FY24 Free Cash Flow Outlook Lifted
The 1Q24 Whitco Supply acquisition diversified DNOW’s customer base and added new revenue opportunities in the midstream markets. Management now expects FY24 revenue to increase in the mid- to high single digits range from FY23 and for adjusted EBITDA margin to be in line with FY23. Management lifted its FY24 free cash flow outlook to ~$200 million from ~$150 million. A full-quarter contribution from Whitco is expected to underpin a 10-15% Q/Q revenue increase in 2Q24. 2Q24 adjusted EBITDA margin is expected to be 7-8%. 1Q24 adjusted EBITDA was $39 million with a 6.9% margin. The $185 million Whitco acquisition was funded with cash leaving DNOW’s balance sheet debt-free as of March 31, 2024. Total liquidity was $564 million at the quarter-end, providing ample capacity to continue the pursuit of accretive acquisition opportunities. Whitco was DNOW’s first Energy Center acquisition since 2015. The company operated from eight locations serving the oil, gas, pipeline, fabrication, and production industries. Its broad array of products, including product lines valves and actuation products, diversifies DNOW’s exposure across the midstream segment. Management targets acquisition opportunities that are accretive to gross and operating margins and expand DNOW’s revenue opportunities across markets. The company seeks to invest in its core markets to defend and grow share and capture new revenue streams in the expanding energy evolution market. Despite lower US drilling and completion activity, DNOW’s revenue per average rig has increased. We attribute the revenue increase to market share gains across product lines driven by DNOW ability to provide customers the products they need in the quantities they need at the time they need them. 1Q24 US revenue per average rig was the highest posted since 4Q20. DNOW repurchased $1 million of common stock during 1Q24 and has $22 million remaining under its current $80-million authorization.NOW, through its subsidiaries, is a distributor to the oil and gas and industrial markets. The company's global product offering includes consumable maintenance, repair and operating supplies, pipe, valves, fittings, flanges, gaskets, fasteners, electrical, instrumentation, artificial lift, pumping solutions, valve actuation and modular process, measurement and control equipment. The company also provides warehouse and inventory management solutions as part of its supply chain and materials management offering. The company's solutions include outsourcing the functions of procurement, inventory and warehouse management, logistics, point of issue technology, project management, as well as business process.
Water Tower Research is built on the foundation of democratizing information flow. We bridge the growing information gap between companies and investors through our investor engagement strategies and open-access research platform.
Our research analysts are Wall Street veterans with the experience and knowledge to work with companies and investors in tandem. We provide access to the information and content that anchors the due diligence process for both professional money managers and individual investors. We leverage traditional research distribution channels and the best of modern digital strategies and tactics to amplify this information flow globally to engage all categories of investors and stakeholders.
Information flow is the foundation for creating investor awareness, knowledge, and engagement. Our mission is to help companies and investors have the tools they need and achieve their goals.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.