SEC Filing | DNOW

Date: November 1, 2017

/s/ Raymond W. Chang

Raymond W. Chang

Vice President & General Counsel

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Form 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) November 1, 2017

NOW INC.

(Exact name of registrant as specified in its charter)

Delaware

001-36325

46-4191184

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

7402 North Eldridge Parkway

Houston, Texas

77041

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: 281-823-4700

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02

Results of Operations and Financial Condition

On November 1, 2017, NOW Inc. issued a press release announcing earnings for the third quarter ended September 30, 2017 and conference call in connection therewith. A copy of the release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.

The information contained in this Current Report shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01

Financial Statements and Exhibits

(d) Exhibits

The following exhibit is provided as part of the information furnished under Item 2.02 of this Current Report on Form 8-K:



99.1		NOW Inc. press release dated November 1, 2017 announcing the earnings results for the third quarter ended September 30, 2017.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EX-99.1

Exhibit 99.1

Earnings Conference Call

November 1, 2017

8:00 a.m. CST

1 (800) 446-1671 (North America)

1 (847) 413-3362 (Outside North America)

Webcast: ir.distributionnow.com

NOW Inc. Reports Third Quarter 2017 Results

HOUSTON, TX, November 1, 2017 – NOW Inc. (NYSE: DNOW) announced results for the third quarter ended September 30, 2017.

Third Quarter 2017 Financial Highlights

•

Revenue was $697 million for the third quarter of 2017, up 34 percent year over year.

•

Net loss was $9 million for the third quarter of 2017, versus $56 million a year ago. Non-GAAP net loss excluding other costs was $3 million compared to $36 million in the third quarter of 2016.

•

Diluted loss per share was $0.08 for the third quarter of 2017 compared to $0.53 a year ago. Non-GAAP diluted loss per share excluding other costs was $0.03 for the third quarter of 2017 compared to $0.34 in the third quarter of 2016.

•

Non-GAAP EBITDA excluding other costs for the third quarter of 2017 was $5 million compared to a loss of $40 million in the third quarter of 2016.

Refer to Supplemental Information in this release for GAAP to non-GAAP reconciliations.

Robert Workman, President and CEO of NOW Inc., remarked, “I’m pleased with the earnings growth our team produced this quarter. These results reflect our focus on higher product margins, capturing business from new customers and culling costs in areas left behind by the market recovery. Despite weak oil prices in the third quarter and rig counts now softening, we believe consistent execution on improving our core operations, coupled with operators ramping up completions, will enable positive earnings momentum.”

Prior to the earnings conference call a presentation titled “NOW Inc., Third Quarter 2017 Review & Key Takeaways” will be available on the Company’s Investor Relations website.

About NOW Inc.

NOW Inc. is one of the largest distributors to energy and industrial markets on a worldwide basis, with a legacy of over 150 years. NOW Inc. operates primarily under the DistributionNOW and Wilson Export brands. Through its network of approximately 300 locations and 4,600 employees worldwide, NOW Inc. offers a comprehensive line of products and solutions for the upstream, midstream and downstream energy and industrial sectors. Our locations provide products and solutions to exploration and production companies, energy transportation companies, refineries, chemical companies, utilities, manufacturers and engineering and construction companies.

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. with the U.S. Securities and Exchange Commission, which identify significant risk factors which could cause actual results to differ from those contained in the forward-looking statements.

Contact:

Daniel Molinaro

Senior Vice President and Chief Financial Officer

(281) 823-4941

NOW INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)


	September 30,			December 31,
	2017			2016
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	99		$	106
Receivables, net		466			354
Inventories, net		562			483
Prepaid and other current assets		22			16

Total current assets		1,149			959
Property, plant and equipment, net		126			143
Deferred income taxes		2			1
Goodwill		328			311
Intangibles, net		171			184
Other assets		4			5

Total assets		1,780			1,603

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	310		$	246
Accrued liabilities		111			100
Other current liabilities		1			1

Total current liabilities		422			347
Long-term debt		163			65
Deferred income taxes		7			7
Other long-term liabilities		1			1

Total liabilities		593			420
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; 107,803,100 and 107,474,904 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively		1			1
Additional paid-in capital		2,017			2,002
Accumulated deficit		(727	)		(678	)
Accumulated other comprehensive loss		(104	)		(142	)

Total stockholders’ equity		1,187			1,183

Total liabilities and stockholders’ equity	$	1,780		$	1,603

NOW INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In millions, except per share data)


	Three Months Ended									Nine Months Ended
	September 30,						June 30,			September 30,
	2017			2016			2017			2017			2016
Revenue	$	697		$	520		$	651		$	1,979		$	1,569
Operating expenses:
Cost of products		562			433			527			1,606			1,312
Warehousing, selling and administrative		141			140			138			414			432

Operating loss		(6	)		(53	)		(14	)		(41	)		(175	)
Other expense		(3	)		(3	)		(3	)		(8	)		(7	)

Loss before income taxes		(9	)		(56	)		(17	)		(49	)		(182	)
Income tax provision (benefit)		—			—			—			—			(19	)

Net loss	$	(9	)	$	(56	)	$	(17	)	$	(49	)	$	(163	)

Loss per share:
Basic loss per common share	$	(0.08	)	$	(0.53	)	$	(0.16	)	$	(0.45	)	$	(1.52	)

Diluted loss per common share	$	(0.08	)	$	(0.53	)	$	(0.16	)	$	(0.45	)	$	(1.52	)

Weighted-average common shares outstanding, basic		108			107			108			108			107

Weighted-average common shares outstanding, diluted		108			107			108			108			107

NOW INC.

SUPPLEMENTAL INFORMATION

BUSINESS SEGMENTS (UNAUDITED)

(In millions)


	Three Months Ended						Nine Months Ended
	September 30,				June 30,		September 30,
	2017		2016		2017		2017		2016
Revenue:
United States	$	506	$	372	$	481	$	1,426	$	1,066
Canada		96		67		79		271		185
International		95		81		91		282		318

Total revenue	$	697	$	520	$	651	$	1,979	$	1,569

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)


	Three Months Ended									Nine Months Ended
	September 30,						June 30,			September 30,
	2017			2016			2017			2017			2016
GAAP net loss ⁽¹⁾	$	(9	)	$	(56	)	$	(17	)	$	(49	)	$	(163	)
Interest, net		2			1			1			4			2
Income tax provision (benefit)		—			—			—			—			(19	)
Depreciation and amortization		12			14			13			38			39
Other costs ⁽²⁾		—			1			1			1			8

EBITDA excluding other costs	$	5		$	(40	)	$	(2	)	$	(6	)	$	(133	)

EBITDA % excluding other costs ⁽³⁾		0.7	%		(7.7	%)		(0.3	%)		(0.3	%)		(8.5	%)

NET LOSS TO NON-GAAP NET LOSS EXCLUDING OTHER COSTS RECONCILIATION (UNAUDITED)

(In millions)


	Three Months Ended									Nine Months Ended
	September 30,						June 30,			September 30,
	2017			2016			2017			2017			2016
GAAP net loss⁽¹⁾	$	(9	)	$	(56	)	$	(17	)	$	(49	)	$	(163	)
Other costs, net of tax ^{(4) (5)}		6			20			6			19			45

Net loss excluding other costs ⁽⁵⁾	$	(3	)	$	(36	)	$	(11	)	$	(30	)	$	(118	)

DILUTED LOSS PER SHARE TO NON-GAAP DILUTED LOSS PER SHARE EXCLUDING OTHER COSTS RECONCILIATION (UNAUDITED)


	Three Months Ended									Nine Months Ended
	September 30,						June 30,			September 30,
	2017			2016			2017			2017			2016
GAAP diluted loss per share ⁽¹⁾	$	(0.08	)	$	(0.53	)	$	(0.16	)	$	(0.45	)	$	(1.52	)
Other costs, net of tax ⁽⁴⁾		0.05			0.19			0.06			0.17			0.42

Diluted loss per share excluding other costs⁽⁵⁾	$	(0.03	)	$	(0.34	)	$	(0.10	)	$	(0.28	)	$	(1.10	)

(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)	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 and severance expenses which are included in operating loss.

(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, 2017 includes an expense of $5 million and $18 million, respectively, after tax, for a valuation allowance recorded against the Company’s deferred tax assets; as well as, less than $1 million and $1 million, respectively, after tax, in severance expenses that are included in operating loss.

(5)	Totals may not foot due to rounding.