DNOW · Dnow Inc.

Revenue surged 97.5% to $1.18 billion in Q1 2026 from $599 million a year ago, primarily driven by the MRC Global acquisition that expanded our scale across U.S. and international markets. This growth reflects heightened customer demand shaped by operational budgets, capacity expansions, and compliance needs in energy-related sectors. Gross profit rose 38.8% to $193 million, though the gross margin of 16.3% contracted due to our LIFO inventory costing methodology and inventory-related transaction charges associated with the acquisition. Worldwide supply and demand dynamics for steel products further influenced pricing and availability, impacting sales and profitability.

Operating income swung to a $50 million loss from a $30 million profit, yielding an operating margin of -4.2%. This deterioration stems from reduced margins, incremental expenses tied to the acquisition, and broader cost pressures that offset the revenue expansion. Net income followed suit, posting a $44 million loss with diluted EPS of -$0.24, compared to $22 million profit and $0.20 EPS last year. Management notes these shifts relate to integration dynamics post-acquisition, including LIFO effects that decreased profitability by notable amounts versus prior periods.

Looking ahead, while upstream spending may remain flat to lower per industry reports, growth is anticipated from natural gas infrastructure demand as LNG exports rise and gas-fired power for data centers expands. Downstream sectors show promise from MRO activities, refinery turnarounds, chemical plants, and energy transition projects. Management actively monitors evolving conditions affecting demand, costs, logistics, and macroeconomics to navigate these dynamics.