November 14, 2022, ST. PETERSBURG, FL – Water Tower Research (www.watertowerresearch.com) has published an Initiation of Coverage Report on NOW, Inc. (NYSE: DNOW) titled, “Global Supplier to the Energy Industry”. The report can be accessed here.
NOW, Inc. is a global distribution company serving the needs of customers across all segments of the energy value chain and other industries, including chemical processing, mining, utilities, and renewables. The company operates through the DistributionNOW and DNOW brands. DistributionNOW operates from ~175 locations in 20 countries to supply thousands of products sourced from vendors in more than 40 countries to customers in ~80 countries.
DistributionNOW’s value proposition for customers is to drive supply chain efficiency through speed, technology, and innovation to meet customer needs so they can concentrate on maximizing returns. The DigitalNOW® ecosystem offers customers a variety of eCommerce options to efficiently manage their supply chains and monitor equipment maintenance and repair schedules.
DistributionNOW’s earnings and cash flow potential is closely tied to the capital expenditure cycles of its energy industry customers. Supportive underlying fundamentals have contributed to strong financial results in 2022. We estimate FY22 and FY23 revenue growth of 30% and 8%, respectively. US revenue accounts for ~74% of total revenue, with Canada contributing ~15%, and International the remaining 11%.
We estimate EBITDA of $165 million for both FY22 and FY23. EBITDA was $45 million in 2021. The company’s balance sheet is string with $267 million of cash and $635 million of liquidity as of September 30, 2022. In August, the board authorized an $80-million share repurchase plan, providing a capital allocation tool to utilize when management believes the intrinsic value of NOW’s shares is disconnected from the market valuation.
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