DNOW (NYSE:DNOW) outlined a strategy centered on greater end-market diversification, integration of MRC Global and margin expansion, while highlighting growth opportunities tied to oil-and-gas production volumes, natural-gas infrastructure and data-center development.
The company said it has transformed since becoming a standalone public company in 2014 following its spinoff from National Oilwell Varco. While upstream oil-and-gas markets remain its largest source of revenue, DNOW said its November 2025 merger with MRC Global has broadened its exposure to gas utilities, midstream operations and downstream industrial customers.
Second-Quarter Results and Cash Flow
For the second quarter, DNOW reported revenue of $1.3 billion, up 10% sequentially. U.S. revenue increased 13% from the first quarter, according to the presentation.
EBITDA rose 54% sequentially to $60 million from $39 million in the first quarter. DNOW attributed part of the improvement to progress in resolving disruption associated with an enterprise resource planning system at MRC Global’s U.S. business.
The company said it generated a record $133 million in cash flow from operations during the second quarter. Working capital as a percentage of revenue improved to 19% from 25.5% in the prior quarter, which DNOW said reflected more efficient inventory management and lower days sales outstanding.
DNOW forecast full-year revenue of slightly more than $5 billion, with its first-half revenue run rate at approximately $2.5 billion. The company has 300 locations and 5,100 employees across the U.S., Canada, the U.K., Europe, the Middle East and Southeast Asia.
MRC Global Integration and Cost Synergies
The company said the MRC Global integration remains a major focus. DNOW characterized the MRC U.S. ERP system as stabilized and said it has moved into an optimization phase. Temporary elevated costs associated with the disruption are expected to be reduced over the remainder of the year, while the company also works to recover revenue and expand customer share.
DNOW continues to target $70 million in cost synergies over three years from the MRC Global combination. It originally expected to reach $17 million in savings by the end of the first year, but has raised that expectation to $30 million. The total three-year target remains unchanged at $70 million.
The company said it is also seeking product-margin, operating-profit and EBITDA-margin improvements as it integrates the businesses. DNOW noted that EBITDA margin reached a low point of 3.3% in the first quarter and said it has guided to a full-year EBITDA margin of 4.5%, including expected additional expansion in the third quarter.
More Diversified Revenue Mix
For the first half of 2026, the U.S. accounted for 84% of consolidated revenue, followed by international markets at 12% and Canada at 4%.
By end market, upstream represented approximately 39% of revenue, gas utilities accounted for 23%, midstream contributed 20%, and downstream industrial represented 18%. DNOW said that compares with its historical profile, when upstream was more than 70% of revenue before the company’s acquisition of Whitco in 2024 and subsequent combination with MRC Global.
- Upstream demand is being supported by higher production volumes and longer laterals, DNOW said.
- Gas-utility activity is tied to infrastructure modernization, residential and commercial development, and annual capital budgets.
- Midstream growth is linked to natural-gas takeaway, natural-gas-liquids expansion, LNG exports and rising power demand.
- Downstream and industrial opportunities include refinery turnarounds, water and wastewater, mining, renewable natural gas and data centers.
DNOW said refinery utilization is currently high and expects the latter half of the year and 2027 to provide a favorable turnaround environment. It said chemical-market activity has been softer year over year after a larger project cycle in 2024 and 2025.
Data Centers, Capital Allocation and Acquisitions
The company identified data-center construction as a potential source of demand in both its midstream and industrial businesses. DNOW said data centers are increasing natural-gas demand, creating infrastructure needs for large-diameter pipe, fittings and valves. Within data-center facilities, the company said it is supplying industrial pipe, valves, fittings, pumps, automation and controls.
DNOW also pointed to its first-quarter acquisition of Edge Controls, a controls and automation business that expands its ability to connect systems through automation, control and SCADA capabilities. The company said the acquisition can support bundled offerings for upstream, midstream and data-center operators.
On capital allocation, DNOW repurchased $25 million of shares during the second quarter, following $50 million of repurchases in the first quarter. That brought first-half 2026 share repurchases to $75 million under a $160 million authorization approved in January 2025.
The company also reduced debt by $95 million during the second quarter after assuming debt in the MRC Global transaction, ending the period with net debt of $360 million. DNOW said it remains focused on organic investment, shareholder returns, debt reduction and acquisitions that are margin accretive and expand its product lines, solutions and end-market diversification.
About DNOW (NYSE:DNOW)
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.
