The quarter came in modestly above the market’s baseline. Published estimates clustered around roughly $1.29 billion of revenue and $0.09–$0.10 of adjusted EPS; DNOW delivered $1.307 billion and $0.12, respectively.
| Metric | Q2 2026 actual | Comparison / expectation |
|---|---|---|
| Revenue | $1,307 million (Income Statement) | Published consensus: approximately $1.29 billion |
| Adjusted diluted EPS | $0.12 (Adjusted EPS reconciliation) | Published estimates: approximately $0.09–$0.10 |
| Adjusted EBITDA | $60 million (Adjusted EBITDA reconciliation) | Up from $39 million in Q1 2026 |
| Adjusted gross margin | 20.8% (Gross Profit to Adjusted Gross Profit Reconciliation) | Down from 23.2% in Q1 2026 |
| Operating cash flow | $133 million (Cash Flow reconciliation) | Up from negative $95 million in Q1 2026 |
| Free cash flow | $124 million (Cash Flow reconciliation) | Up from negative $103 million in Q1 2026 |
The strongest surprise was cash generation, not earnings quality. Operating cash flow reached a record second-quarter $133 million, helped by a $130 million reduction in inventories from year-end and strong collections; free cash flow was $124 million after $9 million of capital spending (Cash Flow reconciliation; Balance Sheets). That materially improves liquidity, but cash conversion was helped by working-capital release rather than solely by higher profitability.
Underlying operations improved sharply sequentially, though margins remain below the prior quarter. Revenue rose 10% sequentially to $1.307 billion and adjusted EBITDA increased 54% to $60 million, but adjusted gross margin fell to 20.8% from 23.2% in Q1 (Financial Highlights; Gross Profit to Adjusted Gross Profit Reconciliation). The rebound therefore looks more like volume recovery and cost execution than a clean margin expansion story.
The GAAP result remains weak beneath the adjusted headline. DNOW posted a $21 million net loss, or negative $0.11 per diluted share, while adjusted net income was $21 million, or $0.12 per share (Income Statement; Adjusted Net Income Reconciliation). The quarter included $19 million of LIFO expense, $6 million of transaction-related charges, $3 million of inventory-related charges, and $4 million of impairment and other charges (Adjusted EBITDA Reconciliation). Those adjustments explain the gap between the reported loss and adjusted profit, so the earnings beat is real but narrow.
Capital allocation was supportive, while leverage did not improve through debt reduction. DNOW repurchased $25 million of stock during the quarter and $75 million year to date (Capital Allocation; Financial Highlights). Net debt was $360 million and leverage was 1.7x, but debt increased to $474 million from $411 million at year-end while cash declined to $114 million from $164 million (Net Debt Reconciliation; Balance Sheets). With no new numerical outlook provided in the filing, the net read is a modest beat anchored by unusually strong cash flow—not a broad upgrade to the earnings picture.
Read the original 8-K on SEC EDGAR ↗