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DNOW’s first full quarter as a combined company with MRC Global was shaped by integration work, temporary costs tied to enterprise resource planning (ERP) systems and a sequential decline in adjusted earnings. Management said operations are improving and that revenue prospects should strengthen later in 2026.
President and Chief Executive Officer David Cherechinsky said DNOW’s teams have been focused on merger integration and two parallel ERP initiatives: stabilizing MRC Global’s U.S. ERP platform and accelerating the migration of selected MRC Global locations to DNOW’s SAP platform.
Cherechinsky said the system is stabilized enough to conduct business, though it is not yet optimized. He added that DNOW has removed much of the ERP-related friction and is seeing improvements in system responsiveness, service levels and operating cadence.
Chief Financial Officer Mark Johnson reported total first-quarter 2026 revenue of $1.2 billion, up 23% (or $224 million) from the fourth quarter of 2025 and up $584 million from the year-earlier quarter. Johnson said the increase was primarily driven by a full-quarter contribution from MRC Global.
On a comparable basis using the companies’ separately reported first-quarter 2025 figures, combined first-quarter revenue declined by $128 million year over year. Johnson said about three-quarters of that decline was attributable to MRC Global’s U.S. business, where upstream and downstream end markets saw the largest drops.
Adjusted gross profit was $256 million, or 21.6% of revenue, compared with $217 million, or 22.6%, in the fourth quarter. Johnson attributed the margin decline to MRC Global’s historically lower gross margin profile, reduced higher-margin international project sales and U.S. margin compression as MRC Global works to recover costs related to tariffs, freight and pricing.
Adjusted EBITDA was $39 million, or 3.3% of revenue, down $22 million sequentially. Johnson said the decline reflected MRC Global U.S. operating at a loss, lower international profit contribution after a prior project revenue cycle ended and higher bad debt expense.
DNOW reported a net loss attributable to the company of $44 million, or $0.24 per diluted share. Johnson said the loss was affected by $41 million in inventory step-up amortization charges related to the merger, reduced margins and higher SG&A expenses.
On an adjusted non-GAAP basis, DNOW reported adjusted net income of $3 million, or $0.01 per diluted share.
Cherechinsky said MRC Global’s U.S. business represented approximately half of DNOW’s U.S. revenue and 42% of consolidated global revenue in the first quarter, making ERP stabilization a critical priority.
He said DNOW migrated all MRC Global Permian operations to its optimized SAP platform as of late April. The move made approximately $40 million of additional MRC Global inventory visible and deployable, supporting faster fulfillment and improved service levels.
DNOW plans to migrate 14 additional upstream and midstream locations, with about half targeted for completion in the second quarter. Cherechinsky said many of those moves also involve facility consolidations, contributing to cost synergies earlier than initially expected.
DNOW raised its annualized synergy expectation for 2026 to approximately $30 million, above its original estimate of $17 million in run-rate savings by the end of the first year. Cherechinsky said the increase reflects a pull-forward of timing rather than a change in scope.
The company’s three-year annualized synergy target remains $70 million.
Management said revenue declines at MRC Global U.S. were concentrated across roughly two dozen customers, which Cherechinsky described as providing “clear line of sight” for targeted recovery efforts. He said DNOW is more optimistic about recovering revenue in upstream, midstream and gas utilities, while downstream industrial is expected to be more difficult.
Cherechinsky also highlighted midstream demand tied to natural gas infrastructure, LNG-related export activity, power generation and data center load growth. In the data center market, he said DNOW has generated orders in the $30 million range, most of which are expected to ship this year.
DNOW used $95 million in operating cash during the first quarter, primarily due to working capital changes and payments of merger-related costs, including change-of-control severance payments. Johnson said the company typically consumes cash in the first quarter and expects improved cash generation in the second half of the year.
The company ended the quarter with $571 million in total debt and $455 million in net debt. Total liquidity was $379 million, including $263 million of availability under its revolving credit facility and $116 million in cash.
DNOW repurchased $50 million of stock during the quarter, retiring 4.2 million shares. Cherechinsky said the company used debt for the first time in its history to fund share repurchases, citing management’s view that the stock traded at a meaningful discount to intrinsic value following market concerns over ERP conversion challenges.
DNOW said it has repurchased $87 million under its current $160 million authorization and $167 million across its current and prior programs since late 2022.
For the second quarter, DNOW expects revenue to rise sequentially in the mid- to high-single-digit percentage range. Cherechinsky said the company expects growth in the U.S. and international segments, partially offset by a seasonal decline in Canada. He said EBITDA flow-through on that revenue growth is expected to approach 25%, above the company’s normal 10% to 15% range.
For full-year 2026, DNOW expects revenue to approach $5 billion and adjusted EBITDA margin to approach 4.5% of revenue. The company also expects full-year cash from operating activities to range from $100 million to $200 million.
Cherechinsky said he is confident the overall DNOW business has bottomed in the first quarter of 2026, adding that EBITDA dollars are expected to improve as the year progresses.
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