research

NOW, Inc. - Resilient Model Withstands Industry Headwinds

DNOW’s business has been resilient in the face of a declining US rig count through the first three quarters of 2023. 3Q23 US revenue was $448...

Water Tower Research

NOW, Inc. - Leveraging Existing Model to Supply Energy Evolution

DNOW’s transformed fulfillment model is driving sustainable earnings traction as the company increases its market share.

Water Tower Research

NOW, Inc. - Fulfillment Model to Meet Customers' Evolving Needs August 16, 2023 Jeff Robertson

DistributionNOW gained share during 2Q23 as US drilling activity slowed. US revenue per rig averaged ~$631k, up from ~$561k in 1Q23 and ~$570k in...

Water Tower Research