DNOW 2025 Q1 Earnings Strong Net Income Growth of 9.5%

DNOW (DNOW) reported its fiscal 2025 Q1 earnings on May 07th, 2025. The total revenue of DNOW increased by 6.4% to $599 million in 2025 Q1, up from $563 million in 2024 Q1. DNOW exceeded expectations with a 9.5% increase in net income to $23 million, reflecting a robust financial performance. The company's guidance remains in-line, with a focus on leveraging its strong cash position to capitalize on growth opportunities.

Revenue

Earnings/Net Income
DNOW maintained stable EPS at $0.20 in 2025 Q1 compared to 2024 Q1. Meanwhile, the company's profitability strengthened with net income of $23 million in 2025 Q1, marking a 9.5% growth from $21 million in 2024 Q1. The EPS performance reflects consistent earnings stability.

Price Action
The stock price of DNOW has dropped 3.36% during the latest trading day, has dropped 7.62% during the most recent full trading week, and has edged down 0.81% month-to-date.

Post-Earnings Price Action Review
The strategy of buying DNOW shares after a revenue drop quarter-over-quarter and holding for 30 days has yielded a 21.79% return over the past five years. This compares to a benchmark return of 84.08%, resulting in an excess return of -62.30%. The compound annual growth rate (CAGR) for this strategy was 4.04%. The strategy experienced a maximum drawdown of -11.70%, indicating the potential downside risk investors faced. Despite this risk, the strategy achieved a Sharpe ratio of 0.36, suggesting moderate risk-adjusted returns. The volatility associated with the strategy was 11.37%, reflecting the fluctuations investors might encounter over the holding period. Overall, this approach demonstrated lower returns and higher risk compared to the benchmark.

CEO Commentary
David Cherechinsky, President and CEO of DNOW, emphasized that the company exceeded first-quarter expectations, achieving a 5% sequential revenue growth to $599 million and delivering strong EBITDA of $46 million despite a challenging market with fewer operating rigs. He highlighted strategic actions, including a recent acquisition in Singapore to enhance their offerings and a $16 million stock repurchase under their authorized program. Cherechinsky expressed confidence in the company's robust cash position and zero debt, which enables them to pursue growth opportunities while managing inventory effectively. He acknowledged uncertainties in market conditions but remained optimistic about DNOW's strategic positioning.

Guidance
DNOW recognizes the unpredictability of future market conditions influenced by declining oil prices and trade disruptions. However, the company believes it is well-positioned to capitalize on both organic and acquisition growth opportunities. They expect to pursue more efficient operational strategies while remaining selective in acquisitions, leveraging their strong cash balance and lack of debt to navigate potential market challenges.

Additional News
In recent developments, DNOW completed the acquisition of Natron International Pte. Ltd, headquartered in Singapore, in April. This strategic move expands DNOW's MacLean International brand, enhancing its electrical supply capabilities in the Asia Pacific region. The acquisition aligns with DNOW's growth strategy in the traditional and renewable energy sectors. Additionally, DNOW announced a significant capital allocation initiative, purchasing $8 million in common stock during Q1 2025 and $16 million year-to-date under a new $160 million share repurchase program. This buyback reflects DNOW's commitment to returning value to shareholders. The company has also maintained a robust financial position, with $219 million in cash and no long-term debt, providing significant liquidity to support future growth initiatives.