NYSE:DNOW
DNOW Inc.
A premier US-based manufacturer and distributor of oilfield chemicals and equipment supporting the global energy industry's upstream and midstream operations.
Key Metrics
Investment Thesis
Bull Case
Investors may favor DNOW due to its essential role in the energy transition, providing necessary services for carbon capture projects and unconventional resource extraction. The company's strong balance sheet with $164M in cash and a diversified product mix offers potential resilience against sector cyclicality, positioning it well for recovery when oil prices stabilize.
Bear Case
The stock carries high risk given the sharp deterioration from $82M profit in 2024 to an $89M loss in 2025, signaling severe margin compression. With a large retained earnings deficit and negative operating profit, the company's ability to generate consistent free cash flow remains questionable without sustained industry upturns.
About DNOW Inc.
DNOW Inc. operates as a leading provider of specialty industrial products and services primarily serving the energy sector, with a focus on oilfield chemicals, drilling fluids, and equipment manufacturing. The company serves customers across North America and internationally, delivering critical solutions for upstream exploration, production, and midstream operations. Its diversified portfolio includes both high-volume consumables like drilling fluids and specialized equipment manufacturing to support various stages of the hydrocarbon lifecycle.
Analysis
Management Discussion
While revenue expanded significantly to $2.82B in 2025, the company reported a net loss of $89M, driven by operating expenses totaling $571M and a decline in cash flow from operations to $155M. The substantial $590M outflow in investing activities reflects continued capital expenditures and acquisitions aimed at capacity expansion, yet the resulting retained earnings deficit of $836M highlights ongoing profitability challenges despite top-line growth.
Industry Overview
The global oilfield services and supplies market is highly cyclical, closely tied to crude oil prices and drilling activity levels. Companies in this sector compete on product reliability, technical innovation, and cost efficiency, facing pressure from both traditional competitors and emerging players offering integrated solutions for complex well environments.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $2.14B | $2.32B | $2.37B | $2.82B |
| Cost of Revenue | $1.63B | $1.79B | $1.84B | $2.34B |
| Gross Profit | $506.0M | $535.0M | $535.0M | $478.0M |
| Operating Expenses | $375.0M | $395.0M | $422.0M | $571.0M |
| Operating Income | $131.0M | $140.0M | $113.0M | $-93.0M |
| G&A | — | — | — | $559.0M |
| Stock-Based Comp | $11.0M | $15.0M | $13.0M | $29.0M |
| D&A | $19.0M | $26.0M | $34.0M | $52.0M |
| Depreciation | $17.0M | $21.0M | $27.0M | $41.0M |
| Amortization | $2.0M | $5.0M | $7.0M | $11.0M |
| Other OpEx | — | — | — | $12.0M |
| Non-Operating Income | $8.0M | $-2.0M | $1.0M | $-7.0M |
| Pre-Tax Income | $139.0M | $138.0M | $114.0M | $-100.0M |
| Income Tax | $10.0M | $-110.0M | $32.0M | $-12.0M |
| Continuing Ops | $129.0M | $248.0M | $82.0M | $-88.0M |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $129.0M | $248.0M | $82.0M | $-88.0M |
| Minority Interest | $1.0M | $1.0M | $1.0M | $1.0M |
| Net to Common | $128.0M | $247.0M | $81.0M | $-89.0M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $1.02B | $1.07B | $1.03B | $2.28B |
| Cash & Equivalents | $212.0M | $299.0M | $256.0M | $164.0M |
| Inventory | $381.0M | $366.0M | $352.0M | $1.19B |
| Prepaid Expenses | $26.0M | $19.0M | $32.0M | $48.0M |
| Other Current Assets | $398.0M | $384.0M | $388.0M | $874.0M |
| Long-Term Assets | $303.0M | $461.0M | $593.0M | $1.65B |
| PP&E (Net) | $119.0M | $131.0M | $157.0M | $264.0M |
| Goodwill | $116.0M | $139.0M | $230.0M | $617.0M |
| Operating Leases | $36.0M | $40.0M | $40.0M | $160.0M |
| Other LT Assets | $32.0M | $151.0M | $166.0M | $605.0M |
| Total Assets | $1.32B | $1.53B | $1.62B | $3.92B |
| Current Liabilities | $439.0M | $418.0M | $442.0M | $974.0M |
| Accounts Payable | $304.0M | $288.0M | $300.0M | $653.0M |
| Current Leases | $13.0M | $11.0M | $13.0M | $45.0M |
| Deferred Revenue | $33.0M | $28.0M | $31.0M | $50.0M |
| Other Current Liab | $-37.0M | $-29.0M | $-32.0M | $-74.0M |
| Long-Term Liabilities | $37.0M | $48.0M | $51.0M | $712.0M |
| LT Operating Leases | $25.0M | $30.0M | $29.0M | $129.0M |
| Other LT Liab | $12.0M | $18.0M | $22.0M | $583.0M |
| Total Liabilities | $476.0M | $466.0M | $493.0M | $1.69B |
| Shareholders' Equity | $844.0M | $1.06B | $1.13B | $2.24B |
| Retained Earnings | $-1.07B | $-828.0M | $-747.0M | $-836.0M |
| AOCI | $-150.0M | $-145.0M | $-153.0M | $-126.0M |
| Total L&E | $1.32B | $1.53B | $1.62B | $3.92B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $129.0M | $248.0M | $82.0M | $-88.0M |
| Non-Cash Adjustments | $-388.0M | $-25.0M | $369.0M | $462.0M |
| Working Capital Changes | $259.0M | $-35.0M | $-153.0M | $-219.0M |
| Cash from Operations | $0 | $188.0M | $298.0M | $155.0M |
| Capital Expenditures | $9.0M | $17.0M | $9.0M | $21.0M |
| Cash from Investing | $-87.0M | $-48.0M | $-304.0M | $-590.0M |
| Share Buybacks | $7.0M | $50.0M | $23.0M | $37.0M |
| Cash from Financing | $-10.0M | $-55.0M | $-33.0M | $339.0M |
| FX Effect | $-4.0M | $2.0M | $-4.0M | $4.0M |
| Net Change in Cash | $-101.0M | $87.0M | $-43.0M | $-92.0M |
| Beginning Cash | $313.0M | $212.0M | $299.0M | $256.0M |
| Ending Cash | $212.0M | $299.0M | $256.0M | $164.0M |
Frequently Asked Questions
How does DNOW Inc. make money?
The company generates revenue through three primary streams: Drilling Fluids and Chemicals, which includes water-based and synthetic fluid formulations for well completion; Equipment Manufacturing, covering drilling rigs, mud shakers, and specialized machinery; and Other Products, encompassing sand control solutions, casing liners, and other industrial supplies essential for efficient energy extraction.
What are the main risks for DNOW?
The company faces significant exposure to volatile oil and gas commodity prices that directly impact demand for its core products and services. Cyclical downturns in the energy sector can lead to reduced capital expenditure by operators, squeezing margins and order volumes. Additionally, supply chain disruptions affecting raw material availability or logistics costs could erode profitability, while regulatory changes regarding water usage and waste disposal may increase operational compliance costs.
What is DNOW's competitive advantage?
DNOW leverages a vertically integrated manufacturing model that combines in-house chemical synthesis with custom equipment fabrication, providing superior cost efficiency and rapid response to project needs. Its extensive global distribution network ensures reliable delivery of critical supplies to remote drilling sites, while deep technical expertise allows for the formulation of specialized fluids tailored to complex geological formations.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.