The oil market remained turbulent during the third quarter as a drop in oil prices caused drillers in North America to start slowing their pace. However, despite those challenging conditions, NOW Inc.'s (NYSE: DNOW) financial results kept improving. The company anticipates that its steady progress will continue as the oil industry gets back up on its feet after a long downturn.
NOW results: The raw numbers
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What happened with NOW this quarter?
NOW continues to improve both the top and bottom lines:
- Sales not only rose sharply versus the year-ago period but were up 7.1% from the second quarter. Likewise, the company's net loss also narrowed both year over year and sequentially.
- Fueling the revenue rebound were sales to U.S. customers, which rose to $506 million in the quarter. That's 5.2% higher than last quarter and 36% above the third quarter of last year. Sales in Canada also improved versus both prior periods, up 21.1% from the second quarter and 43.3% from the year-ago period to $96 million. Likewise, other international sales rose when compared to the prior periods, increasing 4.4% and 17.3% sequentially and year over year, respectively, to $95 million.
- While NOW continued to report an adjusted net loss, the company did finally post positive EBITDA of $5 million, an improvement from the negative $2 million last quarter and $40 million in last year's third quarter.
What management had to say
CEO Robert Workman commented on what fueled results in the third quarter by saying:
NOW has worked hard to capture new business as the oil market starts to show signs of life. The company recently announced several new distribution agreements. For example, it signed a master distribution agreement with a subsidiary of Forum Energy Technologies (NYSE: FET). Under that deal, NOW will become the preferred partner to distribute a portfolio of coiled line pipe products in the U.S. for Forum Energy Technologies. Oil and gas companies use Forum's coated steel lined pipes because they can install them quickly, which cuts overall costs and enables them to bring wells online faster.
According to Workman:
As he noted, lower oil prices caused drillers to reduce the number of rigs they had working in the U.S., which would typically mean that demand for the parts NOW distributes would decline. However, the company believes it can mitigate that softness by continuing to execute, which includes winning more new business so that it can maintain the momentum of its improving financial results.
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