DNOW (NYSE:DNOW) executives used the company’s fourth-quarter and full-year 2025 earnings call to emphasize two parallel storylines: legacy DNOW’s strongest standalone results since going public and the early progress—and challenges—following the November merger with MRC Global.
Merger integration highlights and synergy update
President and CEO David Cherechinsky said the company completed the merger with MRC Global on Nov. 6 and is now “operating as one company.” He described strong cultural alignment and pointed to MRC Global’s technical expertise and integrated solutions, particularly in gas utilities, downstream industrial markets, and its international valve business.
On cost synergies, management updated expectations versus the target set when the deal was announced in June 2025. Cherechinsky said the company remains on track to achieve $70 million in cost savings within three years of closing, and now expects to reach $23 million by the end of the first year, compared with the $17 million originally expected for 2026. In the Q&A, he attributed the faster pace largely to accelerated systems and integration actions in response to the U.S. ERP disruption at legacy MRC Global.
Legacy DNOW performance and 2025 records
Cherechinsky singled out the “heritage DNOW” business for delivering what he called its best four-year stretch ever (2022–2025). He said legacy DNOW generated a record full-year EBITDA of $199 million in 2025, despite a contracting U.S. upstream activity backdrop, and achieved 8.2% EBITDA as a percentage of revenue, exceeding the company’s near-8% guided target. He cited strong performance at Whitco, FlexFlow, and Trojan.
Fourth-quarter and full-year financial results
CFO Mark Johnson said fourth-quarter 2025 revenue was $959 million, up 51% sequentially, driven by $388 million of MRC Global revenue contribution from the close date through year-end (the “stub period”). For the full year, DNOW reported $2.8 billion in revenue, up 19% from 2024.
Adjusted EBITDA for the fourth quarter was $61 million, representing 6.4% of revenue. Full-year 2025 EBITDA totaled $209 million, or 7.4% of revenue.
- U.S. revenue (4Q): $765 million, including $298 million from MRC Global during the stub period. Johnson said legacy DNOW U.S. revenue was $467 million, down about 10% sequentially.
- Canada revenue (4Q): $51 million, down 4% sequentially; full-year Canada revenue was $214 million. Johnson cited low commodity prices, tariff uncertainty, and customer consolidation, and said the business protected margins through cost management.
- International revenue (4Q): $143 million; full-year international revenue was $312 million, including about $90 million from MRC Global in the stub period. Legacy DNOW international revenue was $222 million for the year, down 7.5%, which Johnson attributed to fewer projects and exits from certain countries as part of restructuring and service location optimization.
Johnson also detailed purchase accounting and merger-related impacts. Fourth-quarter cost of products included $135 million of acquisition-related costs tied to the partial burn-off of inventory stepped up to fair value in the merger. The company also recorded $9 million of LIFO charges in the quarter and $27 million for the full year.
Adjusted gross profit was $217 million in the quarter, or 22.6%, down from 23.2% in the third quarter, which Johnson said was primarily due to MRC Global’s contribution. SG&A expense rose to $226 million, up $114 million sequentially, including about $75 million tied to MRC Global stub-period activity and about $50 million of transaction-related expenses, partially offset by about $5 million of favorable asset sales.
The company reported a net loss of $147 million in the fourth quarter, which Johnson said was unfavorably impacted by transaction-related costs, a $12 million non-cash charge in the international segment related to cumulative foreign currency translation losses (CTA) from liquidating a foreign entity, and the inventory step-up amortization. Adjusted net income for the fourth quarter was $23 million, or $0.15 per diluted share.
ERP disruption at U.S. legacy MRC Global weighs on operations
A major focus of both prepared remarks and analyst questions was the U.S. ERP implementation at legacy MRC Global. Cherechinsky described the ERP challenges as a “heavier lift than previously known” and said design architecture problems have created inefficiencies in core processes. He cited system limitations including slowness, impediments to customer service, increased resource needs, higher safety stock, and difficulty processing orders.
He noted the issue is limited to U.S. MRC Global operations, which represent about 40% of DNOW’s business. He said the remaining 60%—including MRC Global’s international operations and legacy DNOW businesses—are not affected.
In response to questions, Cherechinsky said revenue declines in the third and fourth quarters were attributable to the ERP implementation, and said the company is not yet sure when the system issues will be fully resolved. He outlined mitigation steps, including routing certain projects through legacy DNOW systems, adding more than 200 personnel in the field to bolster customer service, establishing a dedicated help desk, and deploying DNOW’s IT and operational excellence teams to execute a remediation plan.
He also provided color on where impacts are most pronounced, saying revenues have been stable in gas utilities, while the biggest negative impacts have been in upstream and downstream.
2026 outlook: guidance delayed, market commentary provided
Cherechinsky said DNOW has decided to delay sequential and full-year guidance, citing ongoing ERP challenges in legacy MRC Global U.S. operations and the “critical phase” of post-merger integration. He said the company will reinstate guidance once it has greater stability and predictability.
Still, management offered directional commentary on end markets. Cherechinsky said upstream activity is expected to be flat to down, with growth opportunities in water management and disposal. He characterized midstream as supported by structural growth drivers such as natural gas infrastructure expansion, LNG, and power generation-related development, and said gas utility system modernization is expected to continue with growth in 2026. He also highlighted progress in data centers, stating DNOW entered the market in January 2025 and is supplying core product offerings to 11 new customers across four key data center markets.
On consolidated organic growth, Cherechinsky said he had viewed the business entering 2026 as generally “flattish” on revenue, with upside coming from cost synergies, integration, and revenue synergy initiatives. He also noted the company remains acquisitive, though activity has been “deferred a bit” given the ERP disruption.
Discussing capital allocation, Cherechinsky said priorities include investing in integration and growth areas (including water management, midstream, gas utilities, and data centers), deleveraging debt incurred in the merger with a goal of returning to a net cash position, pursuing strategic M&A, and opportunistically repurchasing shares under its reactivated $160 million authorization.
Johnson said DNOW ended the year with $588 million of liquidity, including $164 million of cash and $424 million of revolver availability. Total debt was $411 million and net debt was $247 million, with a leverage ratio of 1.2x. The company generated $83 million of operating cash flow in the fourth quarter and $155 million for the full year, with $25 million in capital expenditures for 2025. DNOW repurchased $10 million of shares in the fourth quarter and had cumulatively repurchased $37 million under the program as of Dec. 31.
In Q&A, Cherechinsky said the company expects to generate cash in the $100 million to $200 million range in 2026, while also pointing to “pent-up inventory” and uncollected receivables as near-term issues that could represent opportunities as systems stabilize.
About DNOW (NYSE:DNOW)
DistributionNOW (NYSE: DNOW) is a global distributor of energy and industrial products, serving a broad range of end-markets including oil and gas, petrochemical, power generation, and industrial manufacturing. Headquartered in Houston, Texas, the company provides solutions across the life cycle of energy and industrial assets, with an emphasis on safety, reliability and operational efficiency.
The company’s core product portfolio includes piping systems and related components (such as valves, fittings, flanges and gaskets), instrumentation, electrical and automation equipment, fasteners, industrial safety supplies, chemicals and composite products.
