NOW : First Quarter 2021 Key Takeaways

NOW Inc. - First Quarter 2021

Key Takeaways

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Disclosure Statement

• Statements made in the course of this presentation that state the Company's or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. It is important to note that the Company's actual results could differ materially from those projected in such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time-to-time in the Company's filings with the U.S. Securities and Exchange Commission (SEC). Any decision regarding the Company or its securities should be made upon careful consideration of not only the information here presented, but also other available information, including the information filed by the Company with the SEC. Copies of these filings may be obtained by contacting the Company or the SEC.
• In an effort to provide investors with additional information regarding our results as determined by U.S. Generally Accepted Accounting Principles (GAAP), we disclose various non-GAAP financial measures in our quarterly earnings press releases and other public disclosures. We use these non-GAAP financial measures internally to evaluate and manage the
  Company's operations because we believe it provides useful supplemental information regarding the Company's ongoing economic performance. The non-GAAP financial measures include: (i) earnings before interest, taxes, depreciation and amortization (EBITDA) excluding other costs (sometimes referred to as "EBITDA"), (ii) net income (loss) excluding other costs and (iii) diluted earnings (loss) per share excluding other costs. Each of these financial measures excludes the impact of certain other costs and therefore has not been calculated in accordance with GAAP. A reconciliation of each non-GAAP financial measure to its most comparable GAAP financial measure can be found in our earnings press release.

2	First Quarter 2021	© 2021 COPYRIGHT DISTRIBUTIONNOW

CEO Perspective: First Quarter Key Takeaways

• 1Q21 revenue was $361M, up 13% sequentially, driven by improved activity and growth from all three reporting segments
• U.S. Energy contributed 81% and U.S. Process Solutions contributed 19% of U.S. revenue in the quarter
• 1Q21 gross margins were 20.8% on resilient product margins and lower sequential inventory charges
• $374M cash balance at March 31, 2021, with zero debt
• Positive EBITDA, excluding other costs; achieved by executing on our strategy
• Completed Master Corporation (February) and Flex Flow (April) acquisitions; bolstering the value proposition of U.S. Process Solutions

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Response to COVID-19

• Remained connected to our customers communicating impacts on product availability and accessibility, as DNOW designated as an "essential" business
• Corporate COVID-19 response team coordinating policies and guidelines
• Continuous communication through our HSE onsite champions on COVID updates and CDC / WHO information
• Implemented recurring survey to ensure employees have access to necessary PPE and cleaning supplies
• Provided masks, signage and disinfecting cleaners at locations
• Employees working remotely are able to leverage technology to connect with co-workers, customers and suppliers
• Decreased third party access to business locations and increased reliance on video and teleconferencing

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DNOW Strategy to Unlock Value

• Revenue grew sequentially across all three reporting segments, driving improving flow-throughson lowered
  WSA
• Gross margins improved sequentially due to resilient product margins and lower inventory charges
• Headwinds from COVID related restrictions and extreme winter weather resulted in shut downs of a number of our U.S. locations and reduced customer completion activity and plant shut downs
• Higher sequential quarterly revenue resulted from pent-up demand and improvement in market fundamentals

Deliver Margin

• Structural change towards a more centralized fulfillment model with smaller branches and reduced personnel and vehicles, square footage and less inventory focusing on higher turns
• Super Centers to direct ship to customers, implementing new warehousing technology to improve efficiencies

• Focused on cost transformation to better adapt to market demand and preserve balance sheet

Optimize	▪ Leveraging technology and DigitalNOW™
Operations	digitalization platform to enhance employee
productivity and increase operational efficiencies

• Completed Flex Flow acquisition in April 2021
• • Second acquisition of the year, expanding U.S. Process Solutions capabilities
  • Leading provider of high pressure, high volume horizontal pumping solutions for midstream and upstream markets
  • Highly complementary to Odessa Pumps business
• Completed Master Corporation acquisition in February 2021
• M&A pipeline active, proactively evaluating opportunities
• Approximately $598 million in total liquidity

5	First Quarter 2021

Drive Growth	Maximize Working	▪ Working capital, excluding cash, was 15% of first quarter
Through	Capital	2021 annualized revenue
▪ Inventory turns at 4.6x, a quarterly record high
Acquisitions	Velocity

• • Cash balance at March 31, 2021 of $374M
• Zero debt

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