NOW Inc.releases third-quarter financials
NOW Inc. (DistributionNOW), reported for its third quarter ended Sept. 30, a net loss of $224 million or $(2.09) per fully diluted share compared to the second quarter ended June 30, 2015 net loss of $19 million or $(0.18) per fully diluted share.
Excluding other costs, net loss was $18 million or $(0.17) per fully diluted share. Third quarter pre-tax other costs included an estimated $255 non-cash goodwill impairment associated with the fair value of goodwill and $5 million in acquisition-related and severance charges.
Also included in the third quarter results is a pre-tax $16 million charge, the impact approximating $(0.10) per fully diluted share for high steel content inventory cost adjustments related to falling steel prices.
The company’s revenues for the third quarter of 2015 were $753 million, an increase of less than 1% from the second quarter of 2015. Excluding incremental revenues attributable to acquisitions of about $20 million, sequential revenues declined 2%. Free cash flow for the third quarter was $161 million, an increase of $215 million from the year ago period and an increase of $70 million sequentially, driven by improved performance and reductions in receivables and inventory in 2015.
“During the third quarter we continued to see contraction in the market with unrelenting land rig count declines in the United States, a tepid emergence from seasonal breakup in Canada and continued stacking and scrapping of deep-water offshore rigs globally,” NOW Inc. President and CEO Robert Workman said. “While we navigate this uncertain environment our focus remains on what we can control. Our year-to-date free cash flow has been robust at $236 million and we anticipate further gains as we work to improve our working capital position.
“We were pleased to complete the acquisition of two businesses in the quarter, Odessa Pumps and Equipment in the United States, and a supplier of valves and actuators in Canada. We will continue integrating the nine acquisitions we have completed since the spinoff. We will maintain our focus on DistributionNOW’s long-term growth strategy positioning our company to withstand the current market downturn and to take advantage of an eventual market recovery.”
Third quarter revenues for the United States were $497 million, flat with the second quarter of 2015, and a decrease of 34% from the third quarter of 2014. Excluding incremental revenues attributable to acquisitions of about $20 million, sequential revenues declined 4%, outperforming the U.S. rig count decline of 5% in the third quarter of 2015.
Revenues for the third quarter of 2015 for Canada were $94 million, up 6% compared to second quarter 2015 results and down 46% from the third quarter of 2014, outperforming the 50% Canadian rig count decline since the third quarter of 2014 and despite a weakened Canadian dollar. Canada’s sequential revenue increase was driven by a modestly improved but still depressed energy market.
International operations generated third quarter revenues of $162 million, which were down 2% from the second quarter of 2015 and up 9% from the third quarter of 2014. Sequential revenues were down primarily from reduced market activity and customer spend.