DNOW

Century Aluminum Company CENX reported earnings of $2.39 per share for the second quarter of 2026. It compares favorably with the prior-year quarter’s loss of 5 cents per share. The bottom line missed the Zacks Consensus Estimate of $2.40. Adjusted EBITDA was $326.9 million, up from $74.3 million in the prior-year quarter. Century Aluminum Company price-consensus-eps-surprise-chart | Century Aluminum Company Quote The company reported net sales of $752.1 million, up 19.7% year over year. The figure missed the Zacks Consensus Estimate of $835.3 million by around 10%. The increase in sales was primarily driven by higher realized metal prices and higher shipments sequentially, supported by increased production from the Mt. Holly expansion and the restart of Line 2 at Grundartangi. Primary aluminum shipments were 130,632 tons, down around 25.7% year over year but up around 6.3% sequentially. At the end of the quarter, the company had cash and cash equivalents of $343.4 million, up 40.7% from the previous quarter. The company forecasts third-quarter 2026 adjusted EBITDA attributable to Century in the range of $325 million to $345 million. Shares of Century Aluminum have risen 104.5% in the past year compared with the industry’s 37.2% growth. Image Source: Zacks Investment Research CENX currently carries a Zacks Rank #5 (Strong Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Flowserve Corporation’s FLS second-quarter 2026 adjusted earnings of 95 cents per share beat the Zacks Consensus Estimate of 86 cents by 10.5%. The bottom line increased 4.4% year over year. Flowserve now expects organic sales to decline approximately 1% compared with the previous expectation of a 1% decline to 2% growth. FLS raised the low end of its adjusted earnings guidance and now expects adjusted earnings per share of $4.05-$4.20 compared with the earlier range of $4.00-$4.20. DNOW Inc. DNOW reported second-quarter 2026 adjusted earnings of 12 cents per share, down 55.6% year over year but beating the Zacks Consensus Estimate of 8 cents by 50%. For the third quarter, DNOW expects revenues to increase in the low-to-mid single-digit percentage range sequentially. Adjusted EBITDA margin is projected between 5% and 5.5% of revenues. IDEX Corporation IEX delivered second-quarter 2026 adjusted earnings of $2.32 per share, topping the Zacks Consensus Estimate of $2.10. IEX raised its full-year 2026 guidance, projecting organic sales growth of 5-6% compared with prior expectations of 3-4%. IDEX also lifted its full-year adjusted earnings outlook to $8.70-$8.85 per share from $8.35-$8.55 previously. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Century Aluminum Company (CENX) : Free Stock Analysis Report Flowserve Corporation (FLS) : Free Stock Analysis Report IDEX Corporation (IEX) : Free Stock Analysis Report DNOW Inc. (DNOW) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 9:00 a.m. ET President and Chief Executive Officer - David Cherechinsky Senior Vice President and Chief Financial Officer - Mark Johnson Vice President of Digital Strategy and Investor Relations - Brad Wise Operator: Good day. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to the DNOW Second Quarter 2026 Earnings Conference. [Operator Instructions]. Mr. Brad Wise, Vice President of Digital Strategy and Investor Relations, you may begin your conference. Brad Wise: Thank you, Greg. Good morning, and welcome to DNOW's Second Quarter 2026 Earnings Conference Call. We appreciate you joining us, and thank you for your interest in DNOW. With me today is David Cherechinsky, President and Chief Executive Officer; and Mark Johnson, Senior Vice President and Chief Financial Officer. We operate under the DNOW and MRC brands, and DNOW is our New York Stock Exchange ticker symbol. Please note that some of the statements we make during this call, including the responses to your questions, may contain forecasts, projections and estimates, including, but not limited to, comments about our outlook for the company's business. These are forward-looking statements within the meaning of the U.S. federal securities laws based on limited information as of today, August 6, 2026, which is subject to change. They are subject to risks and uncertainties, and actual results may differ materially. No one should assume these forward-looking statements remain valid later in the quarter or later in the year. We do not undertake any obligation to publicly update or revise any forward-looking statements for any reason. In addition, this conference call contains time-sensitive information that reflects management's best judgment at the time of the live call. I will refer you to the latest Forms 10-K and 10-Q that DNOW has on file with the U.S. Securities and Exchange Commission for a more detailed discussion of the major risk factors affecting our business. Further information as well as supplemental financial and operating information may be found within our earnings release on our website at ir.dnow.com or in our filings with the SEC. To supplement the information provided to investors under GAAP, we present certain non-GAAP financial measures in our quarterly earnings releases and other public communications. We encourage you to review our earnings release and securities filings for further details on our use of these non-GAAP metrics for reconciliations to the most comparable GAAP measures, and these documents are also available on our website. Unless we specifically state otherwise, references in this call to EBITDA refer to adjusted EBITDA. Our second quarter 2026 earnings presentation is available on the Investor Relations section of our website. We expect to file our Form 10-Q later today, after which will also be available on our website. A replay of today's call will be available for the next 30 days. Now let me turn the call over to Dave. David Cherechinsky: Thank you, Brad, and good morning, everyone. I want to start by recognizing and thanking our 5,000 DNOW employees who delivered strong second quarter results, which reflect a meaningful improvement from the first quarter of 2026, our first full quarter as a combined organization. The revenue, earnings and significant cash gains generated in the quarter was the direct result of teamwork and collaboration across the company. Our employees came together with a shared purpose, adding value to our customers and working towards realizing the full potential of DNOW. Our customer-first mindset remains our greatest differentiator and continues to drive growth as we move into the second half of the year. I'm deeply grateful for the commitment, resilience and hard work of every team member. Thank you for all you do to support our customers and to make DNOW run stronger. Our ability to execute our strategic plans across multiple fronts resulted in stellar results for the second quarter with revenue of $1.3 billion, a sequential improvement of $124 million or 10%, with 13% growth in the United States exceeding our expectations. Our teams continue to work tirelessly towards executing our U.S. ERP conversion and optimization plans. Our strong top line performance helped lift EBITDA to $60 million in the second quarter, a $21 million or 54% sequential improvement, beating our expectations and a key step towards our targeted profitability improvement. EBITDA as a percentage of revenue for the quarter rose to 4.6%, a 130 basis points improvement over the first quarter. We delivered $133 million of cash flow from operations in the second quarter, resulting in a positive $38 million year-to-date cash inflow. This cash haul was driven by continued progress on the system optimization and working capital management fronts. The quarter benefited from higher revenue, improved execution and accelerated synergy actions while acknowledging that we continue to incur temporary elevated costs related to the MRC Global U.S. ERP implementation and integration activities. These costs are expected to remain a near-term headwind but should decline as integration milestones are completed and systems are deployed. During the second quarter, we made progress on the most important objective we laid out earlier this year, retrieving the revenue we want while improving profitability and cash generation. In July, we successfully transitioned our 17th MRC Global location to SAP, marking another important milestone in our U.S. ERP conversion and optimization journey. With 17 locations now converted, we continue to standardize upstream and midstream operations across the network while enhancing operational efficiency, inventory visibility and synergy realization. Each conversion advances our ability to grow revenues, standardize processes, optimize the footprint, improve service levels and capture the merger synergies identified as part of our 3-year integration plan. This achievement reflects outstanding cross-functional execution with teams delivering high-quality results across data preparation, testing, training, system readiness and cutover activities with accelerated time lines. Now moving to business results. The U.S. business delivered $1.1 billion in revenue, up 13% from the first quarter, representing strong sequential revenue improvement in areas where the combined DNOW and MRC Global platform gives us the best opportunity to recapture customer activity, gain share and improve operating leverage. Revenue growth was driven by midstream strength, gas utility gains with notable sequential upstream market share improvement, supported by strong execution and deeper customer engagement. The combined product range and geographic coverage help expand our commercial reach and operational capabilities for our customers. In the Permian, for example, where we now operate on optimized ERP platforms, we are supporting larger project activity while strengthening local branch execution, inventory deployment and customer service. As a result, we are seeing increased project activity, stronger bid conversion and growing momentum with both existing and new customers. We are seeing clear evidence that the combined organization is winning in the market by bringing together customer relationships, broader product availability, best practices and stronger execution discipline. This was especially evident where inventory depth, local coverage and targeted customer recovery actions enabled us to respond more effectively. U.S. performance improved across our operating regions, supported by healthy demand in maintenance, production, infrastructure and project-related activity. In upstream, we made definitive progress recovering customer activity and recapturing share. This is a sector where our combined organization benefits from strong field relationships, deeper product availability and a broader footprint. Midstream is one of the most attractive areas of our diversified sector portfolio, piercing $1 billion quarter annualized revenue rate for the first time in the U.S., our highest midstream revenue level ever. Investment in natural gas infrastructure, LNG-related activity, power generation and feed gas infrastructure build-outs for data centers continue to support demand for the infrastructure type products and services we provide. We are seeing strong activity across midstream infrastructure, pipeline-related work, compressor station packages, fabricated solutions, valve automation and other project-driven demand lanes. Our second quarter performance is a solid example of the type of momentum we want to see across the combined DNOW platform. The business continues to benefit from strong customer engagement, recurring project activity and forward-looking planning and quoting activity with customers. Our midstream momentum reflects customer trust, earned through consistent execution and the ability to convert relationships and project visibility into repeat opportunities. Gas Utilities delivered another point of validation. Our gas utilities business grew 15% sequentially, nearly twice the 3-year second quarter sequential growth average. This represents an 11-quarter revenue high in what we see as a sector with a strong macro outlook. Gas utilities is a durable infrastructure-led market supported by modernization, infrastructure integrity and meter replacement programs and utility investment. Sequential revenue growth was driven by improved operational execution, seasonal construction demand, increasing CapEx from top customers and market share growth from new customers. To meet the growing needs of one of our top gas utility customers, we invested in a new distribution center designed to support 15 customer locations, resulting in improved proximity and enhanced customer service as activity levels expand. Activity across downstream industrial sectors was mixed. The downstream business saw a $12 million sequential revenue decline in 2Q, although activity and revenue was flat sequentially when removing the impact of a first quarter large non-repeating project paired with market share take-back initiatives despite continued weakness in the chemical processing industry. Our targeted downstream customer relationships are improving, and we are encouraged by the future revenue opportunities associated with upcoming turnaround activity. We typically begin to see prebuy activity for seasonal turnarounds towards the end of the third quarter in advance of the first quarter execution, which is traditionally the strongest quarter for downstream turnaround activity. As a result, we expect downstream performance to improve as we move into the coming quarters. On the industrial side, we continue to participate in opportunities tied to data centers, U.S. LNG expansion, mining and selected industrial markets. Near seasonal high refinery utilization and declining crude inventories point to a constructive future demand environment, supporting ongoing energy and industrial activity and improving demand for maintenance-related products and services. Simultaneously, across all sectors, we are focused on a number of operational and financial improvement initiatives, including inventory optimization, pricing actions facility rationalization and technology upgrades that will deliver stronger working capital performance and process efficiency. Data centers continue to represent an attractive opportunity for us, and we are encouraged by the momentum we are building across both our infrastructure products business and our automation and controls capabilities. Our strategy is focused on developing relationships with the EPC firms, mechanical and general contractors supporting major data center developments, allowing us to establish a meaningful presence in this rapidly expanding market. Through responsive service, supply chain expertise, material management capabilities and consistent execution, we have earned repeat business and expanded our participation across multiple projects and geographies. I also want to shine a spotlight on our Process Solutions business, delivering its highest ever quarterly revenue with growth led by our Water Solutions team with solid contributions from Trojan, Flex Flow and Edge Controls. What is particularly encouraging is that this performance was not concentrated on a single product line or end market, highlighting the strength of the business' growing portfolio. This breadth is important because Process Solutions provides DNOW with premium earnings growth while providing our customers a more diversified set of advanced fluid, gas and automation solutions across a diverse set of industrial applications. Strategically, Process Solutions strengthens DNOW's diversification and infrastructure-led growth profile. Canada's revenue for the second quarter was $47 million or 8% lower than the first quarter, better than expected as a result of the seasonal pressure that accompanies the spring breakup period. We saw a more resilient customer and project activity in Canada despite second quarter seasonality with activity less susceptible to breakup period-related declines across midstream and LNG opportunities. International revenue was $151 million, up $4 million or 3% sequentially with increased profitability due to project mix. We observed positive activity in certain markets and softer or timing-driven performance in others. We are seeing improving market conditions across several key regions, particularly in U.K. brownfield activity and Australia, where both MRO and project demand strengthened. While customers remain cautious and geopolitical -- amid geopolitical uncertainty, legislative developments and ongoing cost and supply chain pressures, these market dynamics also continue to create opportunities for new project awards and market share gains. In our Middle East operations, geopolitical instability continues to impact customer activity and project timing. We are seeing some customers slow workforce deployment and defer project execution, resulting in delays in bidding activity and capital spending decisions across the region. While several larger opportunities remain in the pipeline, customer engagement and project progression have been slower than anticipated as uncertainty persists. We remain well positioned with key customers internationally and are encouraged by long-term opportunity set. Turning to capital allocation. We remain disciplined and focused on creating long-term shareholder value through balanced investments maintaining a strong balance sheet and returning capital to shareholders. During the second quarter, we demonstrated the strength of our cash generation capabilities, delivering $133 million of cash flows from operations, a second quarter DNOW record. We deployed that cash across multiple capital allocation priorities, repurchasing $25 million of shares while reducing net debt by $95 million during the quarter to be more in line with our net debt to 4-quarter trailing EBITDA level target of less than 2. We view share repurchases as an attractive means of returning capital to shareholders and continued significant share repurchase levels in the quarter. We are strengthening the balance sheet, which enhances our financial flexibility and our ability to execute our strategic priorities while creating long-term shareholder value. The combination with MRC Global has created a larger more diversified business with greater participation in markets supported by long-term infrastructure and industrial investment. These characteristics strengthen the durability of earnings and give us confidence in our ability to continue generating meaningful cash flow. Looking ahead, we will continue to focus on long-term value creation through our capital allocation with prioritization of share repurchases, debt reduction, organic investments and strategic acquisitions while maintaining the financial flexibility to capitalize on attractive opportunities as they arise. With that, let me turn it over to Mark. Mark Johnson: Thank you, Dave, and good morning, everyone. Total revenue for the second quarter of 2026 was $1.3 billion, up approximately 10% or $124 million from the first quarter and above the guidance we provided on our last call. The sequential increase was driven by growth across the midstream, gas utilities and upstream sectors. On a geographic segment basis, U.S. revenue for the second quarter of 2026 was $1.1 billion, an increase of $124 million or 13% from the first quarter of 2026. The upstream sector contributed approximately 36% of total U.S. revenue in the second quarter, followed by gas utilities at 28%; midstream, 23%; and Downstream and Industrial 13%. In Canada, revenue for the second quarter totaled $47 million down $4 million or 8% sequentially. As seasonality drove revenue lower, historically, Canada's revenue declined in the second quarter during the seasonal breakup period when access to production areas is limited due to road conditions. International revenue was $151 million in the second quarter, up $4 million or 3% sequentially, primarily from increased activity in the U.K. Adjusted gross profit for the second quarter was $272 million or 20.8% compared to $256 million or 21.6% in the first quarter of 2026. The sequential decline in adjusted gross margin percentage was primarily attributable to $4 million in inventory-related charges associated with aged inventory paired with approximately $4 million lower vendor consideration in the International segment. Selling, general and administrative or SG&A expenses were $238 million in the second quarter compared to $243 million in the prior quarter. The decrease was primarily driven by elevated bad debt expense recorded in the first quarter that did not recur at the same levels as well as additional synergy realization and operating efficiency initiatives associated with the integration of MRC Global. Adjusted EBITDA for the second quarter was $60 million or 4.6% of revenue, up $21 million sequentially. The increase in EBITDA was primarily driven by the combination of higher revenues and lower SG&A expenses. Depreciation and amortization expense was $23 million in the second quarter and is forecasted to be approximately $24 million in the third quarter of 2026. Interest expense was $9 million in the second quarter of 2026, consistent with our expectations. The $1 million sequential increase primarily reflects a higher average debt balance during the second quarter. Interest expense is forecast to decline slightly into the third quarter. Moving to income taxes. Changes in geographic mix of projected earnings, including first half 2026 LIFO charges led to a revision of our forecasted annual effective tax rate. Applying this revised rate to our year-to-date results generated second quarter income tax expense of $12 million, producing an effective tax rate of negative 133% for the quarter and a year-to-date effective tax rate of 5.8%. For modeling purposes, we currently expect the full year 2026 GAAP effective tax rate in the mid- to high single digits. However, the actual rate may vary depending in part on the level of earnings, including LIFO adjustments during the second half of the year. Net cash taxes for the quarter were $9 million. Net loss attributable to DNOW for the second quarter was $21 million or $0.11 per fully diluted share. On a non-GAAP basis, second quarter adjusted net income attributable to DNOW was $21 million or $0.12 per fully diluted share. Moving on to the balance sheet. At the end of the second quarter, accounts receivable was $889 million, flat sequentially, an impressive feat despite revenue increasing 10% from the first quarter, driving days sales outstanding or DSO to 62 days, down 7 days sequentially. This improvement was accelerated and ahead of our prior expectations as intentional initiatives by our credit sales and operations team members paired with ERP optimization efforts yielded greater improved working capital efficiency. Inventory was $1.1 billion at the end of the second quarter, down $131 million from the first quarter with an annualized turn rate of 4.0x. The reduction reflects measurement period adjustments to opening balance sheet inventory reserves associated with the MRC Global acquisition of $53 million, $19 million in increased LIFO reserve and continued execution of inventory optimization initiatives. Accounts payable was $711 million at the end of the second quarter or 61 days payable outstanding. Working capital, excluding cash as a percentage of annualized second quarter revenue improved to 19.4%. In the second quarter of 2026, we generated $133 million of cash from operating activities, driven by improvements in working capital efficiencies and the significant improvement in cash flow reflects the benefits of our ongoing focus on working capital management, inventory optimization and operational execution. During the quarter, we invested $9 million in capital expenditures. And additionally, we repurchased $25 million in shares in the second quarter. To date, we repurchased $112 million under the current share repurchase program and a total of $192 million cumulatively across the current and previous share repurchase programs. Our balance sheet remains strong with total liquidity of $472 million including $358 million in availability under our revolving credit facility and $114 million of cash at quarter end. Our total debt balance was $474 million at the end of the second quarter. Net debt was $360 million, resulting in a trailing 12-month EBITDA net debt leverage ratio of 1.7x. Our $850 million revolving credit facility matures in November 2030, providing us with long-term financial flexibility. In the second quarter, we continued to make progress on cost synergy realization with our first year expectation to approximate $30 million on a 2026 exit rate basis, significantly exceeding our original year 1 exit rate estimate of $17 million. Our annualized synergy target remains $70 million by the end of year 3. And overall, the second quarter marked a notable step forward in our transformation as we delivered improved revenue performance, enhanced profitability, disciplined working capital management and strong cash generation. And with that, let me turn the call back to Dave. David Cherechinsky: Thank you, Mark. Now switching to our outlook for the third quarter and full year 2026. As we reach the halfway point of 2026, we are focused on execution across numerous opportunities and end markets while simultaneously capturing the merger benefit realization. I'm pleased with what we have accomplished, and I'm excited about the future. The second quarter represented an important step forward. We expect the business to continue benefiting from revenue recapture, gas utility durability, midstream infrastructure demand and opportunities across data centers, LNG, mining, water and broader infrastructure-led markets. At the same time, we expect downstream and industrial revenues to remain more timing sensitive. I'm encouraged by the level of engagement and progress we are making to better position us for the upcoming turnaround season. We expect sequential third quarter growth in the U.S. as we make additional progress on executing on our integration plan, recover the revenue we want and continue our path to optimize the MRC Global U.S. ERP. We also expect sequential growth in international and in Canada. Taken together, we expect DNOW's third quarter revenues to be up sequentially in the low to mid-single-digit percentage range, compounding the solid second quarter growth with EBITDA targeted in the 5% to 5.5% range above our prior guide, which will result in higher EBITDA to revenue flow-throughs than we normally experience. On a full year basis, we are raising our prior guide and expect revenues to approach approximately $5 billion to $5.1 billion, with EBITDA as a percentage of revenue to approach 4.5%. In closing, I'm encouraged by the progress and meaningful step change we made in the second quarter. I am thrilled with our significantly improved performance, highlighted by $133 million of cash flow from operating activities, a record second quarter achievement. Strong collections improved the quality and liquidity of accounts receivable while inventory streamlining further enhanced exceptional cash generation. Revenue increased to $1.3 billion during the quarter, representing a 10% sequential increase and a strong 13% increase in the U.S. segment. Adjusted EBITDA rose substantially to $60 million, up 54% sequentially, reflecting stronger volumes and execution of the integration and cost management initiatives. For the first time, U.S. midstream revenues surpassed $1 billion on an annualized basis, while both the gas utility and upstream sector revenues delivered their strongest sequential quarter percentage growth since 2022. During the quarter, our net debt leverage ratio improved while we returned capital to shareholders through our share repurchase program, demonstrating the strength of our cash generation and commitment to disciplined capital allocation. Total repurchases reached $75 million in the first half of 2026, representing more shares purchased in these 2 quarters than in the previous 10 quarters combined. The continued investment in our own shares reflects our confidence in the execution of our strategy and long-term growth prospects. I would like to thank our entire team for their efforts to deepen relationships with customers and suppliers, advance our integration initiatives and drive greater operational efficiency with dedication and commitment to growth. Our actions are producing encouraging results, and we continue to take decisive steps to position DNOW for long-term success. I'm very proud of the progress we made during the quarter and confident about the second half of the year. With that, let's open the call for questions. Operator: [Operator Instructions] All right. It looks like our first question comes from the line of Alex Rygiel with Texas Capital. Alexander Rygiel: Can you speak to additional working capital gains that could be achieved over the coming quarters or so? David Cherechinsky: Working capital needs? Alexander Rygiel: Working capital gains. David Cherechinsky: Okay. So our 2 big primary assets are inventory and accounts receivable. We talked on our last call about really using our excess level of inventory as a commercial lever, and we did that in the second quarter and that shows. So we're careful about making sure we replace the stuff we need to grow our gas utility, midstream, all of our sector businesses, but we're careful about that, but we recognize we have excess inventory in the system. We're going to bring that down by another $25 million, $50 million during the rest of the year. So inventory streamlining is a big focus for us. In terms of accounts receivable, we made really nice gains in our DSOs in the quarter. They improved by 7 days, which I don't know if we've ever been able to do that before. Of course, we had some long sluggish unpaid invoices due to system issues, which we've resolved. We're making very nice progress there. But still, there's additional receivables reductions we expect primarily in the fourth quarter as we see our seasonal decline in revenues in 4Q. So that could be another $25 million to $50 million plus earnings driving significant cash from operating activities. But those would be the 2 main levers. We expect CapEx to be pretty similar quarter-on-quarter. But otherwise, AR and inventory, we see those as opportunities and also necessary avenues for additional customer support as we finance receivables with revenue growth, and we want to make sure we have the right inventory to capitalize on growth in data centers and LNG and really strong progression in all the sectors, except for downstream, as we talked about earlier on the call. Alexander Rygiel: And then secondly, you mentioned you were encouraged by the upcoming turnaround season. Can you comment on or give us a little bit of help in understanding your visibility on that, understanding that sometimes those turnaround projects get pushed when the customer is being so active and unwilling to kind of take systems off-line. But maybe comment on your visibility and confidence that the fall turnaround season is going to play out as planned. David Cherechinsky: Yes. Good question, Alex. Do you want to give some color on that, Brad, in terms of timing and where we are in the process. Brad Wise: Yes. Well, Alex, thank you for the question. We track -- we have a lot of downstream refining customers specifically, and we, of course, track turnarounds and timing of turnarounds. Over the last couple of years or last year was a pretty good turnaround season for the MRC Global business. We've seen, obviously, with the challenges we had with the ERP system, we have spoken previously about the inability to participate meaningfully in that prior turnaround season last year. But if you look at projects, if you look at what we're tracking, we believe it will be a similar year to last year, but we think our -- and Dave talked about us repairing our relationships with those refineries, with those customers as we improve our systems, as we talk about stabilize and optimize the MRC platform. So we -- our salespeople are focused on targeting that business, and we think we will go into the turnaround season, which really we're looking at more pre-buys toward the end of the third quarter, kind of more of a bookings backlog starts to build. And then as we get into 4Q with the execution that Dave talked about in 1Q of '27. So we are optimistic about growth there on a year-over-year basis, knowing -- talking with our sales and ops team about the opportunity looks similar to last year. Now we're all seeing refineries utilization run very high. We made reference to that in our prepared remarks. And any time refineries are run hard for a long time with high utilization, they're going to need more maintenance. So we think this kind of sets up a constructive environment for maybe the next couple of years for us. Operator: Our next question comes from the line of Adam Farley with Stifel. Adam Farley: Maybe starting on MRC. Could you provide an update on how the MRC platform and the ERP system is performing? Are you seeing improved performance in the system? Are you seeing improved service levels to customers? Maybe just talk about some of the internal metrics you track to gauge ERP improvements. David Cherechinsky: Yes. We're seeing really widespread performance improvements as it relates to picking materials in the warehouse to processing paperwork more timely to data analysis for back-office review of what's working, what's not working. We continue to see operational benefits from the improvements we've invested in making the systems that support Oracle and MRC work better. So we're seeing nice gains there. Basically, speed has been the gains we've made over the last 90 days. Adam Farley: That's great to hear. And then maybe on the up and midstream conversions to SAP completing, you noted completing your 17th location. Can you just remind us on what's left in the pipeline to convert over to SAP? How are those locations that have been converted? Are they performing? And just any other -- are there any other locations that need to be converted over to SAP? David Cherechinsky: Yes, that's been one of the most promising areas. Like I said in the last couple of calls, kind of the nexus of strength from DNOW and MRC really happens less on the process solutions, gas utilities and downstream side, but the real strength, the real power that comes from the combination happens in upstream and midstream. So we focused on that area or those sectors to really provide a system that supports delighting the customer in a way where we can take back market share. So we've implemented SAP in 17 locations. We've been careful to measure the handoff of revenues from billings that used to happen in the MRC system onto SAP, and we're measuring to make sure that, that baton passing is working, that we're -- that the inventories, the revenues, the customer focus, the increased customer focus that comes from those overlap locations is intensifying, and we're benefiting from that. So we're tracking on a per customer basis, are we gaining in that handoff -- very important to us and we are gaining. And we saw that in a really strong upstream growth in the U.S., which from the first quarter to second quarter, we haven't seen for 4 years. So we're very excited about that. But that process is working. We internally call it these are locations that have been liberated. They're in a system that is optimized, that's been in place for several years that makes it very easy to be responsive and fast in terms of customer request, requirements, fulfillments, et cetera, reporting, et cetera. So we think we're pretty juiced in terms of our ability to grow that business, and that's showing in the numbers. Operator: And our next question comes from the line of Chuck Minervino with Susquehanna. Charles Minervino: I was just wondering if you could talk a little bit about the full year guide. It seems like it would imply a bit of a decline in 4Q, a decent sized decline. Just wondering if you guys are kind of just anticipating seasonality there, if that's just like the baseline assumption and we'll see how things go, just given some of the momentum in the business. Just kind of curious what you're thinking about there for 4Q. David Cherechinsky: Yes. That's a great question. Both companies on a stand-alone basis experienced a fourth quarter decline DNOW's fourth quarter decline tended to be around 6% to 8% of revenues from 3Q to 4Q, MRC's was closer to 10% overall and maybe closer to 13% for gas utilities. So we do expect a seasonal decline despite what we expect would be additional market share gains, recovered revenues, improvements in sales to data centers, et cetera. But yes, we do -- we are forecasting a fourth quarter decline. That seasonality will be there. But we -- as each quarter goes by, we expect to be more efficient. We expect to modestly increase gross margin percent, but we do expect some seasonal gravity like we've both historically experienced. Charles Minervino: And just on that, is that just -- just kind of curious on the assumption there. Is that just like your baseline assumption and it's possible it can do better or worse than that? Or, you pretty much have the purchase orders in hand at this point that gives you that visibility into 4Q? Just kind of curious how much variability there is to that number. David Cherechinsky: That's another good question. There is variability. We tend to -- we know from a project perspective or have a good feel from a project perspective, how much will land in 3Q and 4Q day-to-day business, it's a harder read, Chuck. But it is our going-in assumption that 4Q will largely track. Well, we've modeled it a little bit better than the expected seasonal declines, but that's our going-in expectations. We know that the best 2 quarters for gas utilities, for example, are 2Q and 3Q. And for downstream, 1Q and 3Q are the best quarters there. So we expect an incline in gas utilities and downstream in 3Q. And like Brad talked about earlier, we expect -- we're talking to downstream customers stay readying for the 1Q turnaround. We're doing prebuys. We're planning for that, but we won't really see the benefits of the downstream degrees of recovery until Q1, but we will see an uptick in 3Q. But yes, those -- that 4Q decline is we feel pretty comfortable that will happen, but there is variability to your question. Charles Minervino: And just one last one on the guidance. I think last year -- last quarter, it wasn't guidance, but you kind of talked about maybe a $350 million EBITDA number for 2027. Just curious if you gained some confidence in that, lost confidence? Just any sort of update there and how you're feeling about that number? David Cherechinsky: Yes. We gained confidence over the last 90 days in our ability for that glimpse into 2027. Again, we caveat it as not guidance but we see the possibility of growth in sector expansion in upstream, midstream and gas utilities next year. We see the market is going to grow for those 3 sectors next year. We expect to take back market share, to grow market share in upstream and midstream. We expect midstream to expand and gas utilities to get better again next year. Plus, we're going to be taking back revenues as kind of the fourth leg there and our confidence in a 6.5%, 7% revenue growth going into 2027. And then some modest improvements in gross margins and then efficiencies as we exit 2026 staying in place for next year. So we see that $350 million as plausible. And our teams are focused on that target. How much revenue are we going to be able to get back? How much expense are we going to need to keep in place? What's the right nexus of growth and kind of mid P&L or expense management it takes to get to that kind of earnings growth going into the new year, and we feel really more confident today than we did 90 days ago. Operator: And our next question comes from the line of Chris Dankert with D.A. Davidson. Christopher Dankert: Again, just given the excitement around data center and Water Solutions, could you kind of remind us just relative to the size of those businesses and the kind of growth you were seeing in the quarter? David Cherechinsky: Well, in data centers, we forecast could be in the $40 million to $50 million this year. I think the last number we cited was around $30 million expectations. I think we said in May. We see that as for 2026 anyway as a growing opportunity, and we're excited about it. We have our sales teams focused on it. In terms of Water Solutions, is that -- Mark, is that $100 million to $150 million business with premium margins, as we talked about in the opening part of the call. But it's a business where we've done most of our recent acquisitions and where we hope to do more in the coming years. So I think it's in that range. It's an important diversified element of our Process Solutions strategy, and we expect to grow that business. Christopher Dankert: Got it. That's helpful. And then just on some of the ERP mitigation efforts. I know we had some extra hands helping out. I guess, how are we thinking about either those positions rolling off, moving to other roles? Just relatively speaking, the cost to mitigate, how are we thinking about that roll off? David Cherechinsky: Yes. On the last call, we estimated that the total of costs for consulting help on E&P (sic) [ ERP ] stabilization efforts, contract labor, overtime, temps, et cetera. We estimated that to be in about the $8.5 million per quarter in the second quarter. We expect that number to come down about $1 million in 3Q and another $1 million in 4Q. In terms of the number of temps we have in place, that number is pretty stable. I think it was -- we said around 115, 119 last quarter. I think it's still in that range. We grew substantially. We're still working through system improvements. We're realizing those improvements. But like I said last quarter, our thumb is on the scale for revenue retrieval over discrete immediate expense management. So we do expect those numbers to come down, as I suggested. And then we expect significant efficiencies as we end the year generally in the business. Operator: And our next question comes from the line of Jeff Robertson with Water Tower Research. Jeffrey Robertson: Dave, with respect to recapturing revenues, can you talk a little bit about where -- what you see the size of that opportunity being in the sense that, that could be independent of customers increasing their activity? And then how does that play into your margin thinking as you look out into 2027? David Cherechinsky: Jeff, I'm sorry, I missed the first part of your question. I'm sorry. Can you repeat it, please? Jeffrey Robertson: Sure. When you think about recapturing revenue from customers, can you talk a little bit about the opportunity there? That would be independent of customers increasing their own activity levels? And then how -- if you focus on recapturing the revenues that you want, which implies the higher-margin revenues, how does that play into your thinking about margins in 2027? David Cherechinsky: Okay. That's a good question. I mean we are seeing some of our customers spending more money. And of course, that's an opportunity for us no matter how effective our take-back efforts are. When customers' demands increase, we tend to benefit from it. We have a lot of locations, plenty of inventory, the best people in the business, so we're going to benefit regardless. In terms of our ability to take back those revenues, we're working towards that. That's represented in our guide. We feel -- like I said last quarter, and we'll reaffirm today, we feel very solid about our ability there in upstream, midstream and gas utilities as evidenced by strong sequential growth from 1Q to 2Q. And then downstream, when you look at what happened in downstream, we were sidelined in some of the facilities. We're seeing our customers ask us to come back. We were -- had long-term relationships and our customers are asking to come back. We're seeing some real avenues for taking advantage of the turnaround season coming up in a few quarters. So we're poised for that. In terms of what that means for pricing, there's no doubt that recapturing some of these projects with those customers, gaining back some of the market share did require some teaser level margins to get back in the door, but we see that as an opportunity now as we reestablish ourselves as the premier provider of solutions for our customers as our ability -- especially as we grow those revenues, grow those purchases with our suppliers, achieve greater levels of vendor consideration and support of our suppliers, we expect to be able to push price and we'll do that. But we're focused on volume and then gross margins and then efficiencies to drive significantly improved cash flows and earnings. But that's kind of the progression. But we feel good about that. The sequencing will get us to where we want to be as we gave with the glimpse of 2027. Operator: And our last question today comes from the line of Joshua Jayne with Daniel Energy Partners. Joshua Jayne: First one is just on the U.S. upstream business. Could you discuss your outlook for the back half of the year and into 2027? So we've seen the private companies drive a lot of the rig count increase. But based on just what you're seeing today, does that momentum continue? Or any insight into how the large publics are thinking about spending over the next 12 to 18 months would be helpful. That's my first question. Brad Wise: Yes, Josh, I'll take that and maybe Dave or Mark can follow up. We've certainly seen steady improvement in the upstream market. domestically in the U.S., we're majority land, not necessarily offshore. Offshore has become an increasingly smaller piece of our overall portfolio. We do some offshore in the international area. But U.S. rig count has kind of slowly recovered here. I think it's projected to increase further in '27 from an outlook standpoint. However, a lot of our customers are still exhibiting capital discipline as WTI price has been higher. We have seen a lot of the large publics kind of maintain their CapEx for the full year, maintain their production guides. But yes, I agree with your commentary. I mean some of the smaller and the private companies are taking advantage of price as long as they can get access to high-spec rig equipment and other OFS capability. But we see the upstream as growing this year, certainly potentially growing next year. And as our recovery efforts are kind of simultaneously following the market there, we think that's a good piece of growth opportunity for DNOW. I think that was just under now 40% of our overall revenue. But we expect that to be a growth lever for us in the future. Joshua Jayne: And then moving on internationally as my follow-up, maybe you could just talk a bit more about the impact of the Middle East and just your view there of what it will ultimately take for activity to get back to, I guess, what we would call normal post conflict. And then on top of that, what are the international regions where you would say you're underserved today that you think could be growth drivers for you over the next couple of years? David Cherechinsky: I'll take that. In terms of the Middle East, particularly, we're a pretty small player there. Our revenues in the Middle East are going to be really in the 2% or lower range. So except for project lumpiness and our ability to seize projects, which we see more as an upside in the Middle East than anything, we don't see much negative impact going forward, but we could see some growth as things settle down in the Middle East, but I think it'd be marginal. In terms of where we're underserved internationally, I think we're -- we have 2 businesses within DNOW, we are focused more so on electrical distribution. At MRC, a much larger business was focused on valves. I mean I think our opportunity is to marry up a broader product offering for our customers and grow. I don't think -- we don't see any obvious areas of footprint -- underserved areas internationally. We think we're pretty well positioned even though we're small in the Middle East, we're well positioned in the North Sea in the U.K. and Australia and Singapore and elsewhere. I think we're poised to really take advantage of each other's complementary strengths. And we've organized a new team internationally, and I think we're going to take advantage of what we've brought together more than anything. Operator: And thank you all for your questions. That does conclude the question-and-answer session of today's call. Mr. Brad Wise, I will turn it back over to you for final remarks. Brad Wise: Well, thank you to everyone for joining us today and your interest in DNOW. We look forward to discussing our third quarter 2026 results at our next earnings conference call in November. Hope everybody has a wonderful Thursday. With that, I'll turn the call back over to Greg. Operator: Great. Thank you, Brad. And thank you, ladies and gentlemen, for joining us today. That does conclude today's conference call. You may now disconnect. Have a great day, everyone. Before you buy stock in NOW, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and NOW wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $403,337!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,334,946!* Now, it’s worth noting Stock Advisor’s total average return is 958% — a market-crushing outperformance compared to 214% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 13, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. DNOW (DNOW) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

The Middleby Corporation MIDD reported second-quarter 2026 adjusted earnings of $2.35 per share, beating the Zacks Consensus Estimate of $2.28 by 3.1%. The bottom line increased 6.8% year over year. Net sales of $876 million topped the consensus estimate of $835 million by 4.6% and rose 9.9% year over year. Commercial Foodservice remained the key growth engine, with organic sales up 8.3% on strong U.S. dealer demand and replacement activity. Total revenues and adjusted EBITDA also exceeded management’s guided ranges. Commercial Foodservice sales increased 8.6% year over year to $630.6 million. U.S. and Canada revenues rose 5.9% to $436.8 million, while international sales advanced 15.4% to $193.8 million. Management highlighted QSR sales benefited from new product adoptions and higher replacement demand. The U.S. dealer channel also maintained growth, supported by solid market demand, institutional customers and emerging chains. Global order activity for ice and beverage equipment increased ahead of planned menu expansion in 2026. Food Processing revenues climbed 13.3% year over year to $244.9 million, while organic sales increased 1.3%. U.S. and Canada sales edged up 0.8% to $126 million, whereas international revenues jumped 30.4% to $118.9 million. Adjusted EBITDA for the segment increased 8.6% to $49.8 million. The adjusted EBITDA margin contracted to 20.3% from 21.2% a year earlier. Middleby completed the Food Processing spin-off on July 6, 2026, launching Midera as a standalone public company. Estimated post-spin adjusted earnings for the quarter were $1.74 per share compared with $1.40 a year earlier. The Middleby Corporation price-consensus-eps-surprise-chart | The Middleby Corporation Quote Cost of sales increased 12.4% year over year to $540.5 million, while gross profit rose 6% to $335.1 million. Gross margin narrowed 140 basis points to 38.3%. Selling, general and administrative expenses rose 11.3% to $186.6 million. Operating income was nearly flat at $147.7 million, with operating margin declining to 16.9% from 18.6%. Adjusted EBITDA increased 6.4% to $193.2 million, but its margin fell 70 basis points to 22.1% as a less favorable mix, tariffs, inflation and new-product investments pressured profitability. Operating cash flow increased to $99.7 million from $91.8 million in the prior-year quarter. Capital expenditures were $10.7 million, resulting in free cash flow of $89 million compared with $77.2 million in the year-ago quarter.Middleby ended the second quarter with $159.2 million in cash and cash equivalents, down from $222.2 million as of Jan 3. 2026. Long-term debt declined to $1.94 billion from $2.13 billion. The company repurchased 1.4 million shares during the quarter, representing 2.9% of shares outstanding, and ended the quarter with net leverage of 2.4 times. For the third quarter of 2026, Middleby expects revenues of $620-$640 million, adjusted EBITDA of $143-$150 million and adjusted earnings of $1.67-$1.83 per share. At the midpoints, these imply growth of 4%, 3% and 2%, respectively, from the comparable 2025 period. Management expects continued adoption of new products among chain customers and higher replacement equipment demand. Sequential margin improvement is also anticipated, though inflationary pressures are expected to limit organic gains. Operational initiatives at Taylor and lean-manufacturing investments are expected to support margin expansion. For full-year 2026, MIDD now expects post-spin revenues of $2.48-$2.53 billion, adjusted EBITDA of $572-$588 million and adjusted earnings of $6.73-$6.89 per share. At the midpoints, the ranges imply growth of 7%, 5% and 12%, respectively, versus 2025. The company estimates annual tariff costs for continuing operations at $70-$80 million. It also expects $10-$15 million of inflationary costs in the second half of 2026, driven by steel, copper, controls and higher ocean and trucking costs. An additional third-quarter price increase is planned to partly offset inflation and freight pressures. The company currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks are discussed below:Applied Industrial Technologies AIT carries a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Applied Industrial’s earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 4.0%.  In the past 60 days, the Zacks Consensus Estimate for Applied Industrial’s fiscal 2026 bottom line has inched up 0.1%.IDEX Corporation IEX presently carries a Zacks Rank of 2. IDEX’s earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 7.7%. In the past 60 days, the Zacks Consensus Estimate for IEX’s 2026 earnings has increased 2.1%.DNOW Inc. DNOW currently carries a Zacks Rank of 2. DNOW’s earnings topped the consensus estimate thrice and missed once in the trailing four quarters. The average earnings surprise was 0.8%. In the past 60 days, the Zacks Consensus Estimate for DNOW’s 2026 earnings has increased 6.3%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Middleby Corporation (MIDD) : Free Stock Analysis Report Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report IDEX Corporation (IEX) : Free Stock Analysis Report DNOW Inc. (DNOW) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in DNOW Inc.? Here are five stocks we like better. Second-quarter performance improved sharply: Revenue rose 10% sequentially to $1.3 billion, adjusted EBITDA increased 54% to $60 million, and operating cash flow reached a record $133 million. U.S. midstream, gas utilities and upstream businesses led growth. Integration and cash management advanced: DNOW continued migrating MRC Global locations to SAP and expects first-year synergies of about $30 million, above its original estimate. Inventory and net debt declined, while the company repurchased $25 million of shares during the quarter. 2026 outlook was raised: DNOW now expects full-year revenue to approach $5.0 billion-$5.1 billion and EBITDA margins to approach 4.5%; third-quarter revenue is projected to grow at a low- to mid-single-digit sequential rate. Here are 5 Beaten Up Enterprise Software Stocks Ready to Rebound DNOW (NYSE:DNOW) reported second-quarter 2026 revenue of $1.3 billion, up $124 million, or 10%, sequentially, as growth in its U.S. upstream, midstream and gas utility businesses exceeded management’s expectations. Adjusted EBITDA rose 54% from the first quarter to $60 million, while operating cash flow reached a second-quarter company record of $133 million. President and Chief Executive Officer David Cherechinsky said the quarter marked a “meaningful improvement” from the first quarter, which was the company’s first full quarter as a combined organization following its MRC Global combination. He attributed the results to revenue recovery efforts, integration actions, working-capital management and continued progress on system optimization. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth “Our ability to execute our strategic plans across multiple fronts resulted in stellar results for the second quarter,” Cherechinsky said. U.S. revenue totaled $1.1 billion, increasing $124 million, or 13%, from the prior quarter. Chief Financial Officer Mark Johnson said upstream represented about 36% of second-quarter U.S. revenue, followed by gas utilities at 28%, midstream at 23%, and downstream and industrial markets at 13%. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling Cherechinsky said midstream reached its highest revenue level ever for the company, surpassing a $1 billion annualized revenue rate in the U.S. He cited investment in natural-gas infrastructure, LNG-related activity, power generation and feed-gas infrastructure for data centers as demand drivers. The company reported activity in pipeline-related work, compressor-station packages, fabricated solutions and valve automation. Gas utility revenue increased 15% sequentially to an 11-quarter high. Management said results reflected seasonal construction demand, rising capital expenditures among key customers, improved execution and share gains with new customers. DNOW also opened a distribution center to support 15 locations for one of its largest gas utility customers. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High Upstream activity improved as the company recovered customer business and gained market share, according to Cherechinsky. He said DNOW’s broader product availability, field relationships and geographic footprint have strengthened its ability to serve customers in the sector. Downstream revenue declined $12 million sequentially. However, management said revenue was flat excluding the effect of a large, non-recurring first-quarter project and market-share recovery initiatives. The company expects downstream activity to improve in coming quarters as customers prepare for seasonal refinery turnarounds, with pre-buying activity typically beginning late in the third quarter ahead of first-quarter execution. DNOW continued to integrate MRC Global’s operations and systems during the quarter. In July, the company transitioned its 17th MRC Global location to SAP as part of its U.S. ERP conversion and optimization effort. Cherechinsky said the converted locations are helping standardize operations, improve inventory visibility, support customer service and enable synergies. He added that the company is tracking customer revenue handoffs from MRC’s legacy system to SAP and has seen gains from those conversions, particularly in U.S. upstream operations. Management acknowledged that ERP implementation and integration work continued to create temporary elevated costs. Cherechinsky said costs related to consultants, contract labor, overtime and temporary workers were about $8.5 million in the second quarter and are expected to decline by roughly $1 million in the third quarter and another $1 million in the fourth quarter. Johnson said DNOW expects first-year cost synergies to reach approximately $30 million on a 2026 exit-rate basis, exceeding its original $17 million first-year estimate. The company maintained its target of $70 million in annualized synergies by the end of the third year of integration. The company generated $133 million in operating cash flow during the second quarter, producing a positive $38 million year-to-date cash inflow. Accounts receivable remained flat despite the 10% revenue increase, and days sales outstanding fell seven days sequentially to 62 days. Inventory declined $131 million sequentially to $1.1 billion. Johnson said the reduction reflected $53 million in opening-balance-sheet inventory reserve adjustments related to the MRC Global acquisition, a $19 million increase in LIFO reserves and inventory optimization actions. DNOW ended the quarter with $114 million in cash, $358 million of availability under its revolving credit facility and total liquidity of $472 million. Total debt was $474 million, while net debt was $360 million, resulting in a trailing 12-month net-debt-to-EBITDA ratio of 1.7 times. During the quarter, the company spent $25 million repurchasing shares and reduced net debt by $95 million. Through the first half, it repurchased $75 million of shares. Johnson said DNOW has repurchased $112 million under its current authorization and $192 million across its current and previous repurchase programs. Second-quarter net loss attributable to DNOW was $21 million, or $0.11 per diluted share. On an adjusted basis, net income was $21 million, or $0.12 per diluted share. Adjusted gross profit was $272 million, representing a 20.8% margin, compared with 21.6% in the first quarter, primarily due to inventory-related charges and lower vendor consideration in the international segment. For the third quarter, DNOW expects sequential revenue growth in the low- to mid-single-digit percentage range, with EBITDA margins targeted at 5% to 5.5%. Management expects sequential growth in the U.S., Canada and international operations. The company raised its full-year outlook and now expects revenue to approach $5 billion to $5.1 billion, with EBITDA as a percentage of revenue approaching 4.5%. Cherechinsky said the company expects a seasonal revenue decline in the fourth quarter, consistent with historical patterns at both DNOW and MRC Global. Still, he said management has gained confidence in its ability to improve revenue recovery, capture market share and advance toward its previously discussed, non-guidance view of approximately $350 million in EBITDA for 2027. International revenue rose 3% sequentially to $151 million, driven largely by increased U.K. activity. Canada revenue fell 8% to $47 million because of seasonal spring-breakup conditions, though management said activity proved more resilient than expected. The company noted that geopolitical instability in the Middle East has delayed customer activity and project decisions, though its exposure to the region is relatively small. DistributionNOW (NYSE: DNOW) is a global distributor of energy and industrial products, serving a broad range of end-markets including oil and gas, petrochemical, power generation, and industrial manufacturing. Headquartered in Houston, Texas, the company provides solutions across the life cycle of energy and industrial assets, with an emphasis on safety, reliability and operational efficiency. The company’s core product portfolio includes piping systems and related components (such as valves, fittings, flanges and gaskets), instrumentation, electrical and automation equipment, fasteners, industrial safety supplies, chemicals and composite products. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "DNOW Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Sequential revenue growth of 10% was driven by growth across the midstream, gas utilities, and upstream sectors, as well as the successful recapture of market share. The U.S. midstream business surpassed a $1 billion annualized revenue rate for the first time, fueled by natural gas infrastructure, LNG expansion, and data center demand. Profitability improved significantly with EBITDA rising 54% sequentially, reflecting stronger volumes and the acceleration of cost management initiatives following the MRC Global merger. Management successfully transitioned the 17th MRC Global location to the SAP platform, which is enhancing inventory visibility and operational efficiency across its upstream and midstream network. Process Solutions achieved record quarterly revenue, demonstrating the strategic value of a diversified portfolio across water, gas, and automation applications. International performance was mixed, with strength in the U.K. and Australia offset by geopolitical instability in the Middle East causing project deferrals. The company achieved record second-quarter cash flow from operations of $133 million, driven by aggressive working capital management and a 7-day reduction in DSO. Third quarter revenue is expected to grow in the low to mid-single-digit range, supported by continued integration progress and seasonal demand in gas utilities. Management raised full-year 2026 revenue guidance to approximately $5 billion to $5.1 billion, with EBITDA margins targeted to approach 4.5%. Integration costs related to the MRC Global U.S. ERP implementation are expected to remain a near-term headwind but will decline as milestones are completed. The company anticipates a seasonal revenue decline in the fourth quarter, consistent with historical patterns for both the legacy DNOW and MRC businesses. Management expressed increased confidence in a 2027 target of $350 million in EBITDA, predicated on market share gains and continued efficiency improvements. Inventory-related charges of $4 million were recorded for aged inventory, contributing to a sequential decline in adjusted gross margin percentage. The company incurred $19 million in increased LIFO reserves and $53 million in measurement period adjustments to opening balance sheet inventory reserves. Geopolitical instability in the Middle East remains a risk factor, leading to slower workforce deployment and deferred capital spending by regional customers. Temporary elevated costs for contract labor and consulting to stabilize the ERP system are expected to decrease by approximately $1 million per quarter through year-end. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management expects to reduce inventory by another $25 million to $50 million during the remainder of the year by using excess stock as a commercial lever. Additional receivables reductions are anticipated in the fourth quarter, coinciding with the seasonal revenue decline. Pre-buy activity is expected to begin toward the end of the third quarter, with primary execution occurring in the first quarter of 2027. High refinery utilization rates are creating a constructive environment for maintenance-related demand over the next couple of years. The MRC platform is seeing widespread speed improvements in warehouse picking, paperwork processing, and back-office data analysis. The transition of locations to SAP is specifically designed to 'liberate' branches from legacy system constraints and improve responsiveness. Data center revenue is now projected to reach $40 million to $50 million in 2026, up from a previous estimate of $30 million. Water Solutions is currently a $100 million to $150 million business with premium margins and remains a primary focus for future strategic acquisitions.

DNOW Inc. DNOW reported second-quarter 2026 adjusted earnings of 12 cents per share, down 55.6% year over year but beating the Zacks Consensus Estimate of eight cents by 50%. Revenues surged 108.1% year over year to $1.31 billion, surpassing the consensus mark of $1.26 billion by 3.4%.Stronger volumes and progress on integration and cost-management initiatives supported sequential improvement. U.S. midstream revenues also exceeded a $1 billion annualized run rate for the first time, while gas utility and upstream revenues posted their highest percentage growth sequentially since 2022. U.S. revenues reached $1.11 billion, up 110% from $528 million in the year-ago quarter. The region accounted for 85% of consolidated revenues and increased 12.6% sequentially.International revenues jumped 190.4% year over year to $151 million. Canada generated $47 million, down 2.1% from the prior-year quarter. DNOW Inc. price-consensus-eps-surprise-chart | DNOW Inc. Quote Upstream remained the largest end market, contributing $508 million, or 39% of total revenues. Gas utilities generated $310 million, representing 24% of the total.Midstream revenues were $272 million, or 21% of revenues, while downstream and industrial contributed $217 million, or 16%. Within the U.S. business, upstream represented 36% of revenues, followed by gas utilities at 28%, midstream at 23% and downstream & industrial at 13%. DNOW’s cost of products increased 113.2% year over year to $1.06 billion. Gross profit increased 88.4% year over year to $243 million. However, the gross margin contracted 190 basis points to 18.6%. Adjusted gross profit rose to $272 million from $146 million, while the adjusted gross margin declined to 20.8% from 23.2%.Selling, general and administrative expenses increased 112.5% to $238 million. DNOW recorded an operating profit of $1 million compared with $17 million a year earlier. The company also recognized a $4 million impairment charge related to a Houston corporate office lease. Adjusted EBITDA totaled $60 million, up 17.6% year over year and 54% sequentially. The adjusted EBITDA margin was 4.6% compared with 8.1% in the prior-year quarter and 3.3% in the first quarter of 2026.GAAP net loss attributable to DNOW was $21 million, or 11 cents per diluted share, compared with net income of $14 million, or 13 cents per share, a year earlier. The quarter included a $19 million increase in the LIFO reserve and $6 million of transaction-related charges. DNOW expects annualized cost synergies from the MRC Global integration to reach an approximately $30 million exit rate by year-end 2026. That represents 43% of its $70 million three-year synergy target and is above the prior 2026 plan of $17 million.Integration initiatives include commercial cross-selling, leveraging complementary inventory, migrating upstream and midstream locations to an optimized SAP platform, and combining supply capabilities to improve bid competitiveness and capture incremental revenues. Cash provided by operating activities was $133 million in the second quarter, a company record for the period. Free cash flow totaled $124 million after $9 million of capital expenditures.DNOW ended the second quarter with $114 million in cash and $474 million of long-term debt. Net debt stood at $360 million, while the net debt leverage ratio improved to 1.7 times. Total liquidity was $472 million, with access to an additional $500 million accordion feature. For the third quarter, DNOW expects revenues to increase in the low-to-mid single-digit percentage range sequentially. Adjusted EBITDA margin is projected between 5% and 5.5% of revenues.For full-year 2026, the company raised its revenue outlook to $5-$5.1 billion and now expects adjusted EBITDA margin to approach 4.5%. Management also increased its cash-from-operations forecast to $125-$200 million. The company currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks are discussed below:Applied Industrial Technologies AIT carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Applied Industrial’s earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 4.0%.  In the past 60 days, the Zacks Consensus Estimate for Applied Industrial’s fiscal 2026 bottom line has inched up 0.1%.IDEX Corporation IEX presently carries a Zacks Rank of 2. IDEX’s earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 7.7%. In the past 60 days, the Zacks Consensus Estimate for IEX’s 2026 earnings has increased 1.4%.The Middleby Corporation MIDD currently carries a Zacks Rank of 2. Middleby’s earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 10.4%. In the past 60 days, the Zacks Consensus Estimate for MIDD’s 2026 earnings has increased 0.3%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report DNOW Inc. (DNOW) : Free Stock Analysis Report Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report IDEX Corporation (IEX) : Free Stock Analysis Report The Middleby Corporation (MIDD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

DNOW (DNOW) came out with quarterly earnings of $0.12 per share, beating the Zacks Consensus Estimate of $0.08 per share. This compares to earnings of $0.27 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +50.00%. A quarter ago, it was expected that this energy and industrial distribution company would post earnings of $0.05 per share when it actually produced earnings of $0.01, delivering a surprise of -80%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. DNOW, which belongs to the Zacks Manufacturing - General Industrial industry, posted revenues of $1.31 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 3.38%. This compares to year-ago revenues of $628 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. DNOW shares have added about 7.3% since the beginning of the year versus the S&P 500's gain of 12.8%. While DNOW has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for DNOW was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.09 on $1.32 billion in revenues for the coming quarter and $0.31 on $5.01 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Manufacturing - General Industrial is currently in the top 25% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Middleby (MIDD), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 11. This food preparation equipment company is expected to post quarterly earnings of $2.28 per share in its upcoming report, which represents a year-over-year change of -3%. The consensus EPS estimate for the quarter has been revised 0.2% higher over the last 30 days to the current level. Middleby's revenues are expected to be $836.82 million, down 14.4% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report DNOW Inc. (DNOW) : Free Stock Analysis Report The Middleby Corporation (MIDD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

HOUSTON, Aug. 06, 2026 (GLOBE NEWSWIRE) -- DNOW Inc. (NYSE: DNOW) announced results for the second quarter ended June 30, 2026. Recent Capital Allocation Repurchased $25 million of common stock in the second quarter of 2026 and $75 million year-to-date under the Company's $160 million share repurchase program Second Quarter 2026 Highlights Revenue was $1,307 million Gross profit was $243 million, or 18.6% of revenue, and adjusted gross profit was $272 million, or 20.8% of revenue Net loss attributable to DNOW Inc. was $21 million, or ($0.11) per diluted share, and adjusted net income attributable to DNOW Inc. was $21 million, or $0.12 per diluted share Adjusted EBITDA was $60 million, or 4.6% of revenue Cash flow from operating activities was $133 million Cash and cash equivalents was $114 million and total long-term debt was $474 million at June 30, 2026, equating to net debt of $360 million, or a net debt leverage ratio of 1.7x David Cherechinsky, President and CEO of DNOW, added, “I am thrilled with our significantly improved performance during the second quarter of 2026, highlighted by $133 million of cash flow from operating activities, a record second-quarter achievement. Strong collections improved the quality and liquidity of accounts receivable, while inventory streamlining further enhanced exceptional cash generation. Revenue increased to $1.3 billion during the quarter, representing a 10% sequential increase and a strong 13% increase in the U.S. segment. Adjusted EBITDA rose substantially to $60 million, up 54% sequentially, reflecting stronger volumes and execution of integration and cost management initiatives. Second-quarter U.S. midstream revenues surpassed $1 billion on an annualized basis for the first time in our history, while both the gas utility and upstream sector revenues delivered their strongest sequential quarter percentage growth since 2022. During the quarter, our net debt leverage ratio improved to 1.7 times, while we returned capital to shareholders through our share repurchase program, demonstrating the strength of our cash generation and our commitment to disciplined capital allocation. Total repurchases reached $75 million during the first half of 2026, representing more shares purchased in these two quarters than in the previous 10 quarters combined. The continued investment in our own shares reflects our confidence in the execution of our strategy and long-term growth prospects. I would like to thank our entire team for their efforts to deepen relationships with customers and suppliers, advance our integration initiatives and drive greater operational efficiency with dedication and commitment to growth. Our actions are producing encouraging results, and we continue to take decisive steps to position DNOW for long-term success. I am very proud of the progress we made during the quarter and confident about the second half of the year.” Prior to the earnings conference call a presentation titled “DNOW Second Quarter 2026 Earnings Presentation” will be available on the Company’s Investor Relations website. About DNOW DNOW is a premier energy and industrial solutions provider with a legacy of over 160 years as a leading distributor of pipe, valves, fittings (PVF), gas products, pumps and fabricated equipment. Headquartered in Houston, Texas, with approximately 5,100 employees and a global network of distribution and engineering locations; we provide a broad mix of quality products our customers require to build and maintain essential infrastructure across the upstream, gas utilities, downstream and industrial and midstream markets. We deliver a comprehensive range of value-added supply chain solutions and technical product expertise, supported by advanced digital offerings. Our products and resources enable our customers to run their operations more efficiently and effectively, helping them to meet and exceed their business goals. 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 DNOW 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:Mark JohnsonSenior Vice President and Chief Financial Officer(281) 823-4754 Earnings Conference CallAugust 6, 20268:00 a.m. CT1 (888) 660-6431 (within North America)1 (929) 203-2118 (outside of North America)Access Code: 7372055Webcast: ir.dnow.com U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) TO NON-GAAP RECONCILIATIONS 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) adjusted gross profit, (ii) adjusted gross profit as a percentage of revenue, (iii) adjusted earnings before interest, taxes, depreciation and amortization and excluding other costs (Adjusted EBITDA), (iv) Adjusted EBITDA as a percentage of revenue, (v) Adjusted Net Income attributable to DNOW Inc., (vi) Adjusted Diluted Earnings Per Share Attributable to DNOW Inc. Stockholders, (vii) Net Debt, (viii) Net Debt Leverage Ratio and (ix) Free Cash Flow. We use these non-GAAP financial measures to evaluate and manage the Company’s operations because we believe they provide useful supplemental information regarding the financial performance of our business. These non-GAAP financial measures are not intended to replace the GAAP financial measures. The Company defines Adjusted Gross Profit as revenue, less cost of products, plus amortization of intangibles, plus inventory-related charges incremental to normal operations, plus transaction costs associated with acquisitions, such as inventory fair value step-up or write-downs and plus or minus the impact of our Last-In, First-Out (“LIFO”) inventory costing methodology. We define Adjusted EBITDA as net (loss) income plus interest, taxes, depreciation and amortization and excluding other costs, such as stock-based compensation, restructuring and exit costs, transaction-related charges, inventory-related charges incremental to normal operations, long-lived asset impairments (including goodwill and intangible assets) and plus or minus the impact of our LIFO inventory costing methodology. Transaction-related charges include transaction costs, inventory fair value step-up, retention bonus accruals and integration expenses associated with acquisitions. We define Net Debt as total long-term debt, including current portion, minus cash. We define our Net Debt Leverage Ratio as Net Debt divided by trailing twelve months Adjusted EBITDA. The Company believes Net Debt is an indicator of the extent to which the Company’s outstanding debt obligations could be satisfied by cash on hand and a useful metric for investors to evaluate the Company’s leverage position. We believe the Net Debt Leverage Ratio is a commonly used metric that management and investors use to assess the borrowing capacity of the Company. We define Free Cash Flow as net cash provided by (used in) operating activities adjusted for purchases of property, plant and equipment. The Company believes Free Cash Flow is a useful metric for investors to measure a company's financial flexibility and ability to generate cash after considering normal operating expenses and capital expenditures. A reconciliation of each of these non-GAAP financial measures to its most comparable GAAP financial measure is included in the schedules herein. Totals in the schedules herein may not foot due to rounding.