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What changed in DNOW Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of DNOW Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+217 added−209 removedSource: 10-K (2025-02-18) vs 10-K (2024-02-15)

Top changes in DNOW Inc.'s 2024 10-K

217 paragraphs added · 209 removed · 184 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeExamples of such products include: domestically produced goods; low emission rated valves; steel piping products produced from recycled scrap; glass reinforced epoxy piping systems; vapor recovery units that capture volatile organic compounds in an effort to limit and reduce emissions to the atmosphere; produced water transfer and water injection packages that dispose of produced water in an environmentally safe manner; and pipe produced using wind power, recycled water, and wood pellet inputs. 8 Environmental Matters We are subject to a variety of federal, state, local, foreign and provincial environmental, health and safety laws, regulations and permitting requirements, including those governing the discharge of pollutants or hazardous substances into the air, soil or water, the generation, handling, use, management, storage and disposal of, or exposure to, hazardous substances and wastes, the responsibility to investigate, remediate, monitor and clean up contamination and occupational health and safety.
Biggest changeExamples of such products include: domestically produced goods; low emission rated valves; steel piping products produced from recycled scrap; glass reinforced epoxy piping systems; vapor recovery units that capture volatile organic compounds in an effort to limit and reduce emissions to the atmosphere; produced water transfer and water injection packages that dispose of produced water in an environmentally safe manner; and pipe produced using wind power, recycled water and wood pellet inputs.
Our global product offering includes consumable maintenance, repair and operating (“MRO”) supplies, pipe, manual and automated valves, fittings, flanges, gaskets, fasteners, electrical, instrumentation, artificial lift, pumping solutions and modular process, production, measurement and control equipment. We also offer sourcing, procurement, warehouse and inventory management solutions as part of our supply chain and materials management offering.
Our global product offering includes pipe, manual and automated valves, fittings, flanges, gaskets, fasteners, electrical, instrumentation, artificial lift, pumping solutions and modular process, production, measurement, automation, control equipment, and consumable maintenance, repair and operating (“MRO”) supplies. We also offer sourcing, procurement, warehouse and inventory management solutions as part of our supply chain and materials management offering.
We offer our products, services and supply chain solutions across the entire energy value chain, from onshore and offshore drilling of oil and gas, to the exploration and production of oil and gas, the separation, transfer, and disposal of produced water, to the midstream gathering, processing and transmission of oil, gas, water, natural gas liquids (“NGLs”), LNG, and refined petroleum products, to the downstream refining of oil, and the manufacturing of petrochemicals and specialty chemicals.
We offer our products, services and supply chain solutions across the energy value chain, from onshore and offshore drilling of oil and gas, to the exploration and production of oil and gas, the separation, transfer, and disposal of produced water, to the midstream gathering, processing and transmission of oil, gas, water, natural gas liquids (“NGLs”), LNG, and refined petroleum products, to the downstream refining of oil, and the manufacturing of petrochemicals and specialty chemicals.
In the U.S., activity has historically been higher during the summer and fall months. In Canada, certain E&P activities have declined in the spring due to seasonal thaws and regulatory restrictions limiting the ability of drilling rigs and transportation to operate effectively and safely during these periods.
In the U.S., activity has historically been higher during the summer and fall months. In Canada, E&P activities have declined in the spring due to seasonal thaws and regulatory restrictions limiting the ability of drilling rigs and transportation to operate effectively and safely during these periods.
Our product and service offerings are consumed throughout all sectors of the energy industry – from upstream drilling and completion, exploration and production (“E&P”), midstream transmission, gas and crude oil processing infrastructure development to downstream petroleum refining and petrochemicals – as well as in other industries, such as chemical processing, mining, water/wastewater, food and beverage, gas utilities and the evolution of energy transition markets inclusive of greenhouse gas reduction and emissions capture and storage, renewable fuels such as biofuels and renewable natural gas ("RNG"), wind, solar, production of hydrogen as a fuel to power equipment and select industrial markets.
Our product and service offerings are consumed throughout the energy industry – from upstream drilling and completion, exploration and production (“E&P”), midstream transmission, gas and crude oil processing infrastructure development to downstream petroleum refining and petrochemicals – as well as in other industries, such as chemical processing, mining, water/wastewater, food and beverage, gas utilities and the evolution of energy transition markets inclusive of greenhouse gas reduction and emissions capture and storage, renewable fuels such as biofuels and renewable natural gas ("RNG"), wind, solar, production of hydrogen as a fuel to power equipment and select industrial markets.
We provide products and services to the energy evolution and new energy markets driven by the public's desire to reduce current greenhouse gas levels and emissions, and to replace higher sources of greenhouse gas emitting forms of energy with lower emitting alternative forms to produce energy.
We provide products and services to the energy evolution and new energy markets driven by the public's desire to reduce greenhouse gas levels and emissions, and to replace higher sources of greenhouse gas emitting forms of energy with lower emitting alternative forms to produce energy.
We believe we could benefit from consolidation among our customers, particularly in the U.S. and Canada where we have a broad footprint, as the resulting companies seek global distributors as their source for products and related solutions. The Company had one customer in the U.S. segment that represented approximately 10% of total revenues.
We believe we could benefit from consolidation among our customers, particularly in the U.S. and Canada where we have a broad footprint, as the resulting companies seek quality-focused global distributors as their source for products and related solutions. The Company had one customer in the U.S. segment that represented approximately 10% of total revenues.
United States We have approximately 105 locations in the U.S., which are geographically positioned to best serve the upstream, midstream, downstream and renewable energy and industrial markets. We offer higher value solutions in key product lines in the U.S. which broaden and deepen our customer relationships and related product line value.
United States We have approximately 110 locations in the U.S., which are geographically positioned to best serve the upstream, midstream, downstream and renewable energy and industrial markets. We offer higher value solutions in key product lines in the U.S. which broaden and deepen our customer relationships and related product line value.
ITEM 1. B USINESS Overview DNOW Inc., previously NOW Inc. (“DNOW” or the “Company”), headquartered in Houston, Texas, was incorporated in Delaware on November 22, 2013. On June 2, 2014, DNOW stock began regular trading on the New York Stock Exchange under the ticker symbol “DNOW”.
ITEM 1. B USINESS Overview DNOW Inc., (“DNOW” or the “Company”), headquartered in Houston, Texas, was incorporated in Delaware on November 22, 2013. On June 2, 2014, DNOW stock began regular trading on the New York Stock Exchange under the ticker symbol “DNOW”.
These branches serve repeat account and walk-in retail customers. Products are inventoried in branch warehouses based on local market needs and are delivered or available for pick-up as needed. These branches serve a geographical radius and provide delivery of products and solutions.
These branches serve repeat account and walk-in retail customers. Products are inventoried in branch locations based on local market needs and are delivered or available for pick-up as needed. These branches serve a geographical radius and provide delivery of products and solutions.
Examples of these include artificial lift, pumps, valves and valve actuation, process and production equipment, fluid transfer products, measurement and controls, spoolable and coated steel-pipe and composite pipe, along with many other products required by our customers, which enable them to focus on their core business while we manage varying degrees of their supply chain.
Examples of these include pumps, valves and valve actuation, process and production equipment, fluid transfer products, measurement, automation and controls, spoolable and coated steel-pipe and composite pipe, along with many other products required by our customers, which enable them to focus on their core business while we manage varying degrees of their supply chain.
We also provide additional value to our customers through the engineering, design, construction, assembly, fabrication and optimization of products and equipment essential to the safe and efficient production, transportation and processing of oil and gas.
We also provide additional value to our customers through the engineering, design, construction, assembly, fabrication and optimization of products and equipment essential to the safe and efficient production, transportation and processing of oil and gas and produced water.
This industry is highly fragmented, comprised of large distributors, each with many locations and with online ecommerce sites, who aggregate and distribute several product lines, and includes numerous smaller regional and local companies, many of which operate from a single location and either aggregate and distribute several product lines or focus on a single product line.
This industry is highly fragmented, comprised of large distributors, each with many locations and with online e-commerce sites, who aggregate and distribute several product lines, and includes numerous smaller regional and local companies, many of which operate from a single location and either aggregate and distribute several product lines or focus on a single product line.
Canada We have a network of approximately 40 locations in the Canadian oilfield, predominantly in the oil rich provinces of Alberta, Saskatchewan, Manitoba and other targeted locations across the country. Our Canada segment primarily serves energy exploration, production, mining and drilling businesses, offering customers many of the same products and value-added solutions that we perform in the U.S.
Canada We have a network of approximately 40 locations in the Canadian oilfield, predominantly in the oil rich provinces of Alberta, Saskatchewan, and Manitoba. Our Canada segment primarily serves energy exploration, production, mining and drilling businesses, offering customers many of the same products and value-added solutions that we perform in the U.S.
Sustainability We can assist in reducing emissions of greenhouse gases in our operations by creating a more efficient supply chain. An efficient supply chain can help reduce the carbon footprint of deliveries to our distribution centers and branches and ultimately to our customers.
Sustainability We can assist in reducing emissions of greenhouse gases in our operations by creating a more efficient supply chain. An efficient supply chain can help reduce the carbon footprint of deliveries to our supercenters and branches and ultimately to our customers.
We are a global distributor to the oil and gas and industrial markets with a legacy of over 160 years. We operate primarily under the DNOW brand along with several affiliated brands operating in local or regional markets that are tied to prior acquisitions.
We are a distributor to the oil and gas, energy transition and industrial markets with a legacy of over 160 years. We operate primarily under the DNOW brand along with several affiliated brands operating in local, regional or international markets that are tied to prior acquisitions.
Global Operations Demand for our products is driven primarily by the level of oil and gas drilling, completions, servicing, production, transmission, refining and petrochemical activities. It is also influenced by the global supply and demand for energy, the economy in general and geopolitics.
U.S., Canada and International Operations Demand for our products is driven primarily by the level of oil and gas drilling, completions, servicing, production, transmission, refining and petrochemical activities. It is also influenced by the global supply and demand for energy, the economy in general and geopolitics.
From our operations in 18 countries, we sell to customers operating in approximately 80 countries. The supplies and equipment stocked by each of our branches are customized to meet varied and changing local customer demands. The breadth and scale of our offering enhances our value proposition to our customers, suppliers and shareholders.
From our operations, we sell to customers operating in approximately 80 countries. The supplies and equipment stocked by each of our locations are customized to meet varied and changing local customer demands. The breadth, scale and availability of our product offering enhances our value proposition to our customers, suppliers and shareholders.
Human Capital Resources At December 31, 2023, we had approximately 2,475 employees, of which approximately 100 were temporary employees. We offer market-competitive benefits for employees and opportunities for growth and advancement. We place a strong emphasis on employee growth and development and provide opportunities for valued contribution and innovation.
Human Capital Resources At December 31, 2024, we had approximately 2,575 employees, of which approximately 180 were temporary employees. We offer market-competitive benefits for employees and opportunities for growth and advancement. We place a strong emphasis on employee growth and development and provide opportunities for valued contribution and innovation.
As customers increasingly aggregate purchases to improve efficiency and reduce costs, they partner with large distributors who can meet their needs for products in multiple locations around the world. Customers can procure products through our direct branch model or through our ecommerce site, https://shop.dnow.com , or using our mobile application on smart devices.
As customers increasingly aggregate purchases to improve efficiency and reduce costs, they partner with large distributors who can meet their needs for products in multiple locations around the world. Customers can procure products through our direct branch model or through our digital e-commerce channels, such as https://shop.dnow.com , and our mobile application on smart devices.
In addition, we provide our products, services and supply chain solutions to other end markets including mining and minerals, municipal water and wastewater and industrial manufacturing. We provide drilling products, MRO consumables, safety and original equipment manufacturer (“OEM”) equipment for land drilling rigs, workover rigs and initial offshore drilling rig load outs.
In addition, we provide our products, services and supply chain solutions to non-oil and gas end markets such as mining and minerals, municipal water and wastewater and industrial manufacturing. We provide drilling products, MRO consumables, safety and original equipment manufacturer (“OEM”) equipment for land drilling rigs, workover rigs and initial offshore drilling rig load outs.
We offer our customers an expanding suite of emissions reduction technology that reduces the venting and flaring of greenhouse gas, targeting the oil and gas and the growing RNG markets. As a distributor, we perform minimal manufacturing operations. We do not utilize large amounts of water.
In addition, we offer an expanding suite of emissions reduction technology through our EcoVapor branded product line that reduces the venting and flaring of greenhouse gas, targeting the oil and gas and the growing RNG markets. As a distributor, we perform minimal manufacturing operations. We do not utilize large amounts of water.
Our EcoVapor TM branded vapor recovery systems provide an environmental, social, and governance ("ESG") benefit by enabling customers to retain and sell residual flash gas commonly found in storage tanks resulting in a decrease in greenhouse gas emissions. 6 Customers Our primary customers are companies active in the upstream, midstream and downstream sectors of the energy industry, including drilling contractors, well servicing companies, independent and national oil and gas companies, midstream operators, refineries, petrochemical, chemical, utilities, RNG facilities and other downstream energy processors.
Our EcoVapor TM branded vapor recovery systems provide our customers the ability to reduce their scope 1 emissions by enabling customers to retain and sell residual flash gas commonly found in storage tanks resulting in reduced flaring and a decrease in greenhouse gas emissions. 6 Customers Our primary customers are companies active in the upstream, midstream and downstream sectors of the energy industry, including drilling contractors, well servicing companies, independent and national oil and gas companies, midstream operators, refineries, petrochemical, chemical, utilities, RNG facilities and other downstream energy processors.
The industrial distribution end markets include engineering and construction firms that perform capital and maintenance projects for their end-user clients. We also provide supply chain and materials management solutions to the same markets where we sell products.
The energy and industrial distribution end markets we serve are inclusive of engineering and construction firms that perform capital and maintenance projects for their clients. We also provide supply chain and materials management solutions to the same markets where we sell products.
Additionally, through our growing DigitalNOW® platform, customers can leverage world-class technology across ecommerce, data visualization, data management and supply chain optimization applications to solve a wide array of complex operational and product sourcing challenges to assist in maximizing their return on assets.
Additionally, through our DigitalNOW® platform, customers can leverage technology across applications to solve a wide array of complex operational and product sourcing challenges to assist in maximizing their return on assets.
We provide a full suite of process and production equipment, pumps and compressor packages, artificial lift, steel, fiberglass and composite pipe, valves and fittings (“PVF”), instrumentation and measurement, and safety and personal protective equipment (“PPE”) in the exploration, production, separation, storage and gathering of oil and gas, as well as the separation, removal, storage and transfer of produced water. 5 To minimize carbon based effluent emissions, we provide vapor recovery systems to capture and transfer gas and volatile organic compounds during the separation and storage of oil, gas and produced water from operating reservoirs.
We provide a full suite of process and production equipment, pumps and compressor packages, artificial lift, steel, fiberglass and composite pipe, valves and fittings (“PVF”), instrumentation and measurement, and safety and personal protective equipment (“PPE”) in the exploration, production, separation, storage and gathering of oil and gas, as well as the separation, removal, storage and transfer of produced water.
Within our process and production equipment category, we produce customer lease automatic custody transfer (“LACT”) units, Zero2 TM EcoVapor TM and Sulfur Sentinel TM units to reduce emissions associated with routine flaring originating from low pressure storage tanks and renewable fuels such as biogas and landfill gas marketed as RNG facilities, gas meter runs, ASME code vessels in the form of separators, heater treaters, gas conditioning systems, towers, reactors, condensate stabilizers, slug catchers and pressurized bullet tanks, pig launchers and receivers and water transfer and disposal units.
These LACT units are associated with routine flaring originating from low pressure storage tanks and renewable fuels such as biogas and landfill gas marketed as RNG facilities, gas meter runs, ASME code vessels in the form of separators, heater treaters, gas conditioning systems, towers, reactors, condensate stabilizers, slug catchers and pressurized bullet tanks, pig launchers and receivers and water transfer and disposal units.
Simply put, we act with high priority on health and safety in our workplace and in the communities where we operate. Our safety culture is driven by our recently expanded health, safety and environment (“HSE”) training catalog and through our HSE management system beginning with our HSE Policy Statement, which sets the tone for our company’s commitment to safety.
Our safety culture is driven by our health, safety and environment (“HSE”) training catalog and through our HSE management system beginning with our HSE Policy Statement, which sets the tone for our company’s commitment to safety.
By directly engaging people in the communities we serve, we create a transparent dialogue to try to listen and learn from alternative views in how we conduct our business. The strengthening of minority- and women-owned businesses contributes to the overall economic growth and the expansion of our markets. Workforce Health and Safety Safety is at the center of our actions.
By directly engaging people in the communities we serve, we create a transparent dialogue to try to listen and learn from alternative views in how we conduct our business. Workforce Health and Safety Safety is at the center of our actions. We act with high priority on health and safety in our workplace and in the communities where we operate.
For produced water, we provide fluid movement products that help our customers dispose of produced water in an environmentally safe manner. For oil streams, we provide products that measure the quality and quantity of oil and gas through the separation process and prior to distribution to the midstream sector.
For oil streams, we provide products that measure the quality and quantity of oil and gas through the separation process and prior to distribution to the midstream sector.
International We operate in approximately 15 countries and serve the needs of our international customers from approximately 20 locations outside the U.S. and Canada, which are strategically located in major oil and gas development areas.
This product line is supported by inventory, as well as product and installation expertise to serve our customers. 4 International We serve the needs of our international customers from approximately 15 locations outside the U.S. and Canada, which are strategically located in major oil and gas development areas.
We have expanded globally, through acquisitions and organic investments, in Australia, Azerbaijan, Brazil, Canada, Colombia, Egypt, England, India, Indonesia, Kazakhstan, Kuwait, Netherlands, Norway, Oman, Scotland, Singapore, the United Arab Emirates (“UAE”) and the United States. 4 Summary of Reportable Segments We operate through three reportable segments: United States (“U.S.”), Canada and International.
We primarily have operations in the U.S. and Canada, complemented with a number of strategic international operations, through acquisitions and organic investments, in Australia, England, Kuwait, the Netherlands, Norway, Scotland, Singapore and the United Arab Emirates (“UAE”). Summary of Reportable Segments We operate through three reportable segments: United States (“U.S.”), Canada and International.
Use of our large centralized and regional distribution centers allows us to aggregate product across multiple suppliers and customers, which, in turn, prevents each customer from separately creating duplicative supply chains that require fuel for deliveries and resources to manage.
Use of our regional supercenters allow us to aggregate products across multiple suppliers and customers, which, in turn, prevents each customer from separately creating duplicative supply chains that require fuel for deliveries and resources to manage. Many of the products we distribute are used by our customers to aid their efforts to reduce their greenhouse gas emissions.
Products sold through our locations support greenfield expansion upstream capital projects, midstream infrastructure and transmission and MRO consumables used in day-to-day production. We provide downstream energy and industrial 3 products for petroleum refining, chemical processing, liquefied natural gas (“LNG”) terminals, power generation utilities and customer on-site locations. Our supplier network consists of thousands of vendors in approximately 40 countries.
We provide downstream energy and industrial 3 products for petroleum refining, chemical processing, liquefied natural gas (“LNG”) terminals, power generation, gas utilities serviced by a combination of customer on-site locations and off-site service locations in combination with our digital offerings. Our supplier network consists of thousands of vendors in approximately 30 countries.
Our Distribution Channels We offer a diverse range of products across the energy and industrial markets in the U.S., Canada and internationally. There are thousands of manufacturers of the products used in the markets in which we operate and customers demand a high level of service, responsiveness and availability across a broad set of products and vendors.
There are thousands of manufacturers of the products used in the markets in which we operate and customers demand a high level of service, responsiveness and availability across a broad set of products and vendors. These market dynamics make us an essential element in the value chain for our customers.
We also award Milestone Service Awards to employees for their years of service and dedication of time to our Company, which recognize employees at each five-year service anniversary. 7 Workforce Diversity and Inclusion We are committed to advancing an inclusive environment where diversity is appreciated and encouraged, and all employees have a sense of belonging throughout our organization.
We award Milestone Service Awards to employees for their years of service and dedication of time to our Company, which recognize employees at each five-year service anniversary. 7 Workforce Diversity and Inclusion We believe that a diverse and inclusive workplace is a key driver of innovation, creativity and overall success.
We provide PVF, pumps, safety, PPE, supply chain and safety services to the refining, petrochemical, chemical and industrial industries. Our products are consumed from industrial customer’s daily MRO expenditures, customer capital projects in the form of existing plant expansions, new plant facilities, as well as planned and unplanned maintenance of processing units.
Our products are consumed from industrial customer’s daily MRO expenditures, customer capital projects in the form of existing plant expansions, new plant facilities, as well as planned and unplanned maintenance of processing units. 5 Our Distribution Channels We offer a diverse range of products across the energy and industrial markets in the U.S., Canada and internationally.
In Canada, we also provide training for, and supervise the installation of, jointed and spoolable composite pipe. This product line is supported by inventory, as well as product and installation expertise to serve our customers.
In Canada, we also provide training for, and supervise the installation of, jointed and spoolable composite pipe.
We create a culture where all employees can strive to be their best, to achieve company goals and to deliver superior service to our customers. As of December 31, 2023, our U.S. workforce was comprised of approximately 26% female and 32% racial minorities. We recognize that we are an integral part of the communities in which we operate.
As of December 31, 2024, our U.S. workforce was comprised of approximately 25% female and approximately 33% racial minorities. We recognize that we are an integral part of the communities in which we operate.
We support land and offshore operations for the major oil and gas producing regions around the world through our network of locations. Our key markets, beyond North America, include South America, Europe, the Middle East, Asia Pacific, Central Asia and West and North Africa.
We support land and offshore operations for the major oil and gas producing regions through our network of locations.
We recognize the opportunity to drive diversity in our workforce through talent acquisition and retention because we know that one of our greatest strengths is the diverse and different perspectives of our team members. We recognize that having a team with a broad range of experience, cultural characteristics and varying perspectives fortifies our brand.
We are committed to advancing an inclusive environment where diversity is appreciated and encouraged and all employees have a sense of belonging throughout our organization. We recognize the opportunity to drive diversity in our workforce through talent acquisition and retention because we know that one of our greatest strengths is the diverse perspectives of our team members.
Through a network of approximately 165 locations and approximately 2,475 employees worldwide, we offer a complementary suite of digital procurement channels that, in conjunction with our locations, provides products to the energy and industrial markets around the world.
Through a network of approximately 165 locations and approximately 2,575 employees worldwide, our operating locations utilize a complementary suite of technology, systems, order and fulfillment processes and sourcing and procurement channels to provide products and services to a variety of customers operating in the energy and industrial markets.
Many of the products we distribute are used by our customers to aid their efforts to reduce their greenhouse gas emissions. We continually seek opportunities to expand our portfolio of products we offer to customers to aid in reducing their scope 1 emissions.
We continually seek opportunities to expand our portfolio of products we offer to customers to aid in reducing their scope 1 emissions. We offer our customers a variety of scope 1 emission reducing products like sealless pumps and industrial air compressors that are used to replace methane gas pneumatic systems with compressed air pneumatic systems.
We believe in advocating for diversity within our workforce by employing women and men of varying cultures, nationalities and backgrounds to work together to achieve a common goal. To find the best employees, we must have a diverse pipeline of talent. We commit to advancing an inclusive environment where diversity is encouraged.
We recognize that embracing diversity means respecting and valuing the unique perspectives, experiences, and talents that each team member brings to our organization. We believe in advocating for diversity within our workforce by employing women and men of varying cultures, nationalities and backgrounds to work together to achieve a common goal.
Our long legacy of operating in many international regions, combined with expansion into several key markets, provides a competitive advantage as few of our competitors have a presence in most of the global energy producing regions. Distribution Industry Overview The distribution industry is highly fragmented, comprised of large companies with global reach and numerous small, local and regional competitors.
Our long legacy of operating in select international regions provides a competitive advantage as few of our competitors have a presence in most of the global energy producing areas. In the third quarter of 2024, we began a plan to restructure operations in the International segment to optimize efficiencies and to improve operating margins.
These market dynamics make us an essential element in the value chain for our customers. Our product offering is aligned to meet the needs of our customer base. Energy Centers Energy centers are brick and mortar supply store operations that provide products to multiple upstream, midstream and downstream customers from a single location.
Energy Centers Energy centers are brick and mortar supply store operations that are a combination of larger, more regionalized stores known as supercenters with numerous smaller stores located in strategic geographical areas to service customers and maintain customer proximity by providing products to multiple upstream, midstream, downstream, industrial and energy transition customers from a single location.
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Our approach in these markets is similar to our approach in North America, as our customers turn to us to provide products and supply chain solutions support closer to their drilling and exploration activities.
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Our key markets include the United States ("U.S."), Canada, the United Kingdom ("UK"), Norway, Australia, the Netherlands, Singapore and the Middle East area with the ability to provide products through an export model to operators with operations in Southeast Asia and West Africa.
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Products sold through our locations support brownfield and greenfield expansion upstream capital projects, midstream infrastructure and transmission and MRO consumables used in day-to-day production.
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Our approach in these markets and the products we offer is similar to our strategy in the U.S. and Canada, with the addition of the distribution of electrical products in the UK, Australia and international export markets.
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For the year ended December 31, 2024, the Company recognized $9 million in charges, including approximately $6 million of foreign currency translation losses included in impairment and other charges, approximately $2 million of inventory write-downs included in cost of products and $1 million of other exit costs included in warehousing, selling and administrative.
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We could incur additional non-cash foreign currency translation losses as we complete the International restructuring; however, we do not expect the remaining restructuring related liabilities to be material. Distribution Industry Overview The distribution industry is highly fragmented, comprised of large companies with global reach and numerous small, local and regional competitors.
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To minimize carbon based effluent emissions, we provide vapor recovery systems to capture and transfer gas and volatile organic compounds during the separation and storage of oil, gas and produced water from operating reservoirs. For produced water, we provide fluid movement products which help our customers dispose of produced water in an environmentally safe manner.
Added
We provide PVF, pumps, safety, PPE, supply chain and safety services to the refining, petrochemical, chemical and industrial industries.
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Our product offering is aligned to meet the needs of our customer base.
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Within our process and production equipment category, we produce customer lease automatic custody transfer (“LACT”) units, Zero2 TM EcoVapor TM and Sulfur Sentinel TM units to reduce greenhouse gas emissions.
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We appreciate that having a team with a broad range of experience, cultural characteristics and varying perspectives fortifies our brand. Our efforts are rooted in the belief that every individual, regardless of their background, should have the opportunity to thrive and contribute to our shared goals.
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To find the best employees, we must have a diverse pipeline of talent. We commit to advancing an inclusive environment where diversity is encouraged. We create a culture where all employees can strive to be their best, to achieve company goals and to deliver superior service to our customers.
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Additional examples of products we offer our customers to help reduce their scope 1 emissions may be found in our annual sustainability report. 8 Environmental Matters We are subject to a variety of federal, state, local, foreign and provincial environmental, health and safety laws, regulations and permitting requirements, including those governing the discharge of pollutants or hazardous substances into the air, soil or water, the generation, handling, use, management, storage and disposal of, or exposure to, hazardous substances and wastes, the responsibility to investigate, remediate, monitor and clean up contamination and occupational health and safety.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSuch disruptions or misappropriations and the resulting repercussions, including reputational damage and legal claims or proceedings, may adversely affect our results of operations, cash flows and financial condition, and the trading price of our common stock. 15 Privacy concerns relating to our personal and business information being potentially breached could damage our reputation and deter current and potential users or customers from using our products and services.
Biggest changeOur systems are subject to repeated attempts by third parties to access information or to disrupt our systems. Such disruptions or misappropriations and the resulting repercussions, including reputational damage and legal claims or proceedings, may adversely affect our results of operations, cash flows and financial condition, and the trading price of our common stock.
Examples of risks inherent in conducting business in markets outside of the U.S. and Canada include: • changes in the political and economic conditions in the countries in which we operate, including civil uprisings and terrorist acts; • unexpected changes in regulatory requirements; • changes in tariffs; • the adoption of foreign or domestic laws limiting exports to or imports from certain foreign countries; • fluctuations in currency exchange rates and the value of the U.S. dollar; 19 • restrictions on repatriation of earnings; • expropriation of property without fair compensation; • governmental actions that result in the deprivation of contract or proprietary rights; and • the acceptance of business practices which are not consistent with or are antithetical to prevailing business practices we are accustomed to in North America including export compliance and anti-bribery practices and governmental sanctions.
Examples of risks inherent in conducting business in markets outside of the U.S. and Canada include: • changes in the political and economic conditions in the countries in which we operate, including civil uprisings and terrorist acts; • unexpected changes in regulatory requirements; • changes in tariffs; • the adoption of foreign or domestic laws limiting exports to or imports from certain foreign countries; • fluctuations in currency exchange rates and the value of the U.S. dollar; • restrictions on repatriation of earnings; • expropriation of property without fair compensation; • governmental actions that result in the deprivation of contract or proprietary rights; and • the acceptance of business practices which are not consistent with or are antithetical to prevailing business practices we are accustomed to in North America including export compliance and anti-bribery practices and governmental sanctions.
These include provisions: • providing our Board of Directors with the right to issue preferred stock without stockholder approval; • prohibiting stockholders from taking action by written consent; • restricting the ability of our stockholders to call a special meeting; • providing that the number of directors will be filled by the Board of Directors and vacancies on the Board of Directors, including those resulting from an enlargement of the Board of Directors, will be filled by the Board of Directors; • requiring cause and an affirmative vote of at least 80 percent of the voting power of the then-outstanding voting stock to remove directors; 21 • requiring the affirmative vote of at least 80 percent of the voting power of the then-outstanding voting stock to amend certain provisions of our certificate of incorporation and bylaws; and • establishing advance notice requirements for nominations of candidates for election to our Board of Directors or for stockholder proposals.
These include provisions: • providing our Board of Directors with the right to issue preferred stock without stockholder approval; • prohibiting stockholders from taking action by written consent; • restricting the ability of our stockholders to call a special meeting; • providing that the number of directors will be filled by the Board of Directors and vacancies on the Board of Directors, including those resulting from an enlargement of the Board of Directors, will be filled by the Board of Directors; • requiring cause and an affirmative vote of at least 80 percent of the voting power of the then-outstanding voting stock to remove directors; • requiring the affirmative vote of at least 80 percent of the voting power of the then-outstanding voting stock to amend certain provisions of our certificate of incorporation and bylaws; and • establishing advance notice requirements for nominations of candidates for election to our Board of Directors or for stockholder proposals.
We face the following risks with respect to our insurance coverage: • we may not be able to continue to obtain insurance on commercially reasonable terms; • we may incur losses from interruption of our business that exceed our insurance coverage; • we may be faced with types of liabilities that will not be covered by our insurance; • our insurance carriers may not be able to meet their obligations under the policies; or • the dollar amount of any liabilities may exceed our policy limits.
We face the following risks with respect to our insurance coverage: • we may not be able to continue to obtain insurance on commercially reasonable terms; 18 • we may incur losses from interruption of our business that exceed our insurance coverage; • we may be faced with types of liabilities that will not be covered by our insurance; • our insurance carriers may not be able to meet their obligations under the policies; or • the dollar amount of any liabilities may exceed our policy limits.
Our failure to comply with applicable environmental, health and safety requirements could result in fines, penalties, enforcement actions, third-party claims for property damage and personal injury, requirements to clean up property or to pay for the costs of cleanup or regulatory or judicial orders requiring corrective measures, including the installation of pollution control equipment or remedial actions.
Our failure to comply with 17 applicable environmental, health and safety requirements could result in fines, penalties, enforcement actions, third-party claims for property damage and personal injury, requirements to clean up property or to pay for the costs of cleanup or regulatory or judicial orders requiring corrective measures, including the installation of pollution control equipment or remedial actions.
Any such breach or unauthorized access could result in significant legal and financial exposure, damage to our reputation, and potentially have an adverse effect on our business and results of operations. We have goodwill recorded on our balance sheet. If our goodwill becomes impaired, we may be required to recognize charges that would reduce our income.
Any such breach or unauthorized access could result in significant legal and financial exposure, damage to our reputation, and potentially have an adverse effect on our business and results of operations. 15 We have goodwill recorded on our balance sheet. If our goodwill becomes impaired, we may be required to recognize charges that would reduce our income.
As a result of doing business in foreign countries and with foreign partners, we are exposed to a heightened risk of violating anti-corruption and trade control laws and sanctions regulations. The FCPA prohibits us from providing anything of value to foreign officials for the purposes of obtaining or retaining business or securing any improper business advantage.
As a result of doing business in foreign countries and with foreign partners, we are exposed to a heightened risk of violating anti-corruption and trade control laws and sanctions regulations. 19 The FCPA prohibits us from providing anything of value to foreign officials for the purposes of obtaining or retaining business or securing any improper business advantage.
We have experienced in the past, and we will likely experience in the future, significant fluctuations in operating results based on these changes. General economic and geopolitical conditions may adversely affect our business. U.S. and global general economic conditions affect many aspects of our business, including demand for the products we distribute and the pricing and availability of supplies.
We have experienced in the past, and we will likely experience in the future, significant fluctuations in operating results based on these changes. 11 General economic and geopolitical conditions may adversely affect our business. U.S. and global general economic conditions affect many aspects of our business, including demand for the products we distribute and the pricing and availability of supplies.
These or other developments that remove us from, or limit our role in, the distribution chain, may harm our competitive position in the marketplace and reduce our sales and earnings and adversely affect our business. We may need additional capital in the future, and it may not be available on acceptable terms, or at all.
These or other developments that remove us from, or limit our role in, the distribution chain, may harm our competitive position in the marketplace and reduce our sales and earnings and adversely affect our business. 12 We may need additional capital in the future, and it may not be available on acceptable terms, or at all.
Stock markets in general have also experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations could negatively affect the trading price of our common stock. Your percentage ownership in us may be diluted in the future.
Stock markets in general have also experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations could negatively affect the trading price of our common stock. 20 Your percentage ownership in us may be diluted in the future.
Such a loss would require us to rely more heavily on our other existing suppliers or develop relationships with new suppliers, which may 16 cause us to pay higher prices for products due to, among other things, a loss of volume discount benefits currently obtained from our major suppliers.
Such a loss would require us to rely more heavily on our other existing suppliers or develop relationships with new suppliers, which may cause us to pay higher prices for products due to, among other things, a loss of volume discount benefits currently obtained from our major suppliers.
Even though the prices as of the beginning of January for the last three years have been relatively stable, prices have historically been very volatile, and this historical volatility has caused oil and natural gas companies to change their 11 strategies and expenditure levels from year to year.
Even though the prices as of the beginning of January for the last three years have been relatively stable, prices have historically been very volatile, and this historical volatility has caused oil and natural gas companies to change their strategies and expenditure levels from year to year.
We maintain information systems controls designed to protect against, among other things, unauthorized program changes and unauthorized access to data on our information systems. If our information systems controls do not function properly, we face increased risks of unexpected errors and unreliable financial data or theft of proprietary Company information.
We maintain information systems controls designed to protect against, among other things, unauthorized 14 program changes and unauthorized access to data on our information systems. If our information systems controls do not function properly, we face increased risks of unexpected errors and unreliable financial data or theft of proprietary Company information.
While we maintain reserves for expected credit losses, we cannot assure these reserves will be sufficient to meet write-offs of uncollectible receivables or that our losses from such receivables will be consistent with our expectations. 13 We may be unable to successfully execute or effectively integrate acquisitions.
While we maintain reserves for expected credit losses, we cannot assure these reserves will be sufficient to meet write-offs of uncollectible receivables or that our losses from such receivables will be consistent with our expectations. We may be unable to successfully execute or effectively integrate acquisitions.
While we carry insurance coverage standard within our industry to protect us against many of these risks, the potential physical effects of climate 18 change are uncertain, and we may not carry adequate coverage to protect all of our assets or facilities from climate-related events.
While we carry insurance coverage standard within our industry to protect us against many of these risks, the potential physical effects of climate change are uncertain, and we may not carry adequate coverage to protect all of our assets or facilities from climate-related events.
We may be unsuccessful in attracting, hiring, training and retaining qualified personnel. 14 Interruptions in the proper functioning of our information systems could disrupt operations and cause increases in costs or decreases in revenues. The proper functioning of our information systems is critical to the successful operation of our business.
We may be unsuccessful in attracting, hiring, training and retaining qualified personnel. Interruptions in the proper functioning of our information systems could disrupt operations and cause increases in costs or decreases in revenues. The proper functioning of our information systems is critical to the successful operation of our business.
The willingness of oil and gas operators to make capital and operating expenditures to explore for and produce oil and natural gas and the willingness of oilfield service companies to invest in capital and operating equipment will continue to be influenced by numerous factors over which we have no control, including: • the ability of the members of the OPEC and certain non-OPEC countries, to maintain price stability through voluntary production limits, the level of production by other non-OPEC countries, such as the United States, and worldwide demand for oil and gas; • the level of production from known reserves; • the cost of exploring for and producing oil and gas; • limits on access to capital and investor demands for capital discipline; • the level of drilling activity and drilling rig day rates; • worldwide economic activity; • national government political requirements; • changes in governmental regulations; • the impact of public health crises, such as the COVID-19 pandemic including any new virus strains that result in the return of lockdowns or other government restrictions, on worldwide demand for oil and gas; • the development of alternate energy sources; and • environmental regulations.
The willingness of oil and gas operators to make capital and operating expenditures to explore for and produce oil and natural gas and the willingness of oilfield service companies to invest in capital and operating equipment will continue to be influenced by numerous factors over which we have no control, including: • the ability of the members of the OPEC and certain non-OPEC countries, to maintain price stability through voluntary production limits, the level of production by other non-OPEC countries, such as the United States, and worldwide demand for oil and gas; • the level of production from known reserves; • the cost of exploring for and producing oil and gas; • limits on access to capital and investor demands for capital discipline; • the level of drilling activity and drilling rig day rates; • worldwide economic activity; • national government political requirements; • changes in governmental regulations; • the impact of public health crises, such as new virus strains that result in the return of lockdowns or other government restrictions, on worldwide demand for oil and gas; • the development of alternate energy sources; and • environmental regulations.
In addition, there could be additional 17 trade actions or rate increases imposed by the U.S. and these could also result in additional retaliatory actions by the U.S.’ trade partners.
In addition, there could be additional trade actions or rate increases imposed by the U.S. and these could also result in additional retaliatory actions by the U.S.’ trade partners.
Many factors affect the supply of and demand for energy and, therefore, influence oil and natural gas prices, including: • the level of domestic and worldwide oil and natural gas production and inventories; • the level of drilling activity and the availability of attractive oil and natural gas field prospects, which governmental actions may affect, such as regulatory actions or legislation, or other restrictions on drilling, including those related to environmental concerns (e.g., a temporary moratorium on deepwater drilling in the Gulf of Mexico following a rig accident or oil spill); • the discovery rate of new oil and natural gas reserves and the expected cost of developing new reserves; • the actual cost of finding and producing oil and natural gas; • depletion rates; • domestic and worldwide refinery over capacity or under capacity and utilization rates; • the availability of transportation infrastructure and refining capacity; • increases in the cost of products that the oil and gas industry uses, such as those that we provide, which may result from increases in the cost of raw materials such as steel; • shifts in end-customer preferences toward fuel efficiency and the use of natural gas; • the economic or political attractiveness of alternative fuels, such as coal, hydrocarbon, battery power, wind, solar energy and biomass-based fuels; • increases in oil and natural gas prices or historically high oil and natural gas prices, which could lower demand for oil and natural gas products; • worldwide economic activity including growth in non-Organization for Economic Co-operation and Development countries, including China and India; • increased interest rates and the cost of capital; • national government policies, including government policies that could nationalize or expropriate oil and natural gas, E&P, refining or transportation assets; • the ability of OPEC and non-OPEC countries to set and maintain production levels and prices for oil; • the level of production by non-OPEC countries; • the impact of armed hostilities, or the threat or perception of armed hostilities, including the conflicts in Ukraine and in Israel; • public health crises, such as the COVID-19 pandemic that began in 2020 and emergence of any new virus strains that result in the return of lockdowns or other government restrictions; • environmental regulation; • import duties and tariffs; • technological advances; • global weather conditions and natural disasters; • currency fluctuations; and • tax policies.
Many factors affect the supply of and demand for energy and, therefore, influence oil and natural gas prices, including: • the level of domestic and worldwide oil and natural gas production and inventories; • the level of drilling activity and the availability of attractive oil and natural gas field prospects, which governmental actions may affect, such as regulatory actions or legislation, or other restrictions on drilling, including those related to environmental concerns (e.g., a temporary moratorium on deepwater drilling in the Gulf of Mexico following a rig accident or oil spill); • the discovery rate of new oil and natural gas reserves and the expected cost of developing new reserves; • the actual cost of finding and producing oil and natural gas; • depletion rates; • domestic and worldwide refinery over capacity or under capacity and utilization rates; • the availability of transportation infrastructure and refining capacity; • increases in the cost of products that the oil and gas industry uses, such as those that we provide, which may result from increases in the cost of raw materials such as steel; • shifts in end-customer preferences toward fuel efficiency and the use of natural gas; • the economic or political attractiveness of alternative fuels, such as coal, hydrocarbon, battery power, wind, solar energy and biomass-based fuels; • increases in oil and natural gas prices or historically high oil and natural gas prices, which could lower demand for oil and natural gas products; • worldwide economic activity including growth in non-Organization for Economic Co-operation and Development countries, including China and India; • increased interest rates and the cost of capital; • national government policies, including government policies that could nationalize or expropriate oil and natural gas, E&P, refining or transportation assets; • the ability of OPEC and non-OPEC countries to set and maintain production levels and prices for oil; • the level of production by non-OPEC countries; • the impact of armed hostilities, or the threat or perception of armed hostilities; • public health crises, such as the emergence of any new virus strains that result in the return of lockdowns or other government restrictions; • environmental regulation; • import duties and tariffs; • technological advances; • global weather conditions and natural disasters; • currency fluctuations; and • tax policies.
However, these provisions apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that our Board of Directors determines is not in the best interests of our company and our stockholders. 22 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
However, these provisions apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that our Board of Directors determines is not in the best interests of our company and our stockholders. 21 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
ITEM 1A. RI SK FACTORS You should carefully consider each of the following risks in addition to all other information contained or incorporated herein. These risks relate principally to our business and the industry in which we operate or to the securities markets generally and ownership of our common stock.
ITEM 1A. RISK FACTORS You should carefully consider each of the following risks in addition to all other information contained or incorporated herein. These risks relate principally to our business and the industry in which we operate or to the securities markets generally and ownership of our common stock.
As of December 31, 2023, we had $139 million of goodwill recorded on our balance sheet. Under generally accepted accounting principles in the U.S., goodwill is not amortized, but must be reviewed for possible impairment annually, or more often in certain circumstances where events indicate that the asset values are not recoverable.
As of December 31, 2024, we had $230 million of goodwill recorded on our balance sheet. Under generally accepted accounting principles in the U.S., goodwill is not amortized, but must be reviewed for possible impairment annually, or more often in certain circumstances where events indicate that the asset values are not recoverable.
Even when acquisitions are completed, integration of acquired entities can involve significant difficulties, such as: • failure to achieve cost savings or other financial or operating objectives with respect to an acquisition; • complications and issues resulting from the integration/conversion of ERP systems; • strain on the operational and managerial controls and procedures of our business, and the need to modify systems or to add management resources; • difficulties in the integration and retention of customers or personnel and the integration and effective deployment of operations or technologies; • amortization of acquired assets, which would reduce future reported earnings; • possible adverse short-term effects on our cash flows or operating results; • diversion of management’s attention from the ongoing operations of our business; • integrating personnel with different organizational cultures; • coordinating sales and marketing functions; • failure to obtain and retain key personnel of an acquired business; and • assumption of known or unknown material liabilities or regulatory non-compliance issues.
In addition, any future acquisitions may entail significant transaction costs and risks associated with entry into new markets. 13 Even when acquisitions are completed, integration of acquired entities can involve significant difficulties, such as: • failure to achieve cost savings or other financial or operating objectives with respect to an acquisition; • complications and issues resulting from the integration/conversion of ERP systems; • strain on the operational and managerial controls and procedures of our business, and the need to modify systems or to add management resources; • difficulties in the integration and retention of customers or personnel and the integration and effective deployment of operations or technologies; • amortization of acquired assets, which would reduce future reported earnings; • possible adverse short-term effects on our cash flows or operating results; • diversion of management’s attention from the ongoing operations of our business; • integrating personnel with different organizational cultures; • coordinating sales and marketing functions; • failure to obtain and retain key personnel of an acquired business; and • assumption of known or unknown material liabilities or regulatory non-compliance issues.
In particular, we may be held liable for the actions that our local, strategic or joint venture partners take inside or outside of the United States, even though our partners may not be subject to these laws.
In particular, we may be held liable for the actions that our local, strategic or joint venture partners take inside or outside of the U.S., even though our partners may not be subject to these laws.
Also, decreases in the market prices of products that we sell could cause customers to demand lower sales prices from us. These price reductions could reduce our margins and profitability on sales with respect to the lower-priced products. Reductions in our margins and profitability on sales could have a material adverse effect on us.
Also, decreases in the market prices of products that we sell could cause customers to demand lower sales prices from us. These price reductions could reduce our margins and profitability on sales with respect to the lower-priced products.
In addition, certain foreign jurisdictions and government-owned petroleum companies located in some of the countries in which we operate have adopted policies or regulations which may give local nationals in these countries competitive advantages.
In addition, certain foreign jurisdictions and government-owned petroleum companies located in some of the countries in which we operate have adopted policies or regulations which may give local nationals in these countries competitive advantages. Competition in our industry could lead to lower revenues and earnings.
The price for West Texas Intermediate crude was $70.62 per barrel at January 2, 2024, $76.87 per barrel on January 3, 2023 and $75.99 per barrel on January 4, 2022.
The price for West Texas Intermediate crude was $73.79 per barrel at January 2, 2025, $70.62 per barrel on January 2, 2024 and $76.87 per barrel on January 3, 2023.
In addition, various state and municipal governments, universities and other investors maintain prohibitions or restrictions on investments in companies that do business with sanctioned countries, persons and entities, which could adversely affect the market for our common stock and other securities. 20 Compliance with and changes in laws and regulations in the countries in which we operate could have a significant financial impact and effect how and where we conduct our operations.
In addition, various state and municipal governments, universities and other investors maintain prohibitions or restrictions on investments in companies that do business with sanctioned countries, persons and entities, which could adversely affect the market for our common stock and other securities.
Historically, users of pipes, valves and fittings and related products have purchased certain amounts of these products through distributors and not directly from manufacturers. If customers were to purchase the products that we sell directly from manufacturers, or if manufacturers sought to increase their efforts to sell directly to end-users, we could experience a significant decrease in profitability.
If customers were to purchase the products that we sell directly from manufacturers, or if manufacturers sought to increase their efforts to sell directly to end-users, we could experience a significant decrease in profitability.
When steel prices are lower, the prices that we charge customers for products may decline, which affects our product margin and cash flow.
As a result, the price and supply of steel can affect our business and, in particular, our pipe product category. When steel prices are lower, the prices that we charge customers for products may decline, which affects our product margin and cash flow.
Oil and natural gas prices have been and are expected to remain volatile. U.S. rig count decreased from 772 rigs on January 6, 2023 to 622 rigs on December 29, 2023. U.S. rig count averaged 689 rigs in 2023. U.S. rig count at January 19, 2024 was 620 rigs.
Oil and natural gas prices have been and are expected to remain volatile. U.S. rig count decreased from 621 rigs on January 5, 2024 to 589 rigs on December 27, 2024. U.S. rig count averaged 599 rigs in 2024. U.S. rig count at January 24, 2025 was 576 rigs.
Competition in our industry could lead to lower revenues and earnings. 12 Demand for our sales of the products we distribute could decrease if the manufacturers of those products were to instead sell a substantial amount of goods directly to our customers in the sectors we serve.
Demand for our sales of the products we distribute could decrease if the manufacturers of those products were to instead sell a substantial amount of goods directly to our customers in the sectors we serve. Historically, users of pipes, valves and fittings and related products have purchased certain amounts of these products through distributors and not directly from manufacturers.
A substantial decrease in the price of steel could significantly lower our product margin or cash flow. We distribute many products manufactured from steel. As a result, the price and supply of steel can affect our business and, in particular, our pipe product category.
Reductions in our margins and profitability on sales could have a material adverse effect on us. 16 A substantial decrease in the price of steel could significantly lower our product margin or cash flow. We distribute many products manufactured from steel.
These reviews could result in an earnings charge for impairment, which would reduce our net income even though there would be no impact on our underlying cash flow.
These reviews could result in an earnings charge for impairment, which would reduce our net income even though there would be no impact on our underlying cash flow. Risks Relating to Our Supply Chain and International Trade Policies We may experience unexpected supply shortages. We distribute products from a wide variety of manufacturers and suppliers.
Increasing volatility in financial markets may cause these factors to change with a greater degree of frequency or increase in magnitude.
Increasing volatility in financial markets may cause these factors to change with a greater degree of frequency or increase in magnitude. In addition, worldwide economic conditions could have an adverse effect on our business, prospects, operating results, financial condition and cash flows.
We have security measures and controls to protect personal and business information and continue to make investments to secure access to our information technology network.
Privacy concerns relating to our personal and business information being potentially breached could damage our reputation and deter current and potential users or customers from using our products and services. We have security measures and controls to protect personal and business information and continue to make investments to secure access to our information technology network.
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In addition, worldwide economic conditions could have an adverse effect on our business, prospects, operating results, financial condition and cash flows. 1 We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to, among other things, ongoing military conflicts, such as those in Ukraine and in Israel.
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Compliance with and changes in laws and regulations in the countries in which we operate could have a significant financial impact and effect how and where we conduct our operations.
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In addition, any future acquisitions may entail significant transaction costs and risks associated with entry into new markets.
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Our systems are subject to repeated attempts by third parties to access information or to disrupt our systems.
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Over the last four years, the COVID-19 pandemic has adversely affected our business, and the emergence of any new virus strains that result in the return of broad-based lockdowns, vaccine mandates or other government interventions, could further adversely affect our operations and financial condition.
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Over the last four years, the COVID-19 pandemic has adversely affected the global economy, disrupted global supply chains and created significant volatility in the financial markets.
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The emergence of any new virus strains that result in the return of broad-based lockdowns, vaccine mandates or other government interventions or restrictions, could further adversely affect the global economy, global supply chains, financial markets and our business.
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The extent to which the COVID-19 pandemic adversely affects our business, results of operations, and financial condition will depend on future developments, which are highly uncertain and cannot be predicted. Risks Relating to Our Supply Chain and International Trade Policies We may experience unexpected supply shortages. We distribute products from a wide variety of manufacturers and suppliers.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThis disclosure provides stakeholders with a comprehensive overview of the organization's cyber risk management, strategy and governance practices, demonstrating a commitment towards proactive cybersecurity measures and compliance. 23 No unauthorized access to customer, vendor, supplier, joint venture, employee or our data occurred as a result of cybersecurity incidents against us that has had a material adverse effect on our business, operations, or consolidated financial condition.
Biggest changeNo unauthorized access to customer, vendor, supplier, joint venture, employee or our data occurred as a result of cybersecurity incidents against us that has had a material adverse effect on our business, operations, or consolidated financial condition. See additional information about our cybersecurity risks under Risks Relating to Our Business in Item1(a) Risk Factors. 22
ITEM 1C. CYBERSECURITY Cyber Risk Management The Company recognizes the increasing significance of cybersecurity threats in today's digital landscape and has implemented a cyber risk management program to identify, assess, manage, mitigate and respond to cybersecurity threats. This program is integrated within the Company's enterprise risk management program.
ITEM 1C. CYBERSECURITY Cyber Risk Management and Strategy The Company recognizes the increasing significance of cybersecurity threats in today's digital landscape and has implemented a cyber risk management program to identify, assess, manage, mitigate and respond to cybersecurity threats. This program is integrated within the Company's enterprise risk management program.
Governance Our governance structure is designed to ensure effective oversight and management of cybersecurity risks: • The Board of Directors is actively engaged in overseeing cybersecurity matters, receiving regular briefings and ensuring alignment between cybersecurity strategy and overall business strategy. • A dedicated committee oversees cybersecurity governance, assessing policies, practices and risk mitigation strategies and ensuring alignment with industry best practices. • Our executive leadership team actively participates in the development and execution of cybersecurity strategy, reinforcing the importance of cybersecurity at the highest levels of the organization.
Governance Our governance structure is designed to ensure effective oversight and management of cybersecurity risks: • The Board of Directors is actively engaged in overseeing cybersecurity matters, receiving regular briefings and ensuring alignment between cybersecurity strategy and overall business strategy. • A dedicated committee oversees cybersecurity governance, assessing policies, practices and risk mitigation strategies and ensuring alignment with industry best practices. • Our executive leadership team actively participates in the development and execution of cybersecurity strategy, reinforcing the importance of cybersecurity at the highest levels of the organization. • IT and Cybersecurity reports to the Chief Administrative and Information Officer (CAIO) who provides updates to the dedicated committee.
Our cyber risk management program includes: • Regular assessments of cyber risks, taking into account the evolving threat landscape, technological advancements and changes in our business operations. • Proactive identification and mitigation of vulnerabilities in our information systems through regular scanning, testing and patch management. • Implementing and continuously monitoring security controls, including firewalls, intrusion detection systems, encryption and access controls, to safeguard against unauthorized access and data breaches.
Our approach is designed to safeguard sensitive information, protect critical assets and maintain the integrity of our operations. • Regular assessments of cyber risks, taking into account the evolving threat landscape, technological advancements and changes in our business operations. • Proactive identification and mitigation of vulnerabilities in our information systems through regular scanning, testing and patch management. • Implementing and continuously monitoring security controls, including firewalls, intrusion detection systems, encryption and access controls, to safeguard against unauthorized access and data breaches.
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Our approach is designed to safeguard sensitive information, protect critical assets and maintain the integrity of our operations.
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As part of our cyber incident response process, we also engage third-party experts as needed, such as external legal advisors and cybersecurity forensic firms.
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Cybersecurity Strategy Our cybersecurity strategy is aligned with our overall business objectives and includes the following key elements: • Implementation of multiple layers of security controls, including firewalls, intrusion detection and prevention systems, endpoint protection and encryption, to safeguard our information assets. • Ongoing education programs for employees to enhance their awareness of cyber risks and promote a culture of cybersecurity throughout the organization.
Added
This disclosure provides stakeholders with a comprehensive overview of the organization's cyber risk management, strategy and governance practices, demonstrating a commitment towards proactive cybersecurity measures and compliance.
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See additional information about our cybersecurity risks under Risks Relating to Our Business in Item1(a) Risk Factors. 24

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. P ROPERTIES As of December 31, 2023, our three reporting segments, the United States, Canada and International, had approximately 105 locations, 40 locations and 20 locations, respectively. International countries include: Australia, Azerbaijan, Brazil, Colombia, Egypt, England, India, Indonesia, Kazakhstan, Kuwait, Netherlands, Norway, Oman, Scotland, Singapore and UAE.
Biggest changeITEM 2. P ROPERTIES As of December 31, 2024, our three reporting segments, the United States, Canada and International, had approximately 110 locations, 40 locations and 15 locations, respectively. International countries include: Australia, England, Kuwait, the Netherlands, Norway, Scotland, Singapore and UAE. Our properties are comprised of offices, supercenters and branches, approximately 85% of which are leased.
Our properties are comprised of offices, distribution centers and branches, approximately 85% of which are leased. One owned facility is pledged as collateral under our senior secured revolving credit facility discussed in Note 11 “Debt” of the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Form 10-K); none of the other owned facilities are subject to mortgages.
One owned facility is pledged as collateral under our senior secured revolving credit facility discussed in Note 11 “Debt” of the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Form 10-K); none of our owned facilities are subject to mortgages.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSee Note 14 “Commitments and Contingencies” of the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Form 10-K) for additional information. ITEM 4. MINE SAF ETY DISCLOSURES Not Applicable. 25 PART II
Biggest changeSee Note 14 “Commitments and Contingencies” of the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Form 10-K) for additional information. ITEM 4. MINE SAF ETY DISCLOSURES Not Applicable. 23 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table presents a summary of share repurchases made during the three months ended December 31, 2023: Period Total number of shares purchased Average price paid per share (1) Total number of shares purchased as part of publicly announced program (2) Approximate dollar value of shares that may yet be purchased under the program (1)(2) (in millions) October 1 - 31, 2023 — $ — — $ 24 November 1 - 30, 2023 61,254 $ 10.27 61,254 $ 24 December 1 - 31, 2023 30,268 $ 10.66 30,268 $ 23 Total 91,522 $ 10.40 91,522 (1) Excludes 1% excise tax on share repurchases.
Biggest changeThe following table presents a summary of share repurchases made during the three months ended December 31, 2024: Period Total number of shares purchased Average price paid per share (1) Total number of shares purchased as part of publicly announced program (2) Approximate dollar value of shares that may yet be purchased under the program (1)(2) (in millions) October 1 - 31, 2024 181,022 $ 12.34 181,022 $ 4 November 1 - 30, 2024 263,207 $ 14.72 263,207 $ — December 1 - 31, 2024 — $ — — $ — Total 444,229 $ 13.75 444,229 (1) Excludes 1% excise tax on share repurchases.
(2) On August 3, 2022, the Company’s Board of Directors approved a share repurchase program, under which the Company is authorized to purchase up to $80 million of its outstanding common stock through December 31, 2024. 26 Performance Graph The graph below compares the cumulative five year total return provided shareholders on DNOW Inc.'s common stock relative to the cumulative total returns of the S&P Midcap 400 index and the PHLX Oil Service Sector index.
(2) On August 3, 2022, the Company’s Board of Directors approved a share repurchase program, under which the Company is authorized to purchase up to $80 million of its outstanding common stock through December 31, 2024. 24 Performance Graph The graph below compares the cumulative five year total return provided shareholders on DNOW Inc.'s common stock relative to the cumulative total returns of the S&P Midcap 400 index and the PHLX Oil Service Sector index.
This information shall not be deemed to be ‘‘soliciting material’’ or to be ‘‘filed’’ with the Commission or subject to Regulation 14A (17 CFR 240.14a-1-240.14a-104), other than as provided in Item 201(e) of Regulation S-K, or to the liabilities of section 18 of the Exchange Act (15 U.S.C. 78r). ITEM 6. RESERVED Not applicable. 27
This information shall not be deemed to be ‘‘soliciting material’’ or to be ‘‘filed’’ with the Commission or subject to Regulation 14A (17 CFR 240.14a-1-240.14a-104), other than as provided in Item 201(e) of Regulation S-K, or to the liabilities of section 18 of the Exchange Act (15 U.S.C. 78r). ITEM 6. RESERVED Not applicable. 25
Our Board of Directors has not declared any dividends during 2021, 2022 or 2023 and currently has no intention to declare dividends. As of January 31, 2024, there were 1,732 holders of record of our common stock.
Our Board of Directors has not declared any dividends during 2022, 2023 or 2024 and currently has no intention to declare dividends. As of January 31, 2025, there were 1,663 holders of record of our common stock.
An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock and in each index on December 31, 2018 and its relative performance is tracked through December 31, 2023. *$100 invested on 12/31/18 in stock or index, including reinvestment of dividends. Fiscal year ending December 31.
An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock and in each index on December 31, 2019 and its relative performance is tracked through December 31, 2024. *$100 invested on 12/31/19 in stock or index, including reinvestment of dividends. Fiscal year ending December 31.
Copyright© 2024 Standard & Poor's, a division of S&P Global.
Copyright© 2025 Standard & Poor's, a division of S&P Global.
All rights reserved. 12/18 12/19 12/20 12/21 12/22 12/23 DNOW Inc. $ 100 $ 97 $ 62 $ 73 $ 109 $ 97 S&P Midcap 400 $ 100 $ 126 $ 143 $ 179 $ 156 $ 181 PHLX Oil Service Sector $ 100 $ 99 $ 58 $ 70 $ 112 $ 114 The stock price performance included in this graph is not necessarily indicative of future stock price performance.
All rights reserved. 12/19 12/20 12/21 12/22 12/23 12/24 DNOW Inc. $ 100 $ 64 $ 76 $ 113 $ 101 $ 116 S&P Midcap 400 $ 100 $ 114 $ 142 $ 123 $ 144 $ 164 PHLX Oil Service Sector $ 100 $ 58 $ 70 $ 113 $ 115 $ 102 The stock price performance included in this graph is not necessarily indicative of future stock price performance.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

79 edited+16 added−13 removed42 unchanged
Biggest changeIn Canada and other foreign jurisdictions, a valuation allowance of approximately $8 million was maintained against deferred tax assets that the Company continues to believe are not more-likely-than-not to be realized. The Company will continue to monitor the need for a valuation allowance against its deferred tax 37 assets and record adjustments as appropriate in future periods.
Biggest changeThe Company will continue to monitor the need for a valuation allowance against its deferred tax assets and record adjustments as appropriate in future periods. See Note 10 “Income Taxes” of the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Form 10-K) for additional information.
The ASU requires entities to disclose more detailed information in their effective tax rate reconciliation and their cash taxes paid both in the U.S. and foreign jurisdictions. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued.
The ASU requires entities to disclose more detailed information in their effective tax rate reconciliation and their cash taxes paid both in the U.S., state and foreign jurisdictions. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued.
Our global product offering includes consumable MRO supplies, pipe, manual and automated valves, fittings, flanges, gaskets, fasteners, electrical, instrumentation, artificial lift, pumping solutions, and modular process, production, measurement and control equipment. We also offer sourcing, procurement, warehouse and inventory management solutions as part of our supply chain and materials management offering.
Our global product offering includes pipe, manual and automated valves, fittings, flanges, gaskets, fasteners, electrical, instrumentation, artificial lift, pumping solutions and modular process, production, measurement, automation, control equipment and consumable MRO supplies. We also offer sourcing, procurement, warehouse and inventory management solutions as part of our supply chain and materials management offering.
The Company does not expect the adoption of this standard to have material impact in its consolidated statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), which requires the public companies to expand the income tax disclosures.
The Company does not expect the adoption of this standard to have a material impact in its consolidated statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), which requires public companies to expand the income tax disclosures.
Our product and service offerings are consumed throughout all sectors of the energy industry – from upstream drilling and completion, E&P, midstream transmission, gas and crude oil processing infrastructure development to downstream petroleum refining and petrochemicals – as well as in other industries, such as chemical processing, mining, water/wastewater, food and beverage, gas utilities and the evolution of energy transition markets inclusive of greenhouse gas reduction and emissions capture and storage, renewable fuels such as biofuels, RNG, wind, solar, production of hydrogen as a fuel to power equipment and select industrial markets.
Our product and service offerings are consumed throughout the energy industry – from upstream drilling and completion, E&P, midstream transmission, gas and crude oil processing infrastructure development to downstream petroleum refining and petrochemicals – as well as in other industries, such as chemical processing, mining, water/wastewater, food and beverage, gas utilities and the evolution of energy transition markets inclusive of greenhouse gas reduction and emissions capture and storage, renewable fuels such as biofuels, RNG, wind, solar, production of hydrogen as a fuel to power equipment and select industrial markets.
( www.bakerhughes.com ); West Texas Intermediate Crude and Natural Gas Prices: Department of Energy, Energy Information Administration ( www.eia.doe.gov ); Hot-Rolled Coil Prices: SteelBenchmarker™ Hot Roll Coil USA ( www.steelbenchmarker.com ); U.S. Wells Completed: Department of Energy, Energy Information Administration (www.eia.doe.gov) (As revised).
( www.bakerhughes.com ); West Texas Intermediate Crude and Natural Gas Prices: Department of Energy, Energy Information Administration ( www.eia.gov ); Hot-Rolled Coil Prices: SteelBenchmarker™ Hot Roll Coil USA ( www.steelbenchmarker.com ); U.S. Wells Completed: Department of Energy, Energy Information Administration (www.eia.gov) (As revised).
See “Non-GAAP Financial Measures and Reconciliations” 28 in Results of Operations for an explanation of our use of non-GAAP financial measures and reconciliations to the corresponding measures calculated in accordance with GAAP.
See “Non-GAAP Financial Measures and Reconciliations” in Results of Operations for an explanation of our use of non-GAAP financial measures and reconciliations to the corresponding measures calculated in accordance with GAAP.
Our Canadian revenue is favorably impacted as the U.S. dollar weakens relative to the Canadian dollar, and unfavorably impacted as the U.S. dollar strengthens relative to the Canadian dollar. Our Canadian segment revenue was unfavorably impacted by approximately $11 million due to changes in foreign currency exchange rates over the prior year.
Our Canadian revenue is favorably impacted as the U.S. dollar weakens relative to the Canadian dollar, and unfavorably impacted as the U.S. dollar strengthens relative to the Canadian dollar. Our Canadian segment revenue was unfavorably impacted by approximately $4 million due to changes in foreign currency exchange rates over the prior year.
As of December 31, 2023, we were in compliance with all covenants. We continuously monitor compliance with debt covenants. A default, if not waived or amended, would prevent us from taking certain actions, such as incurring additional debt.
As of December 31, 2024, we were in compliance with all covenants. We continuously monitor compliance with debt covenants. A default, if not waived or amended, would prevent us from taking certain actions, such as incurring additional debt.
Consolidated Results Years Ended December 31, 2022 and December 31, 2021 For discussion related to the results of operations and changes in financial condition for the year ended December 31, 2022 compared to the year ended December 31, 2021 refer to Part II, Item 7.
Consolidated Results Years Ended December 31, 2023 and December 31, 2022 For discussion related to the results of operations and changes in financial condition for the year ended December 31, 2023 compared to the year ended December 31, 2022 refer to Part II, Item 7.
Through our network of approximately 165 locations and approximately 2,475 employees worldwide, we stock and sell a comprehensive offering of energy products as well as a selection of products for industrial applications.
Through our network of approximately 165 locations and approximately 2,575 employees worldwide, we stock and sell a comprehensive offering of energy products as well as a selection of products for industrial applications.
Judgments in the estimate of AFDA include global economic and business conditions, oil and gas industry and market conditions, customers’ financial conditions and account receivables past due. Results of operations can be affected by adjustments to the allowance due to actual write-offs that differ from estimated amounts.
Judgments in the estimate of allowance for credit losses include global economic and business conditions, oil and gas industry and market conditions, customers’ financial conditions and account receivables past due. Results of operations can be affected by adjustments to the allowance due to actual write-offs that differ from estimated amounts.
General Overview We are a global distributor to the oil and gas and industrial markets with a legacy of over 160 years. We operate primarily under the DNOW brand along with several affiliated brands operating in local or regional markets that are tied to prior acquisitions.
General Overview We are a distributor to the oil and gas, energy transition and industrial markets with a legacy of over 160 years. We operate primarily under the DNOW brand along with several affiliated brands operating in local, regional or international markets that are tied to prior acquisitions.
The decrease was due to lower project related activity as well as an unfavorable foreign exchange rate impact. Our Canadian revenue was approximately 12% of total revenue in 2023, compared to 15% in 2022. We are subject to fluctuations in foreign currency exchange rates relative to the U.S. dollar.
The decrease was due to lower project related activity as well as an unfavorable foreign exchange rate impact. Our Canadian revenue was approximately 11% of total revenue in 2024, compared to 12% in 2023. We are subject to fluctuations in foreign currency exchange rates relative to the U.S. dollar.
Results of Operations Consolidated Results Years Ended December 31, 2023 and December 31, 2022 The results of operations are presented before consideration of the noncontrolling interest.
Results of Operations Consolidated Results Years Ended December 31, 2024 and December 31, 2023 The results of operations are presented before consideration of the noncontrolling interest.
Warehousing, selling and administrative expenses include branch location, distribution center and regional expenses (including costs such as compensation, benefits and rent) as well as depreciation and corporate general selling and administrative expenses. 32 Impairment and other charges Impairment and other charges were nil for the year ended December 31, 2023 compared to $10 million for the year ended December 31, 2022.
Warehousing, selling and administrative expenses include branch location, distribution center and regional expenses (including costs such as compensation, benefits and rent) as well as depreciation and corporate general selling and administrative expenses. Impairment and other charges Impairment and other charges were $6 million for the year ended December 31, 2024 compared to nil for the year ended December 31, 2023.
Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Form 10-K, which was filed with the United States Securities and Exchange Commission on February 16, 2023. 33 Non-GAAP Financial Measures and Reconciliations In an effort to provide investors with additional information regarding our results of operations as determined by GAAP, we disclose non-GAAP financial measures.
Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Form 10-K, which was filed with the United States Securities and Exchange Commission on February 15, 2024. 31 Non-GAAP Financial Measures and Reconciliations In an effort to provide investors with additional information regarding our results of operations as determined by GAAP, we disclose non-GAAP financial measures.
For the year ended December 31, 2022, the Company recognized approximately $10 million of foreign currency translation losses as a result of substantially completing the liquidation of certain foreign subsidiaries in the International segment.
For the year ended December 31, 2024, the Company recognized approximately $6 million of foreign currency translation losses as a result of substantially completing the liquidation of certain foreign subsidiaries in the International segment.
Share Repurchase Program On August 3, 2022, the Company’s Board of Directors approved a share repurchase program, under which the Company is authorized to purchase up to $80 million of its outstanding common stock through December 31, 2024.
Share Repurchase Program On August 3, 2022, the Company’s Board of Directors approved a share repurchase program, under which the Company is authorized to purchase up to $80 million of its outstanding common stock through December 31, 2024. The Company has fully utilized this $80 million repurchase program as of December 31, 2024.
The following table sets forth the reconciliations of EBITDA excluding other costs to the most comparable GAAP financial measures ( in millions ): Year Ended December 31, 2023 2022 2021 GAAP net income attributable to DNOW Inc.
The following table sets forth the reconciliations of EBITDA excluding other costs to the most comparable GAAP financial measures ( in millions ): Year Ended December 31, 2024 As a % of revenue 2023 As a % of revenue 2022 As a % of revenue GAAP net income attributable to DNOW Inc.
We expect capital expenditures for fiscal year 2024 to be approximately $20 million, primarily related to purchases of property, plant and equipment. We will continue to maintain capital discipline and monitor market dynamics, and we may adjust our capital expenditures accordingly.
We expect capital expenditures for fiscal year 2025 to approximate $20 million, primarily related to purchases of property, plant and equipment. We will continue to maintain capital discipline and monitor market dynamics, and we may adjust our capital expenditures accordingly.
The primary non-GAAP financial measure we focus on is earnings before interest, taxes, depreciation and amortization, excluding other costs (“EBITDA excluding other costs”). This financial measure excludes the impact of certain amounts and is not calculated in accordance with GAAP.
The primary non-GAAP financial measure we focus on is earnings before interest, 26 taxes, depreciation and amortization, excluding other costs (“EBITDA excluding other costs”), and EBITDA excluding other costs as a percentage of revenue. This financial measure excludes the impact of certain amounts and is not calculated in accordance with GAAP.
As of December 31, 2023, we had no borrowings against our revolving credit facility and had approximately $493 million in availability (as defined in the Credit Agreement) resulting in the excess availability (as defined in the Credit Agreement) of 99%, subject to certain restrictions. Availability excluding certain cash deposits was approximately $327 million.
As of December 31, 2024, we had no borrowings against our revolving credit facility and had approximately $433 million in availability (as defined in the Credit Agreement) resulting in the excess availability (as defined in the Credit Agreement) of 99%, subject to certain restrictions. Availability excluding certain cash deposits was approximately $300 million.
(1) $ 247 $ 128 $ 5 Net income attributable to noncontrolling interest 1 1 — Interest expense (income), net (4 ) (1 ) — Income tax provision (benefit) (110 ) 10 7 Depreciation and amortization 26 19 23 Other costs: Stock-based compensation 15 11 8 Other (2) 9 7 2 EBITDA excluding other costs $ 184 $ 175 $ 45 EBITDA % excluding other costs (3) 7.9 % 8.2 % 2.8 % (1) We believe that net income (loss) attributable to DNOW Inc. is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to EBITDA excluding other costs.
(1) $ 81 3.4 % $ 247 10.6 % $ 128 6.0 % Net income attributable to noncontrolling interest 1 1 1 Interest expense (income), net (6 ) (4 ) (1 ) Income tax provision (benefit) 32 (110 ) 10 Depreciation and amortization 34 26 19 Other costs: Stock-based compensation 13 15 11 Other (2) 21 9 7 EBITDA excluding other costs $ 176 7.4 % $ 184 7.9 % $ 175 8.2 % (1) We believe that net income (loss) attributable to DNOW Inc. is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to EBITDA excluding other costs.
The industrial distribution end markets include engineering and construction firms that perform capital and maintenance projects for their end-user clients. We also provide supply chain and materials management solutions to the same markets where we sell products.
The energy and industrial distribution end markets we serve are inclusive of engineering and construction firms that perform capital and maintenance projects for their clients. We also provide supply chain and materials management solutions to the same markets where we sell products.
For the year ended December 31, 2023, operating profit was $140 million compared to operating profit of $131 million for the corresponding period of 2022.
For the year ended December 31, 2024, operating profit was $113 million compared to $140 million for the corresponding period of 2023.
For the year ended December 31, 2022, Other included approximately $10 million (included in impairment and other charges) related to the reclassification of accumulated foreign currency translation losses due to the substantial liquidation of certain foreign subsidiaries; as well as, approximately $10 million (included in warehousing, selling and administrative), of which approximately $5 million related to legal fees for litigation matters that were not ordinary or routine to the operations of the business where the Company is seeking damages and approximately $5 million related to separation and transaction-related charges; partially offset by a benefit of approximately $13 million (included in other income) related to the decrease of contingent consideration liability.
For the year ended December 31, 2022, Other included approximately $10 million (included in impairment and other charges) related to the reclassification of accumulated foreign currency translation losses due to the substantial liquidation of certain foreign subsidiaries; as well as, approximately $10 million (included in warehousing, selling and administrative), of which approximately $5 million related to legal fees for litigation matters that were not ordinary or routine to the operations of the business where the Company is seeking damages and approximately $5 million related to separation and transaction-related charges; partially offset by a benefit of approximately $13 million (included in other income) related to the decrease of contingent consideration liability. 32 Liquidity and Capital Resources We assess liquidity in terms of our ability to generate cash to fund operating, investing and financing activities.
The following table summarizes our net cash flows provided by (used in) operating activities, investing activities and financing activities for the periods presented ( in millions ): Year Ended December 31, 2023 2022 2021 Net cash provided by (used in) operating activities $ 188 $ — $ 30 Net cash provided by (used in) investing activities (48 ) (87 ) (96 ) Net cash provided by (used in) financing activities (55 ) (10 ) (6 ) Fiscal Year 2023 Compared to Fiscal Year 2022 Net cash provided by operating activities was $188 million in 2023 compared to nil in 2022.
The following table summarizes our net cash flows provided by (used in) operating activities, investing activities and financing activities for the periods presented ( in millions ): Year Ended December 31, 2024 2023 2022 Net cash provided by (used in) operating activities $ 298 $ 188 $ — Net cash provided by (used in) investing activities (304 ) (48 ) (87 ) Net cash provided by (used in) financing activities (33 ) (55 ) (10 ) Fiscal Year 2024 Compared to Fiscal Year 2023 Net cash provided by operating activities was $298 million in 2024 compared to $188 million in 2023.
Operating profit was $21 million for the year ended December 31, 2023, a decline of $9 million compared to operating profit of $30 million for the year ended December 31, 2022. Operating profit decreased primarily due to the decline in revenue discussed above.
Operating profit was $13 million for the year ended December 31, 2024, a decline of $8 million compared to operating profit of $21 million for the year ended December 31, 2023. Operating profit decreased primarily due to the decline in revenue discussed above.
Other income (expense) Other expense was $2 million for the year ended December 31, 2023 compared to other income of $8 million for the year ended December 31, 2022.
Other income (expense) Other income was $1 million for the year ended December 31, 2024 compared to other expense of $2 million for the year ended December 31, 2023.
The estimated allowance for doubtful accounts ("AFDA") reflects the Company’s immediate recognition of current expected credit losses by incorporating the historical loss experience, as well as current and future market conditions that are reasonably available.
The estimated allowance for credit losses reflects the Company’s immediate recognition of current expected credit losses by incorporating accounts receivable aging, and the related historical loss experience, as adjusted for current and expected future market conditions that are reasonably available.
Cost of products Cost of products was $1,786 million for the year ended December 31, 2023 compared to $1,630 million for the year ended December 31, 2022, an increase of $156 million. The increase was primarily due to the increase in revenue in the period.
Cost of products Cost of products was $1,838 million for the year ended December 31, 2024 compared to $1,786 million for the year ended December 31, 2023, an increase of $52 million. The increase was primarily due to the increase in revenue in the period.
At December 31, 2023 and 2022, allowance for doubtful accounts totaled $26 million and $25 million, or 6.3% and 5.9% of gross accounts receivable, respectively. Inventory Reserves Inventories consist primarily of oilfield and industrial finished goods and work in process. Work in process primarily consists of inventory and labor related to customer specific engineered equipment.
At December 31, 2024 and 2023, allowance for credit losses totaled $15 million and $26 million, or 3.7% and 6.3% of gross accounts receivable, respectively. Inventory Reserves Inventories consist primarily of oilfield and industrial finished goods and work in process. Work in process primarily consists of inventory and labor related to customer specific engineered equipment.
The Company continues to recognize a valuation allowance on certain identified deferred tax assets in the U.S. and non-U.S. jurisdictions where management believes that it is not more-likely-than-not that the Company would be able to realize the benefits of those specific deferred tax assets.
As of December 31, 2024, the Company has recognized a valuation allowance of $21 million on certain identified deferred tax assets in the U.S. and non-U.S. jurisdictions where management believes that it is not more-likely-than-not that the Company would be able to realize the benefits of those specific deferred tax assets.
At December 31, 2023 and 2022, we had cash and cash equivalents of $299 million and $212 million, respectively. As of December 31, 2023, $81 million of our cash and cash equivalents were maintained in the accounts of our various foreign subsidiaries. For the year ended December 31, 2023, we repatriated $24 million from our foreign subsidiaries.
At December 31, 2024 and 2023, we had cash and cash equivalents of $256 million and $299 million, respectively. As of December 31, 2024, $93 million of our cash and cash equivalents were maintained in the accounts of our various foreign subsidiaries. For the year ended December 31, 2024, we repatriated $9 million from our foreign subsidiaries.
ASU 2023-07 is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted and requires modified retrospective transition method. The Company will not early adopt, and is currently assessing the impact of ASU 2023-07 in its consolidated financial statements and its disclosures.
ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company will not early adopt, and is currently assessing the impact of ASU 2024-03 in its consolidated financial statements and its disclosures.
Wells Completed 12,224 11,350 7.7 % 9,720 25.8 % * Averages for the years indicated, except for U.S. Wells Completed. See sources on following page. 29 The following table details the U.S., Canadian, and international rig activity and West Texas Intermediate (“WTI”) oil prices for the past nine quarters ended December 31, 2023: Sources: Rig count: Baker Hughes, Inc.
Wells Completed 11,731 12,847 (8.7 %) 13,102 (10.5 %) * Averages for the years indicated, except for U.S. Wells Completed. See sources on following page. 27 The following table details the U.S., Canadian, and international rig activity and West Texas Intermediate (“WTI”) oil prices for the past nine quarters ended December 31, 2024: Sources: Rig count: Baker Hughes, Inc.
Our international segment revenue was unfavorably impacted by approximately $2 million due to changes in foreign currency exchange rates over the prior year. Operating profit was $15 million for the year ended December 31, 2023, an improvement of $17 million compared to operating loss of $2 million for the year ended December 31, 2022.
Our international segment revenue was favorably impacted by approximately $2 million due to changes in foreign currency exchange rates over the prior year. Operating profit was $5 million for the year ended December 31, 2024, a decline of $10 million compared to operating profit of $15 million for the year ended December 31, 2023.
The primary non-GAAP financial measure we disclose is earnings before interest, taxes, depreciation and amortization, excluding other costs (“EBITDA excluding other costs”). This financial measure excludes the impact of certain amounts and is not calculated in accordance with GAAP. A reconciliation of this non-GAAP financial measure, to its most comparable GAAP financial measure, is included below.
The primary non-GAAP financial measure we disclose is earnings before interest, taxes, depreciation and amortization, excluding other costs (“EBITDA excluding other costs”) and EBITDA excluding other costs as of percentage of revenue. This financial measure excludes the impact of certain amounts and is not calculated in accordance with GAAP.
Recently Issued Accounting Standards In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280), which requires enhanced segment disclosures primarily focusing on significant segment expense disclosures for both interim and annual periods.
Recently Adopted Accounting Standards In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280), which requires enhanced segment disclosures primarily focusing on significant segment expense disclosures for both interim and annual periods. On January 1, 2024, the Company adopted this standard using modified retrospective transition method.
Warehousing, selling and administrative expenses Warehousing, selling and administrative expenses were $395 million for the year ended December 31, 2023 compared to $365 million for the year ended December 31, 2022, an increase of $30 million. The increase was primarily driven by an increase in employee-related expenses supporting the revenue growth.
Warehousing, selling and administrative expenses Warehousing, selling and administrative expenses were $416 million for the year ended December 31, 2024 compared to $395 million for the year ended December 31, 2023, an increase of $21 million. The increase was primarily driven by an increase in expenses related to acquisitions completed in 2024.
Products sold through our locations support greenfield expansion upstream capital projects, midstream infrastructure and transmission and MRO consumables used in day-to-day production. We provide downstream energy and industrial products for petroleum refining, chemical processing, LNG terminals, power generation utilities and customer on-site locations. Our supplier network consists of thousands of vendors in approximately 40 countries.
Products sold through our locations support brownfield and greenfield expansion upstream capital projects, midstream infrastructure and transmission and MRO consumables used in day-to-day production. We provide downstream energy and industrial products for petroleum refining, chemical processing, LNG terminals, power generation, gas utilities serviced by a combination of customer on-site locations and off-site service locations in combination with our digital offerings.
The Company will not early adopt, and is currently assessing the impact of ASU 2023-09 in its consolidated financial statements and in its disclosures. 38
The Company will not early adopt, and is currently assessing the impact of ASU 2023-09 in its consolidated financial statements and in its disclosures. The Company does not expect the adoption of this standard to have a material impact in its consolidated statements.
Provision (benefit) for income taxes The effective tax rate for the years ended December 31, 2023, and December 31, 2022 was (79.7%) and 7.2%, respectively. In general, the effective tax rate differs from the U.S. statutory rate due to recurring items, such as differing tax rates on income earned in foreign jurisdictions, nondeductible expenses and state income taxes.
In general, the effective tax rate differs from the U.S. statutory rate due to recurring items, such as differing tax rates on income earned in foreign jurisdictions, nondeductible expenses and state income taxes.
Cash used primarily related to the Company's payment of approximately $50 million for share repurchases compared to $7 million in 2022. 35 Effect of the Change in Exchange Rates The effect of the change in exchange rates on cash flows was an increase of $2 million and a decrease of $4 million for the years ended December 31, 2023 and 2022, respectively.
Cash used primarily related to the Company's payment of approximately $23 million for share repurchases in 2024 compared to $50 million in 2023. 33 Effect of the Change in Exchange Rates For the year ended December 31, 2024, the effect of the change in exchange rates on cash flows was $4 million unfavorable compared to $2 million favorable for the years ended December 31, 2023.
The excess of the purchase price over the fair value of the acquired assets and liabilities, if any, is recorded as goodwill. The Company uses all available information to estimate fair values including quoted market prices, the carrying value of acquired assets, and widely accepted valuation techniques such as discounted cash flows.
The Company uses all available information to estimate fair values including quoted market prices, the carrying value of acquired assets, and widely accepted valuation techniques such as discounted cash flows, multi-period excess earnings and relief from royalty.
The worldwide average rig count increased 3.8% (from 1,748 rigs to 1,814 rigs) and the U.S. declined 4.4% (from 721 rigs to 689 rigs) in 2023 compared to 2022.
The worldwide average rig count declined 4.4% (from 1,814 rigs to 1,735 rigs) and the U.S. declined 13.1% (from 689 rigs to 599 rigs) in 2024 compared to 2023.
Key industry indicators for the past three years include the following: % % 2023 v 2023 v 2023* 2022* 2022 2021* 2021 Active Drilling Rigs: U.S. 689 721 (4.4 %) 475 45.1 % Canada 177 176 0.6 % 131 35.1 % International 948 851 11.4 % 755 25.6 % Worldwide 1,814 1,748 3.8 % 1,361 33.3 % West Texas Intermediate Crude Prices (per barrel) $ 77.64 $ 94.79 (18.1 %) $ 67.99 14.2 % Natural Gas Prices ($/MMBtu) $ 2.54 $ 6.42 (60.4 %) $ 3.91 (35.0 %) Hot-Rolled Coil Prices (steel) ($/short ton) $ 887.47 $ 1,097.24 (19.1 %) $ 1,561.23 (43.2 %) U.S.
Key industry indicators for the past three years include the following: % % 2024 v 2024 v 2024* 2023* 2023 2022* 2022 Active Drilling Rigs: U.S. 599 689 (13.1 %) 721 (16.9 %) Canada 188 177 6.2 % 176 6.8 % International 948 948 0.0 % 851 11.4 % Worldwide 1,735 1,814 (4.4 %) 1,748 (0.7 %) West Texas Intermediate Crude Prices (per barrel) $ 76.55 $ 77.64 (1.4 %) $ 94.79 (19.2 %) Natural Gas Prices ($/MMBtu) $ 2.19 $ 2.54 (13.8 %) $ 6.42 (65.9 %) Hot-Rolled Coil Prices (steel) ($/short ton) $ 781.00 $ 887.47 (12.0 %) $ 1,097.24 (28.8 %) U.S.
Operating profit improved in 2023 primarily due to the increase in revenue discussed above, partially offset by higher employee-related expenses supporting the revenue growth. Canada Revenue was $282 million for the year ended December 31, 2023, a decline of $33 million or 10.5% compared to the year ended December 31, 2022.
Operating profit decreased primarily due to an increase in expenses related to acquisitions completed in 2024, partially offset by the increase in revenue discussed above. Canada Revenue was $253 million for the year ended December 31, 2024, a decline of $29 million or 10.3% compared to the year ended December 31, 2023.
Wells Completed for January 2024 was 863, down 15.3% on an annualized basis compared to 2023. 30 Executive Summary For the year ended December 31, 2023, the Company generated net income of $247 million, or $2.24 per fully diluted share on $2,321 million in revenue.
Wells Completed for January 2025 was 927, down 5.2% on an annualized basis compared to 2024. 28 Executive Summary For the year ended December 31, 2024, the Company generated net income attributable to DNOW Inc. of $81 million, or $0.74 per fully diluted share on $2,373 million in revenue.
These receivables are generally trade receivables due in one year or less or expected to be billed and collected in one year or less. The Company measures the allowance for credit losses on trade receivables based on an evaluation of accounts receivable aging, and where applicable, specific reserves on an individual customer basis.
The Company measures the allowance for credit losses on trade receivables based on an evaluation of accounts receivable aging, and where applicable, specific reserves on an individual customer basis.
Changes in tax laws, regulations and treaties, foreign currency exchange restrictions or the Company’s level of operations or profitability in each jurisdiction could impact the tax liability in any given year.
The Company’s annual tax provision is based on taxable income, statutory rates, and the interpretation of the tax laws in the various jurisdictions in which the Company operates. Changes in tax laws, regulations and treaties, foreign currency exchange restrictions or the Company’s level of operations or profitability in each jurisdiction could impact the tax liability in any given year.
The Company reviews these liabilities quarterly and to the extent audits or other events result in an adjustment to the liability accrued for a prior year, the effect will be recognized in the period of the event.
The Company reviews these liabilities quarterly and to the extent audits or other events result in an adjustment to the liability accrued for a prior year, the effect will be recognized in the period of the event. 36 As of December 31, 2024, the Company has an immaterial amount of undistributed foreign earnings that may be subject to taxation upon a future distribution.
The average price of WTI crude declined 18.1% (from $94.79 per barrel to $77.64 per barrel), and natural gas prices declined 60.4% (from $6.42 per MMBtu to $2.54 per MMBtu) in 2023 compared to 2022. The average price of Hot-Rolled Coil declined 19.1% (from $1,097.24 per short ton to $887.47 per short ton) in 2023 compared to 2022.
The average price of WTI crude declined 1.4% (from $77.64 per barrel to $76.55 per barrel), and natural gas prices declined 13.8% (from $2.54 per MMBtu to $2.19 per MMBtu) in 2024 compared to 2023. The average price of Hot-Rolled Coil declined 12.0% (from $887.47 per short ton to $781.00 per short ton) in 2024 compared to 2023. U.S.
From our operations in 18 countries, we sell to customers operating in approximately 80 countries. The supplies and equipment stocked by each of our branches are customized to meet varied and changing local customer demands. The breadth and scale of our offering enhances our value proposition to our customers, suppliers and shareholders.
Our supplier network consists of thousands of vendors in approximately 30 countries. From our operations, we sell to customers operating in approximately 80 countries. The supplies and equipment stocked by each of our locations are customized to meet varied and changing local customer demands.
See Note 10 “Income Taxes” of the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Form 10-K) for additional information. The Company records unrecognized tax benefits as liabilities in accordance with ASC 740 and adjusts these liabilities when judgment changes as a result of the evaluation of new information not previously available in jurisdictions of operation.
The Company records unrecognized tax benefits as liabilities in accordance with ASC 740 and adjusts these liabilities when judgment changes as a result of the evaluation of new information not previously available in jurisdictions of operation.
A summary of the Company’s revenue and operating profit (loss) by segment in 2023 and 2022 follows ( in millions ): Year Ended December 31, Variance 2023 2022 $ Revenue: United States $ 1,749 $ 1,591 $ 158 Canada 282 315 (33 ) International 290 230 60 Total revenue $ 2,321 $ 2,136 $ 185 Operating profit (loss): United States $ 104 $ 103 $ 1 Canada 21 30 (9 ) International 15 (2 ) 17 Total operating profit (loss) $ 140 $ 131 $ 9 31 United States Revenue was $1,749 million for the year ended December 31, 2023, an increase of $158 million or 9.9% compared to the year ended December 31, 2022.
A summary of the Company’s revenue and operating profit by segment in 2024 and 2023 follows ( in millions ): Year Ended December 31, Variance 2024 2023 $ Revenue: United States $ 1,880 $ 1,749 $ 131 Canada 253 282 (29 ) International 240 290 (50 ) Total revenue $ 2,373 $ 2,321 $ 52 Operating profit: United States $ 95 $ 104 $ (9 ) Canada 13 21 (8 ) International 5 15 (10 ) Total operating profit $ 113 $ 140 $ (27 ) United States Revenue was $1,880 million for the year ended December 31, 2024, an increase of $131 million or 7.5% compared to the year ended December 31, 2023.
Net income increased for the year ended December 31, 2023, by $119 million when compared to the corresponding period of 2022. Revenue increased for the year ended December 31, 2023, by $185 million, or 8.7%, when compared to the corresponding period of 2022.
Net income attributable to DNOW Inc. declined for the year ended December 31, 2024, by $166 million when compared to the corresponding period of 2023. Revenue increased for the year ended December 31, 2024, by $52 million, or 2.2%, when compared to the corresponding period of 2023.
As of December 31, 2023, the Company has an immaterial amount of undistributed foreign earnings that may be subject to taxation upon a future distribution. The Company has not recorded deferred income taxes on undistributed foreign earnings that it considers to be indefinitely reinvested. The Company makes a determination each period whether to indefinitely reinvest these earnings.
The Company has not recorded deferred income taxes on undistributed foreign earnings that it considers to be indefinitely reinvested. The Company makes a determination each period whether to indefinitely reinvest these earnings. If, as a result of these reassessments, the Company distributes these earnings in the future, additional tax liabilities may result, offset by any available foreign tax credits.
The price for Hot-Rolled Coil was $1,036.00 per short ton at January 22, 2024, up 16.7% from the 2023 average. As released on February 12, 2024, U.S.
The price for natural gas was $3.84 per MMBtu at January 24, 2025, up 75.3% from the 2024 average. The price for Hot-Rolled Coil was $710.00 per short ton at January 27, 2025, down 9.1% from the 2024 average. As released on February 11, 2025, U.S.
We employ advanced information technologies, including a common ERP platform across most of our business, to provide complete procurement, warehouse and inventory management and logistics coordination to our customers around the globe. Having a common ERP platform allows immediate visibility into our inventory assets, operations and financials worldwide, enhancing decision making and efficiency.
The breadth, scale and availability of our product offering enhances our value proposition to our customers, suppliers and shareholders. We employ advanced information technologies, including a common ERP platform across most of our business, to provide complete procurement, warehouse and inventory management and logistics coordination to our customers around the globe.
The increase in the period was driven by an increase in project related activity and incremental revenue from acquisitions completed in 2022 and 2023. Operating profit was $104 million for the year ended December 31, 2023, an improvement of $1 million compared to operating profit of $103 million for the year ended December 31, 2022.
The increase in the period was primarily driven by incremental revenue from acquisitions completed in 2024 partially offset by a decline in U.S. rigs and completions. 29 Operating profit was $95 million for the year ended December 31, 2024, a decline of $9 million compared to operating profit of $104 million for the year ended December 31, 2023.
Critical Accounting Policies and Estimates In preparing the financial statements, the Company makes assumptions, estimates and judgments that affect the amounts reported. The Company periodically evaluates its estimates and judgments that are most critical in nature, which are related to allowance for doubtful accounts, inventory reserves, purchase price allocation of acquisitions and income taxes.
The Company periodically evaluates its estimates and judgments that are most critical in nature, which are related to allowance for credit losses, inventory reserves, goodwill, purchase price allocation of acquisitions and income taxes. Its estimates are based on historical experience and on its future expectations that the Company believes are reasonable.
We use EBITDA excluding other costs internally to evaluate and manage the Company’s operations because we believe it provides useful supplemental information regarding the Company’s ongoing operating performance. We have chosen to provide this information to investors to enable them to perform more meaningful comparisons of operating results.
A reconciliation of this non-GAAP financial measure, to its most comparable GAAP financial measure, is included below. We use EBITDA excluding other costs internally to evaluate and manage the Company’s operations because we believe it provides useful supplemental information regarding the Company’s ongoing operating performance.
Its estimates are based on historical experience and on its future expectations that the Company believes are reasonable. The combination of these factors forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
The combination of these factors forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results are likely to differ from our current estimates and those differences may be material.
Cash provided was primarily driven by $248 million of net income, less $51 million of reconciling adjustments, primarily depreciation and amortization, stock-based compensation and deferred income taxes. Operating cash flow activities increased in 2023 primarily driven by approximately $170 million working capital improvement attributable largely to improved receivable collections and lower levels in inventory compared to 2022.
Cash provided in 2024 was primarily driven by $82 million of net income, plus $97 million of reconciling adjustments, primarily depreciation and amortization, stock-based compensation and deferred income taxes, and a net decrease of $119 million in working capital. The improvement in 2024 was primarily driven by improved inventory efficiency and better collections on our receivables compared to 2023.
For the year ended December 31, 2022, the effective tax rate was primarily driven by the recognition of tax expense from earnings in Canada offset by current year realization of deferred tax assets and corresponding release of valuation allowance in the U.S., as well as impairment charges incurred as a result of substantially completing the liquidation of certain foreign subsidiaries with no associated tax benefit.
For the year ended December 31, 2024, the effective tax rate was also impacted by foreign currency translation losses and other charges incurred as a result of substantially completing the liquidation of certain foreign subsidiaries with no associated tax benefit, foreign tax credits expiring unused in the period, and the change in valuation allowance recorded against deferred tax assets.
International Revenue was $290 million for the year ended December 31, 2023, an increase of $60 million or 26.1% compared to the year ended December 31, 2022. The increase was driven by stronger project activity and increase in international rig count. Our international revenue was approximately 12% of total revenue in 2023, compared to 11% in 2022.
International Revenue was $240 million for the year ended December 31, 2024, a decline of $50 million or 17.2% compared to the year ended December 31, 2023. The decrease was primarily driven by weaker project activity. Our international revenue was approximately 10% of total revenue in 2024, compared to 12% in 2023.
Actual results are likely to differ from our current estimates and those differences may be material. Allowance for Doubtful Accounts Accounts receivable consist of balances due from customers and are reported net of the allowance for credit losses, which represents their estimated net realizable value.
Allowance for Credit Losses Accounts receivable consist of balances due from customers and are reported net of the allowance for credit losses, which represents their estimated net realizable value. These receivables are generally trade receivables due in one year or less or expected to be billed and collected in one year or less.
We support land and offshore operations for the major oil and gas producing regions around the world through our network of locations. Our key markets, beyond North America, include South America, Europe, the Middle East, Asia Pacific, Central Asia and West and North Africa.
We support land and offshore operations for the major oil and gas producing regions around the world through our network of locations. Our key markets include the U.S., Canada, UK, Norway, Australia, the Netherlands, Singapore and the Middle East area with the ability to provide products through an export model to operators with operations in Southeast Asia and West Africa.
At December 31, 2023 and 2022, inventory reserves totaled $21 million and $20 million, or 5.4% and 5.0% of gross inventory, respectively.
At December 31, 2024 and 2023, inventory reserves totaled $17 million and $21 million, or 4.6% and 5.4% of gross inventory, respectively. Changes in our estimates can be material under different market conditions.
We are also targeting new customers that are not traditional oil and gas customers, but are those that will play a part in the future as our customers discover and invest in new sources of energy.
Part of our growth strategy is to expand our revenues by targeting new customers in non-oil and gas end markets, in addition to servicing those customers that will play a part in the future of the evolving mix of traditional and new sources of energy.
Net cash used in investing activities was $48 million in 2023 compared to $87 million in 2022. Cash used primarily related to business acquisitions of $32 million in 2023 compared to $80 million in 2022. Additionally, the Company used $17 million to purchase property, plant and equipment in 2023 compared to $9 million in 2022.
Net cash used in investing activities was $304 million in 2024 compared to $48 million in 2023. Cash used primarily related to business acquisitions of $299 million, net of cash acquired, in 2024 compared to $32 million, net of cash acquired, in 2023. Net cash used in financing activities was $33 million in 2024 compared to $55 million in 2023.
Changes in our estimates can be material under different market conditions. 36 Purchase Price Allocation of Acquisitions The Company allocates the fair value of the purchase price consideration of an acquired business to its identifiable assets and liabilities based on estimated fair values.
Accordingly, no further testing was required. 35 Purchase Price Allocation of Acquisitions The Company allocates the fair value of the purchase price consideration of an acquired business to its identifiable assets and liabilities based on estimated fair values. The excess of the purchase price over the fair value of the acquired assets and liabilities, if any, is recorded as goodwill.
The total change in the valuation allowance during the year ended December 31, 2023, was $142 million in the U.S., $3 million in Canada and $3 million in other foreign jurisdictions.
The change during the year in the valuation allowance was a reduction of $3 million in the U.S. and $1 million in other foreign jurisdictions primarily due to substantially completing the liquidation of certain foreign subsidiaries.
Crude oil and natural gas prices as well as crude oil and natural gas storage levels are primary catalysts for determining customer activity and we expect global oil and gas demand to grow over the next several years.
Crude oil and natural gas prices as well as crude oil and natural gas storage levels are primary catalysts for determining customer activity. In recent years, oil prices have remained volatile and economic and geopolitical uncertainty continues to drive commodity price volatility globally.
U.S. rig count at January 19, 2024 was 620 rigs, down 69 rigs from the 2023 average. The price for WTI crude was $73.69 per barrel at January 19, 2024, down 5.1% from the 2023 average. The price for natural gas was $2.70 per MMBtu at January 19, 2024, up 6.3% from the 2023 average.
Wells Completed declined 8.7% (from 12,847 completion count to 11,731 completion count) in 2024 compared to 2023. U.S. rig count at January 24, 2025 was 576 rigs, down 23 rigs from the 2024 average. The price for WTI crude was $74.97 per barrel at January 24, 2025, down 2.1% from the 2024 average.
For the year ended December 31, 2023, operating profit increased primarily due to the increase in revenue discussed above and as a result of $10 million of impairment and other charges recognized in the second quarter of 2022 that did not repeat.
For the year ended December 31, 2024, operating profit decreased primarily due to an increase in expense of $9 million related to the restructuring plan in the International segment and revenue decline discussed above.
For the year ended December 31, 2023, we repurchased 4,547,694 shares of our common stock for a total of $50 million. All shares repurchased shall be retired pursuant to the terms of the share repurchase program. As of December 31, 2023, we had approximately $23 million remaining under the program’s authorization.
For the year ended December 31, 2024, we repurchased 1,823,249 shares of our common stock for a total of $23 million. On January 24, 2025, the Company’s Board of Directors authorized a new share repurchase program to purchase up to $160 million of its outstanding common stock.
Removed
In recent years, oil prices have remained volatile due to various factors such as the impact of the COVID-19 pandemic, oil supply constraints, geopolitical instability, U.S. regional bank instability and concerns of a global recession. Economic uncertainty continues to drive commodity price volatility globally.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+2 added−1 removed10 unchanged
Biggest changeWe utilized a sensitivity analysis to measure the potential impact on earnings based on a hypothetical 10% change in foreign currency rates. A 10% change from the levels experienced during 2023 of the U.S. dollar relative to foreign currencies that affected the Company would have resulted in $3 million change in net income for 2023.
Biggest changeA 10% change from the levels experienced during 2024 of the U.S. dollar relative to foreign currencies that affected the Company would have resulted in $1 million change in net income for 2024. Commodity Steel Pricing Our business is sensitive to steel prices, which can impact our product pricing, with steel tubular prices generally having the highest degree of sensitivity.
We are a net receiver of foreign currencies, and therefore, benefit from a weakening of the U.S. dollar and are adversely affected by a strengthening of the U.S. dollar relative to the foreign currency. As of December 31, 2023, our most significant foreign currency exposure was to the Canadian dollar, followed by the British pound and the Australian dollar.
We are a net receiver of foreign currencies, and therefore, benefit from a weakening of the U.S. dollar and are adversely affected by a strengthening of the U.S. dollar relative to the foreign currency. As of December 31, 2024, our most significant foreign currency exposure was to the Canadian dollar, followed by the British pound and the Australian dollar.
Because we operate globally and approximately one-fourth of our 2023 net sales were outside the U.S., foreign currency exchange rates can impact our financial position, results of operations and competitive position.
Because we operate globally and approximately one-fourth of our 2024 net sales were outside the U.S., foreign currency exchange rates can impact our financial position, results of operations and competitive position.
For the years ended December 31, 2023, 2022 and 2021, we reported a net foreign currency transaction loss of $1 million, loss of $2 million and loss of $1 million, respectively.
For the years ended December 31, 2024, 2023 and 2022, we reported a net foreign currency transaction loss of $1 million, $1 million and $2 million, respectively.
ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK We are exposed to certain market risks that are inherent in our financial instruments and arise from changes in interest rates and foreign currency exchange rates.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to certain market risks that are inherent in our financial instruments and arise from changes in interest rates and foreign currency exchange rates.
Upon closure of a foreign subsidiary, the accumulated foreign currency translation gains and losses relating to the foreign subsidiary are reclassified into earnings, reflected in impairment and other charges in the consolidated statements of operations. During 2023, we reported a net foreign currency translation gain of $5 million, which was included in other comprehensive income.
Upon complete or substantially complete liquidation of a foreign subsidiary, the accumulated foreign currency translation gains and losses relating to the foreign subsidiary are reclassified into earnings, reflected in impairment and other charges in the consolidated statements of operations.
FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA Attached hereto and a part of this report are financial statements and supplementary data listed in Item 15. “Exhibits, Financial Statement Schedules.” ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOU NTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
“Exhibits, Financial Statement Schedules.” ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOU NTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
In the event that the counterparties fail to meet the terms of a foreign currency contract, our exposure is limited to the foreign currency rate differential.
In the event that the counterparties fail to meet the terms of a foreign currency contract, our exposure is limited to the foreign currency rate differential. The average foreign exchange rate for 2024 compared to the average for 2023 remained flat compared to the U.S. dollar based on the aggregated weighted average revenue of our foreign-currency denominated foreign operations.
Commodity Steel Pricing Our business is sensitive to steel prices, which can impact our product pricing, with steel tubular prices generally having the highest degree of sensitivity. While we cannot predict steel prices, we mitigate this risk by managing our inventory levels, including maintaining sufficient quantity on hand to meet demand, while limiting the risk of overstocking. 39 ITEM 8.
While we cannot predict steel prices, we mitigate this risk by managing our inventory levels, including maintaining sufficient quantity on hand to meet demand, while limiting the risk of overstocking. 38 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Attached hereto and a part of this report are financial statements and supplementary data listed in Item 15.
Removed
The average foreign exchange rate for 2023 compared to the average for 2022 decreased by approximately 3% compared to the U.S. dollar based on the aggregated weighted average revenue of our foreign-currency denominated foreign operations. The Canadian dollar and Australian dollar decreased in relation to the U.S. dollar by approximately 4% and 4%, respectively.
Added
During 2024, we reported a net foreign currency translation loss of $8 million, after the reclassification of accumulated foreign currency translation losses of approximately $6 million related to the substantial liquidation of certain foreign subsidiaries.
Added
The Canadian dollar and Australian dollar decreased in relation to the U.S. dollar by 1% while the British pound increased in relation to the U.S dollar by approximately 3%. We utilized a sensitivity analysis to measure the potential impact on earnings based on a hypothetical 10% change in foreign currency rates.

Other DNOW 10-K year-over-year comparisons