DNOW 2025 Q3 Earnings Strong EPS Growth Driven by $1.5B MRC Merger

DNOW Inc. (DNOW) delivered a mixed earnings report for Q3 2025, with revenue falling slightly short of estimates but EPS exceeding expectations. The company provided cautious guidance, emphasizing the pending MRC Global merger as a catalyst for growth while withholding specific financial targets.

Revenue

Total revenue rose 4.6% year-over-year to $634 million, though it lagged behind the $637.1 million FactSet estimate. U.S. operations led the charge, generating $527 million (+9.3% YoY), while Canada and international markets faced headwinds, reporting $53 million (-18.5% YoY) and $54 million (-8.5% YoY), respectively.

Earnings/Net Income

Earnings surged with a 91.7% increase in EPS to $0.23 and net income growing 92.3% to $25 million. Adjusted EPS reached $0.26, surpassing the $0.23 consensus, driven by cost discipline and margin expansion. This marks a significant improvement in profitability.

Post-Earnings Price Action Review

Shares of DNOW rallied 10.01% on the day of the earnings release but faced a 1.29% weekly decline and an 8.49% monthly drop. The volatile performance reflects mixed investor sentiment: optimism around the MRC merger and EBITDA guidance contrasted with concerns over the revenue shortfall and broader market jitters. Analysts note the stock’s low P/E ratio and robust cash position could attract buyers if the merger closes as planned.

CEO Commentary

President and CEO David Cherechinsky highlighted the $51 million EBITDA and $266 million cash balance as strengths, reiterating confidence in the MRC merger to unlock synergies. Strategic priorities remain focused on customer service, supply chain innovation, and debt-free operations.

Guidance

DNOW expects the MRC merger to close in Q4 2025 but did not provide specific revenue or EBITDA targets beyond Q3’s $634 million revenue and $0.23 EPS. Forward-looking statements remain contingent on regulatory approvals and market conditions.

Additional News

1. M&A Activity: DNOW announced a $1.5 billion all-stock merger with MRC Global, set to close in Q4 2025, combining industrial infrastructure capabilities.

2. Capital Allocation: Share repurchases were paused, though the company emphasized its $266 million cash balance and zero-debt position.

3. Energy Transition Focus: The firm plans to expand offerings aligned with energy transition trends, leveraging its DigitalNOW® platform to enhance customer operations.

The merger with MRC Global represents a pivotal strategic shift, positioning DNOW as a consolidator in the industrial supply sector. Analysts remain bullish, citing the company’s financial flexibility and alignment with U.S. infrastructure investment trends. However, execution risks and integration challenges could weigh on near-term momentum.