NOW Inc. Announces Third Quarter 2016 Results
The Company’s revenues for the third quarter of 2016 were
Cash flows from operating activities were
Third quarter
revenues for
International
International
operations generated third quarter revenues of
The Company has scheduled a conference call for
Statements made in this press release that are forward-looking in nature
are intended to be "forward-looking statements" within the meaning of
Section 21E of the Securities Exchange Act of 1934 and may involve risks
and uncertainties. These statements may differ materially from actual
future events or results. Readers are referred to documents filed by
NOW INC. | ||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||
(In millions, except share data) |
||||||||||
September 30, | December 31, | |||||||||
2016 | 2015 | |||||||||
(Unaudited) | ||||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 131 | $ | 90 | ||||||
Receivables, net | 339 | 485 | ||||||||
Inventories, net | 532 | 693 | ||||||||
Prepaid and other current assets | 22 | 24 | ||||||||
Total current assets | 1,024 | 1,292 | ||||||||
Property, plant and equipment, net | 153 | 165 | ||||||||
Deferred income taxes | 2 | 4 | ||||||||
Goodwill | 331 | 205 | ||||||||
Intangibles, net | 194 | 161 | ||||||||
Other assets | 7 | 5 | ||||||||
Total assets | 1,711 | 1,832 | ||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 193 | $ | 211 | ||||||
Accrued liabilities | 95 | 94 | ||||||||
Other current liabilities | 4 | 2 | ||||||||
Total current liabilities | 292 | 307 | ||||||||
Long-term debt | 145 | 108 | ||||||||
Deferred income taxes | 4 | 11 | ||||||||
Other long-term liabilities | 2 | 3 | ||||||||
Total liabilities | 443 | 429 | ||||||||
Commitments and contingencies | ||||||||||
Stockholders' equity: | ||||||||||
Preferred stock - par value $0.01; 20 million shares authorized; no shares issued and outstanding |
− | − | ||||||||
Common stock - par value $0.01; 330 million shares authorized; 107,473,952 and 107,219,138 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively |
1 | 1 | ||||||||
Additional paid-in capital | 1,996 | 1,980 | ||||||||
Accumulated deficit | (607 | ) | (444 | ) | ||||||
Accumulated other comprehensive loss | (122 | ) | (134 | ) | ||||||
Total stockholders' equity | 1,268 | 1,403 | ||||||||
Total liabilities and stockholders' equity | $ | 1,711 | $ | 1,832 | ||||||
NOW INC. | |||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||||||||||||||||||||
(In millions, except per share data) |
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Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
September 30, | June 30, | September 30, | |||||||||||||||||||||||
2016 | 2015 | 2016 | 2016 | 2015 | |||||||||||||||||||||
Revenue | $ | 520 | $ | 753 | $ | 501 | $ | 1,569 | $ | 2,366 | |||||||||||||||
Operating expenses: | |||||||||||||||||||||||||
Cost of products | 433 | 636 | 418 | 1,312 | 1,970 | ||||||||||||||||||||
Warehousing, selling and administrative | 140 | 153 | 140 | 432 | 467 | ||||||||||||||||||||
Impairment of goodwill | − | 255 | − | − | 255 | ||||||||||||||||||||
Operating loss | (53 | ) | (291 | ) | (57 | ) | (175 | ) | (326 | ) | |||||||||||||||
Other expense | (3 | ) | − | (2 | ) | (7 | ) | (6 | ) | ||||||||||||||||
Loss before income taxes | (56 | ) | (291 | ) | (59 | ) | (182 | ) | (332 | ) | |||||||||||||||
Income tax benefit | − | (67 | ) | (15 | ) | (19 | ) | (79 | ) | ||||||||||||||||
Net loss | $ | (56 | ) | $ | (224 | ) | $ | (44 | ) | $ | (163 | ) | $ | (253 | ) | ||||||||||
Loss per share: | |||||||||||||||||||||||||
Basic loss per common share | $ | (0.53 | ) | $ | (2.09 | ) | $ | (0.40 | ) | $ | (1.52 | ) | $ | (2.36 | ) | ||||||||||
Diluted loss per common share | $ | (0.53 | ) | $ | (2.09 | ) | $ | (0.40 | ) | $ | (1.52 | ) | $ | (2.36 | ) | ||||||||||
Weighted-average common shares outstanding, basic | 107 | 107 | 107 | 107 | 107 | ||||||||||||||||||||
Weighted-average common shares outstanding, diluted | 107 | 107 | 107 | 107 | 107 | ||||||||||||||||||||
NOW INC. | ||||||||||||||||||||
SUPPLEMENTAL INFORMATION | ||||||||||||||||||||
BUSINESS SEGMENTS (UNAUDITED) | ||||||||||||||||||||
(In millions) |
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Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, | June 30, | September 30, | ||||||||||||||||||
2016 | 2015 | 2016 | 2016 | 2015 | ||||||||||||||||
Revenue: | ||||||||||||||||||||
United States | $ | 372 | $ | 497 | $ | 337 | $ | 1,066 | $ | 1,594 | ||||||||||
Canada | 67 | 94 | 55 | 185 | 299 | |||||||||||||||
International | 81 | 162 | 109 | 318 | 473 | |||||||||||||||
Total revenue | $ | 520 | $ | 753 | $ | 501 | $ | 1,569 | $ | 2,366 | ||||||||||
NOW INC. | |||||||||||||||||||||||||
SUPPLEMENTAL INFORMATION (CONTINUED) | |||||||||||||||||||||||||
U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) TO NON-GAAP RECONCILIATIONS | |||||||||||||||||||||||||
NET LOSS TO NON-GAAP EBITDA EXCLUDING OTHER COSTS RECONCILIATION (UNAUDITED) | |||||||||||||||||||||||||
(In millions) |
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Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
September 30, | June 30, | September 30, | |||||||||||||||||||||||
2016 | 2015 | 2016 | 2016 | 2015 | |||||||||||||||||||||
GAAP net loss (1) | $ | (56 | ) | $ | (224 | ) | $ | (44 | ) | $ | (163 | ) | $ | (253 | ) | ||||||||||
Interest, net | 1 | 1 | 1 | 2 | 1 | ||||||||||||||||||||
Income tax benefit | − | (67 | ) | (15 | ) | (19 | ) | (79 | ) | ||||||||||||||||
Depreciation and amortization | 14 | 10 | 13 | 39 | 26 | ||||||||||||||||||||
Other costs (2) | 1 | 260 | 3 | 8 | 272 | ||||||||||||||||||||
EBITDA excluding other costs | $ | (40 | ) | $ | (20 | ) | $ | (42 | ) | $ | (133 | ) | $ | (33 | ) | ||||||||||
EBITDA % excluding other costs (3) | (7.7 | %) | (2.7 | %) | (8.4 | %) | (8.5 | %) | (1.4 | %) | |||||||||||||||
NET LOSS TO NON-GAAP NET LOSS EXCLUDING OTHER COSTS RECONCILIATION (UNAUDITED) | |||||||||||||||||||||||||
(In millions) |
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Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
September 30, | June 30, | September 30, | |||||||||||||||||||||||
2016 | 2015 | 2016 | 2016 | 2015 | |||||||||||||||||||||
GAAP net loss (1) | $ | (56 | ) | $ | (224 | ) | $ | (44 | ) | $ | (163 | ) | $ | (253 | ) | ||||||||||
Other costs, net of tax (4) | 20 | 206 | − | 45 | 215 | ||||||||||||||||||||
Net loss excluding other costs | $ | (36 | ) | $ | (18 | ) | $ | (44 | ) | $ | (118 | ) | $ | (38 | ) | ||||||||||
DILUTED LOSS PER SHARE TO NON-GAAP DILUTED LOSS PER SHARE EXCLUDING OTHER COSTS RECONCILIATION (UNAUDITED) |
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Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
September 30, | June 30, | September 30, | |||||||||||||||||||||||
2016 | 2015 | 2016 | 2016 | 2015 | |||||||||||||||||||||
GAAP diluted loss per share (1) | $ | (0.53 | ) | $ | (2.09 | ) | $ | (0.40 | ) | $ | (1.52 | ) | $ | (2.36 | ) | ||||||||||
Other costs, net of tax (4) | 0.19 | 1.92 | − | 0.42 | 2.00 | ||||||||||||||||||||
Diluted loss per share excluding other costs (5) | $ | (0.34 | ) | $ | (0.17 | ) | $ | (0.40 | ) | $ | (1.10 | ) | $ | (0.36 | ) | ||||||||||
(1) | In an effort to provide investors with additional information regarding our results as determined by GAAP, we disclose various non-GAAP financial measures in our quarterly earnings press releases and other public disclosures. The non-GAAP financial measures include: (i) earnings before interest, taxes, depreciation and amortization (EBITDA) excluding other costs, (ii) net loss excluding other costs and (iii) diluted loss per share excluding other costs. Each of these financial measures excludes the impact of certain other costs and therefore has not been calculated in accordance with GAAP. A reconciliation of each of these non-GAAP financial measures to its most comparable GAAP financial measure is included in the schedules herein. | ||
(2) | For the three and nine months ended September 30, 2016, other costs primarily includes the transaction costs associated with acquisition activity, including the cost of inventory that was stepped up to fair value during purchase accounting related to acquisitions and severance expenses which are included in operating loss. For the three and nine months ended September 30, 2015, other costs additionally includes the estimated goodwill impairment charge of $255 million. | ||
(3) | EBITDA % excluding other costs is defined as EBITDA excluding other costs divided by Revenue. | ||
(4) | Other costs, net of tax, for the three and nine months ended September 30, 2016 and 2015 included expenses of $19 million, $39 million, nil and nil, after tax, respectively, for a valuation allowance recorded against the Company’s deferred tax assets; as well as, $1 million, $6 million, $206 million and $215 million, after tax, respectively, in transaction costs associated with acquisitions, including the cost of inventory that was stepped up to fair value during purchase accounting related to acquisitions, and severance expenses, as well as, impairment charges associated with the fair value of goodwill, which are included in operating loss. Other costs, net of tax, for the second quarter of 2016 included $3 million, after tax, in acquisition-related and severance charges and a net $3 million after-tax benefit related to a deferred tax asset valuation allowance release. Other costs, net of tax, was less than $1 million, after tax, for the three months ended June 30, 2016. | ||
(5) | Per share amounts may not foot due to rounding. | ||
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Source:
NOW Inc.
Daniel Molinaro, 281-823-4941