DNOW Inc. (DNOW) · Nov 5, 2026 · Earnings
Beat — Adjusted EPS $0.18 vs ~$0.15 consensus
DNOW earnings show improving EBITDA and cash generation, but a modest revenue miss and lower margins temper the quarter’s upside.
DNOW is operating as a larger energy-and-industrial distributor following its 2025 MRC Global acquisition, with the current story centered on integrating the combined platform while capturing demand across gas utilities, midstream, downstream and industrial markets. The quarter beat the adjusted-EPS bar, but not cleanly across the income statement. Adjusted diluted EPS was $0.18 versus a published consensus of roughly $0.15, while revenue was $1.337 billion against expectations of about $1.35 billion. The EPS outperformance is real, but it came alongside a small top-line miss and lower profitability relative to last year.
| Q3 2026 | Q3 2025 | Consensus | |
|---|---|---|---|
| Revenue (Financial Statements) | $1,337M (-0.5%) | $634M | ~$1,350M |
| Adjusted diluted EPS (EPS reconciliation) | $0.18 | $0.26 | ~$0.15 |
| Adjusted EBITDA (EBITDA reconciliation) | $76M (+49%) | $51M | |
| Adjusted gross margin (Gross profit reconciliation) | 21.2% | 23.2% | |
| Free cash flow (Cash flow reconciliation) | $106M | $39M |
Underlying operating momentum improved sequentially, even as margins remain below the prior-year level. Adjusted EBITDA rose from $60 million in the June quarter to $76 million, and management said sales increased sequentially across all three geographic segments. 〔0〕 But adjusted gross margin was 21.2%, down from 23.2% a year earlier, so the earnings beat reflects stronger execution and cost absorption more than a clean return to prior profitability. The filing also shows substantial LIFO and transaction-related adjustments, which make the adjusted figures more useful for tracking operations but less representative of reported earnings power without reconciliation.
Cash generation and balance-sheet repair are the strongest part of the release. Operating cash flow was $120 million and free cash flow was $106 million, helping reduce net debt to $265 million and leverage to 1.1 times. DNOW also repurchased $17 million of stock in the quarter and $92 million year to date under its $160 million authorization. That improves financial flexibility, although cash fell to $112 million from $164 million at year-end as the company continued allocating capital while carrying $377 million of long-term debt.
The result modestly advances the integration-and-recovery story, but does not rewrite it. The EPS beat and improving EBITDA support the idea that DNOW is extracting benefits from scale and better end-market activity; the revenue miss and lower gross margin show that demand conversion and profitability are not yet uniformly strong. There was no new numerical outlook in the filing, so the key evidence is execution rather than a raised forecast.
Bottom line: DNOW delivered a modest earnings beat with notably stronger cash flow and EBITDA, but softer revenue and margins keep this from being a decisive re-rating of the business story. The quarter is better than expected overall, not unequivocally strong across every operating measure.
Q4 earnings report, expected February 2027
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