DNOW Reports Third Quarter 2026 Results

DNOW delivered strong Q3 results with $1.3 billion revenue and robust cash flow.

What the company is saying

DNOW Inc. is highlighting a quarter of strong operational and financial performance, emphasizing $1,337 million in revenue and $76 million in adjusted EBITDA for Q3 2026. The company stresses disciplined capital allocation, citing $17 million in share repurchases during the quarter and $92 million year-to-date, which it claims exceeds the prior eleven quarters’ total by 24 percent. Management, led by President and CEO David Cherechinsky, frames the quarter as one of broad-based strength, with sequential sales growth across all geographic segments and a record quarter for the gas utilities business. The narrative underscores improvements in working capital velocity, resulting in $120 million in operating cash flow and a reduced net debt leverage ratio of 1.1 times. The tone is confident, with management asserting that DNOW is well positioned for continued market share gains and long-term value creation. The announcement also details the company’s balance sheet strength, including $112 million in cash and $377 million in long-term debt. The company provides a full set of GAAP and non-GAAP metrics, but does not supply comparative historical figures to substantiate claims of sequential growth.

What the data suggests

The disclosed numbers show DNOW generated $1,337 million in revenue, $265 million in gross profit (19.8% margin), and $76 million in adjusted EBITDA (5.7% margin) for Q3 2026. Net income attributable to DNOW was $26 million, or $0.14 per diluted share, with adjusted net income at $34 million, or $0.18 per share. Cash flow from operating activities was $120 million, and the company ended the quarter with $112 million in cash and $377 million in long-term debt, resulting in net debt of $265 million and a net debt leverage ratio of 1.1 times. The company repurchased $17 million in shares during the quarter and $92 million year-to-date under a $160 million authorization. U.S. segment revenue was $1,125 million, Canada $56 million, and International $156 million. Selling, general and administrative expenses were $232 million, and inventories stood at $988 million. While the company claims sequential sales growth and record gas utilities revenue, no comparative period data is disclosed to verify these statements. The financial disclosures are comprehensive for the current quarter but do not allow for trend analysis or independent verification of growth claims.

Analysis

The announcement is largely factual, providing a comprehensive set of realised financial and operational metrics for the third quarter of 2026, including revenue, net income, EBITDA, cash flow, and balance sheet data. Most claims are supported by disclosed numbers, and the company details its share repurchase activity with precise figures. However, some narrative inflation is present in the form of unsubstantiated claims about sequential sales growth across all segments and record gas utilities revenue, neither of which are backed by comparative historical data. Forward-looking statements about continued share gains and long-term value creation are generic and not paired with specific, measurable targets. The overall tone is positive, but the evidence for outperformance is incomplete due to the lack of period-over-period comparisons. There is no indication of a large capital outlay with deferred returns, and the benefits of reported actions (e.g., share repurchases) are immediate.

Risk flags

• ●The absence of comparative historical data limits the ability to verify management’s claims of sequential growth and record segment performance, raising questions about the strength and sustainability of the reported improvements.
• ●A net debt position of $265 million and a leverage ratio of 1.1 times, while manageable, still exposes the company to refinancing and interest rate risk if market conditions deteriorate.
• ●The company’s reliance on non-GAAP adjustments, such as adjusted EBITDA and adjusted net income, may obscure underlying volatility or one-time items, making it harder for investors to assess true earnings quality.
• ●Foreign currency losses of $2 million in the quarter indicate some exposure to international market volatility, which could impact future results if exchange rates move unfavorably.
• ●The company recognized $4 million in impairment charges year-to-date related to vacating its corporate office, suggesting potential for further non-operating charges if additional restructuring or asset write-downs occur.

Bottom line

DNOW’s Q3 2026 results show solid revenue, profitability, and cash generation, with $1,337 million in revenue, $76 million in adjusted EBITDA, and $120 million in operating cash flow. The company’s aggressive share repurchase activity signals confidence, with $92 million bought back year-to-date out of a $160 million program. The balance sheet is stable, with $112 million in cash and a net debt leverage ratio of 1.1 times. However, management’s claims of sequential growth and record segment performance cannot be independently verified due to the lack of comparative historical data. Investors should focus on the company’s ability to sustain these margins and cash flows in future quarters and watch for more transparent disclosures of period-over-period performance. The most important takeaway is that DNOW is currently operating from a position of financial strength, but the durability of this performance will depend on continued execution and clearer trend reporting.

Announcement summary

(NYSE:DNOW) DNOW Inc. reported financial results for the third quarter ended September 30, 2026. The company repurchased $17 million of common stock in the third quarter of 2026 and $92 million year-to-date under its $160 million share repurchase program. Revenue for the third quarter was $1,337 million. Gross profit was $265 million, representing 19.8% of revenue, while adjusted gross profit was $283 million, or 21.2% of revenue. Net income attributable to DNOW Inc. was $26 million, or $0.14 per diluted share, and adjusted net income attributable to DNOW Inc. was $34 million, or $0.18 per diluted share. Adjusted EBITDA for the quarter was $76 million, or 5.7% of revenue. Cash flow from operating activities was $120 million. As of September 30, 2026, cash and cash equivalents totaled $112 million, and total long-term debt was $377 million, resulting in net debt of $265 million and a net debt leverage ratio of 1.1 times. Sales increased sequentially in all three geographic segments, with notable growth in downstream, industrial, and midstream businesses, and the gas utilities business achieved its highest quarterly revenue in three years. Year-to-date share repurchases of $92 million exceeded the combined amount returned through share repurchases over the prior eleven quarters by 24 percent. The company had 180,320,779 shares issued and outstanding at September 30, 2026. U.S. segment revenue for the quarter was $1,125 million, Canada segment revenue was $56 million, and International segment revenue was $156 million. Accounts payable at quarter-end was $708 million, and inventories, net, were $988 million. Property, plant and equipment, net, was $253 million. Total assets as of September 30, 2026, were $3,719 million, and total liabilities were $1,598 million. Stockholders' equity was $2,121 million. For the three months ended September 30, 2026, selling, general and administrative expenses were $232 million. Depreciation and amortization for the quarter was $24 million. The company recognized $11 million increase in LIFO reserve and $7 million amortization of intangibles in the quarter. There were no impairment and other charges in the third quarter, but $4 million was recognized year-to-date related to vacating the leased corporate office in Houston, Texas. Foreign currency losses included in other expense, net, were $2 million for the quarter. The company defines and reconciles several non-GAAP financial measures, including adjusted gross profit, adjusted EBITDA, adjusted net income, net debt, net debt leverage ratio, and free cash flow. A presentation titled “DNOW Third Quarter 2026 Earnings Presentation” was made available on the company’s Investor Relations website prior to the earnings conference call.

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