Forward-Looking Statements Some of the statements in this document including information referenced or incorporated by reference from our other filings with the SEC, constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements typically are identified by use of terms such as “anticipates”, “assumes”, “believes”, “budget”, “estimates”, “expects”, “goal”, “guidance”, “plans”, “may,” “will”, “might”, “would”, “should”, “seeks”, “project”, “predict”, “potential”, “currently”, “continue”, “intends”, “outlook”, “forecasts”, “targets”, “reflects”, “could”, or other similar words and phrases, although some forward-looking statements could be expressed differently. Forward-looking statements are current only as of the date they are made. You should be aware that our actual results could differ materially from results anticipated in the forward-looking statements due to a number of factors and risks many of which are outside of our control, including, but not limited to, changes in oil and gas prices, changes in the energy markets, customer demand for our products, changes in trade policies including the imposition or elimination of additional tariffs and duties, significant changes in the size of our customers, difficulties encountered in integrating mergers and acquisitions (including but not limited to certain risks relating to any mergers or acquisitions, such as: the timing of the closing of the merger or acquisition; the risk that the conditions to the transaction are not satisfied on a timely basis or at all or the failure of the transaction to close for any other reason or to close on the anticipated terms; the possibility that regulatory approvals for any dispositions or acquisitions will not be received on a timely basis, if at all, or that such approvals may require modification to the terms of the mergers or remaining businesses; the risk that the expected benefits, synergies and cost reduction efforts of the mergers or acquisitions may not be fully achieved in a timely manner, or at all), successful integration of the business of MRC Global into our business, general volatility in the capital markets, ability to complete the share repurchase program, changes in applicable government regulations, increased borrowing costs, geopolitical conditions and tensions (including Iran, the Ukraine and Middle East conflicts and their regional and global impacts) or any litigation arising out of or related thereto, impairments in long-lived assets, the occurrence of cyber incidents, or failure by us or our third-party service providers to maintain cybersecurity and the integrity of confidential data, and worldwide and national economic conditions and activity. You should also consider carefully the statements under “Risk Factors,” as disclosed in our Form 10-K and any of our subsequent SEC filings, which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements and that are otherwise described from time to time in our SEC reports as filed. Given these uncertainties, current or prospective investors are cautioned not to place undue reliance on any such forward-looking statements. We undertake no obligation to update any such factors or forward-looking statements to reflect new information, future events or developments, or otherwise, except to the extent required by applicable law. The following discussion should be read in conjunction with the unaudited consolidated financial statements and notes thereto contained in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto included in the most recent Annual Report on Form 10-K. Company Overview DNOW is a holding company headquartered in Houston, Texas that was incorporated in Delaware on November 22, 2013. We operate primarily under the DNOW and MRC Global brands along with several affiliated and acquired brands operating in local, regional or international markets. On June 26, 2025, DNOW entered into the Merger Agreement with MRC Global in an all-stock transaction, inclusive of MRC Global's debt. On November 6, 2025, DNOW completed its acquisition of MRC Global. We are a premier provider of energy and industrial solutions with a legacy of over 160 years as a leading distributor of PVF, gas products, pumps and fabricated process and production equipment and a wide range of MRO consumables and related products. We operate across diversified sectors of the energy value chain and industrial end-markets, including: •Upstream: exploration, production and extraction of oil and gas, as well as the use, transfer and disposal of produced water •Gas Utilities: gas utilities (storage and distribution of natural gas) •Downstream and Industrial: downstream and industrial including crude oil refining, petrochemical and chemical processing, general industrials, pharmaceutical, mining, water/wastewater treatment, data centers, LNG terminals and RNG facilities •Midstream: gathering and transmission infrastructure for processing and transmission of oil, gas or water Our comprehensive products and solutions offerings includes an extensive array of PVF, gas products, pumps, fabricated equipment, valve automation, valve modification, gaskets, fasteners, electrical components, measurement, instrumentation, artificial lift, pumping systems, process and production equipment, production measurement technology, MRO consumables and other general and specialty products. Our team of approximately 5,100 employees support our customers through approximately 300 strategic locations including regional distribution centers, super centers, branches and corporate offices. 20 Key Drivers of Our Business We derive our revenue predominantly from the sale of PVF, pumps, and fabricated equipment to upstream, gas utilities, downstream, energy transition and industrial and midstream markets customers globally. Our business is dependent upon both the current conditions and future prospects in these industries and, in particular, our customers' maintenance and expansionary operating and capital expenditures. The outlook for customer spending is influenced by numerous factors, including the following: •Oil and Natural Gas Demand and Prices. Sales of PVF and infrastructure products to the oil and natural gas industry constitute a significant portion of our sales. As a result, we depend upon the maintenance and capital expenditures of oil and natural gas companies to explore for, extract, produce and process oil, natural gas and refined products. Demand for oil and natural gas, current and projected commodity prices and the costs necessary to produce oil and natural gas impact customer capital spending, additions to and maintenance of pipelines, refinery utilization and petrochemical processing activity. Additionally, as some of these participants rebalance their capital investment away from traditional, carbon-based energy toward alternative sources, we expect to continue to supply them and enhance our product and service offerings to support their changing requirements, including in areas such as carbon capture utilization, sequestration and storage, biofuels, RNG, offshore wind and hydrogen processing. •Gas Utility and Energy Infrastructure Integrity and Modernization. Ongoing maintenance and upgrading of existing energy facilities, pipelines and other infrastructure equipment is a meaningful driver for business across the sectors we serve. This is particularly true for the Gas Utilities sector. Activity with customers in this sector is driven by upgrades and replacement of existing infrastructure as well as new residential and commercial development. Continual maintenance of an aging network of pipelines and local distribution networks is a critical requirement for these customers irrespective of broader economic conditions. As a result, this revenue from this sector tends to be more stable over time than our traditional oilfield-dependent businesses and fluctuates based on gas utility customer annual budgets, independently of commodity prices. •Economic Conditions. Changes in the general economy, political affairs, government policies or in the energy sector (domestically or internationally) can cause demand for fuels, feedstocks and petroleum-derived products to vary, thereby causing demand for the products we distribute to materially change. •Manufacturer and Distributor Inventory Levels of PVF, Pumps, Fabricated Equipment and Related Products. Manufacturer and distributor inventory levels of PVF and related products can change significantly from period to period. Increased inventory levels by manufacturers or other distributors can cause an oversupply of PVF and related products in the industry sectors we serve and reduce the prices that we are able to charge for the products we distribute. Reduced prices, in turn, would likely reduce our profitability. Conversely, decreased manufacturer inventory levels may ultimately lead to increased demand for our products and often result in increased pricing, revenue and improved profitability. •Steel Prices, Availability and Supply and Demand. Fluctuations in steel prices can lead to volatility in the pricing of the products we distribute, especially carbon steel line pipe products, which can influence the buying patterns of our customers. A majority of the products we distribute contain various types of steel. The worldwide supply and demand for these products and other steel products that we do not supply impact the pricing and availability of our products and, ultimately, our sales and operating profitability. Additionally, supply chain disruptions with key manufacturers or in markets in which we source products can impact the availability of inventory we require to support our customers. Furthermore, logistical challenges, including inflation and availability of freight providers and containers for shipping can also significantly impact our profitability and inventory lead-times. These constraints can also present an opportunity, as our supply chain expertise allows us to meet customer expectations when the competition may not. Recent Trends and Outlook Recent geopolitical developments, including military conflict involving Iran, have contributed to increased volatility in global energy markets, financial markets and international supply chains. While the full impact of these conditions continues to evolve, management is actively monitoring potential effects on customer demand, costs, logistics and overall macroeconomic conditions. The majority of our publicly traded oil and gas producer customers have generally remained disciplined in their capital expenditures and have generally not increased production beyond their ability to fund their expenditures from prudent borrowings and cash flow from operations. We expect this trend to continue. The U.S. government has imposed tariffs on steel products, which were expanded throughout 2025. A significant portion of the products that we sell are made from steel. In addition, a portion of the products that we sell are sourced from China and India, including certain valve sub-assemblies and pump sub-components that are finished in the U.S. The tariffs on products from Canada and Mexico have a lesser direct impact on our business as they do not represent a significant portion of the products that we purchase from those countries for resale to our customers. Even so, a significant portion of our U.S. inventory and products are domestically made but some products, such as valves and pumps, often have a significant portion of non-U.S. components, and we do import some valves, pumps and other products. In many instances, we have successfully collaborated with our customers to implement tariff pass-throughs throughout 2025 and into 2026. However, in some instances, tariffs raised infrastructure costs for our customers, making projects less viable and resulting in delays or cancellations among certain downstream clients. 21 The U.S. Supreme Court has invalidated the use of the International Emergency Economic Powers Act (“IEEPA”) to impose tariffs. The overall impact on IEEPA tariffs had been limited, as the administration quickly enacted or announced other statutory authorities to maintain or adjust tariffs. Besides the Section 232 tariffs on steel and aluminum noted above, Section 122 and 301 tariffs, along with pointed anti-dumping and countervailing duties, have been imposed to varying degrees. We see the evolution in energy transition investments to reduce atmospheric carbon, source carbon capture, storage and new energy streams as an opportunity for DNOW to supply many of the current products and services we provide, as well as an opportunity to partner and source from new suppliers to expand our offering and to meet our customers’ needs for their energy evolution investments. A number of our larger customers are leading the investments in energy evolution projects where we expect to continue to support them while expanding our product and solution offerings to meet their changing requirements. Part of our growth strategy is to expand our revenues by targeting new customers in non-oil and gas end markets, in addition to servicing those customers that will play a part in the future of the evolving mix of traditional and new sources of energy. Upstream The Upstream sector of our business includes the traditional exploration, production and extraction of oil and gas, as well as the use, transfer and disposal of produced water, and is the most cyclical of our markets. In the six months ended June 30, 2026, this sector represented 39% of our total Company revenue. The Upstream sector revenue increased 17% in the six months ended June 30, 2026 compared to the corresponding period of 2025. During the six months ended June 30, 2026, West Texas Intermediate (“WTI”) oil prices averaged $83.87 per barrel, up 22.9% from the corresponding period of 2025. Natural gas prices also drive customer activity and have experienced volatility but increased throughout 2025, driven by climate and seasonal weather patterns, increased LNG exports and lower storage levels. Recent industry reports have projected flat to lower upstream customer spending levels in 2026, due to current supply and demand projections. We also expect majority of our publicly traded oil and gas producer customers will remain disciplined and consistent with their commitments to their budgets, maintaining returns to their shareholders and operating within their cash flow requirements. Despite this, we expect opportunities for revenue synergies from cross-selling products related to our acquisitions will support growth in this sector. We also expect incremental growth in water management and disposal solutions, supported by our Flex Flow, Trojan and Edge Controls offerings, as customers seek to optimize operating costs and manage produced water volumes more effectively. The majority of the revenue in this sector comes from large independents and major exploration and production companies, which are expected to strongly influence the increase in capital spending in the coming years for this sector. Gas Utilities The Gas Utilities sector contributed 23% of our total Company revenue in the six months ended June 30, 2026, and we expect revenue from this sector to increase in future periods following the November 2025 acquisition of MRC Global. Market growth fundamentals of this sector are positive due to the demand for natural gas, distribution integrity upgrade programs as well as new home construction in certain U.S. states. The majority of the work we perform with our gas utility customers are multi-year programs where they continually evaluate, monitor and implement measures to improve their pipeline distribution networks, ensuring the safety and the integrity of their system. As of 2025, which is the most recently available information, the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) estimates approximately 33% of the gas distribution main and service line miles are over 40 years old or of unknown origin. This infrastructure requires continuous replacement and maintenance as these gas distribution networks continue to age. We supply many of the replacement products including valves, line pipe, smart meters, risers and other gas products. A large percentage of the line pipe we sell is sold to our gas utilities customers for line replacement and new sections of their distribution network. As our gas utility customers connect new homes and businesses to their gas distribution network, the growth in the housing market creates new revenue opportunities for our business to supply the related infrastructure products. Some of our customers in this sector support both gas and electric distribution, and certain customers have announced allocating a higher proportion of their capital budget to electric distribution. However, based on market fundamentals, the need for natural gas to fuel new electric generation facilities and new market share opportunities, we expect the Gas Utilities sector to continue to have steady growth in the coming years. Additionally, due to its reduced dependency on energy demand and commodity prices, this sector is less volatile than the others. Downstream and Industrial Downstream and Industrial sector generated 18% of our total Company revenue in the six months ended June 30, 2026. We expect this sector to deliver strong growth in the coming years driven by increased customer activity levels related to maintenance, repair and operations (“MRO”) activities, project turnaround activity in refineries and chemical plants and new energy transition related projects. Additionally, we have expanded into new markets, including mining and data centers. We are also negotiating master service agreements with targeted owners and subcontractors for PVF work in new data center cooling systems. While still early, we are seeing encouraging momentum in both areas. This sector has a significant amount of project activity, which can create substantial variability between quarters. The outlook for energy transition projects within the Downstream and Industrial sector is supported by government incentives and policies. Many of our customers have made commitments to net zero emissions to address climate change. Our customer base represents many of the primary leaders in the energy transition movement, and they are positioned to lead the effort to decarbonize through nearer-term efforts such as renewable or biodiesel refineries and offshore wind power generation as well as longer-term efforts such as carbon capture, sequestration and storage and hydrogen. However, as U.S. government support is waning for these projects 22 even while European government support continues, we are monitoring our customers' plans for, and the pace of development of, these projects. Midstream DNOW’s Midstream sector is primarily U.S. based and driven by the increased demand for pipelines and gathering systems. In the six months ended June 30, 2026, this sector represented 20% of our total Company revenue. The Midstream sector revenue increased 71% in the six months ended June 30, 2026 compared to the corresponding period of 2025 primarily as a result of the acquisition of MRC Global in November 2025. The outlook in 2026 is expected to have growth primarily driven by demand for natural gas infrastructure as LNG exports continue to rise and gas fired power generation increases for data centers. According to a 2025 Interstate Natural Gas Association of American ("INGAA") Foundation report, to meet energy demand through 2052, North America will require more than $1 trillion in capital investment across natural gas, oil, natural gas liquids, hydrogen and CO2 infrastructure, averaging $40 billion to $48 billion annually, varying by investment. This market driver is anticipated to positively impact our Midstream sector, contributing to opportunities for growth. The revenue profile for this sector tends to be volatile between quarters, as it can often be tied to large projects. Furthermore, as new LNG capacity comes online, this drives the need for associated pipeline infrastructure, which several LNG projects are expected to do in 2026. U.S. natural gas production is expected to rise, leading to the need for additional pipeline infrastructure and gathering systems. Rising electricity consumption from AI-driven data centers creates the need for additional natural gas transportation, which is also expected to drive growth in this sector. In some cases, the market drivers for the Midstream sector are also tied to the same drivers as the Upstream sector, but on a one to two quarter lag. To the extent completion activity and related production increase, this could also have the impact of improving our revenue opportunities in the Midstream sector. New well completions and higher production levels drive the need for additional surface equipment and gathering and processing infrastructure, benefiting this sector's revenue. Following the acquisition of MRC Global, we have enhanced our capabilities in large-bore valves, larger outside diameter pipe, measurement and instrumentation and valve actuation and automation that are in demand when the Midstream sector expands. We believe the combined company is well positioned to capture midstream growth opportunities both domestically and internationally, supported by an expanded footprint and integrated solutions offering. Supply Chain Our supply chain expertise, strong relationships with key suppliers, and effective inventory management allow us to navigate both inflationary and deflationary market conditions. This strategic approach ensures that we can maintain stability in our operations despite external economic pressures. Furthermore, our contracts with customers typically include provisions that allow us to respond quickly to price increases. These contractual mechanisms enable us to pass along cost increases to our customers. It is important to note that these challenges are dynamic and continue to evolve. If additional pricing fluctuations arise due to tariffs or quotas, the ultimate effect on our revenue and cost of products—which are determined using the LIFO inventory costing methodology—remains uncertain and subject to volatility. Operating Environment Overview Our results are dependent on, among other factors, the level of worldwide oil and gas drilling and completions, well remediation activity, crude oil and natural gas prices, capital spending by oilfield service companies and drilling contractors, and the worldwide oil and gas inventory levels. Key industry indicators for the second quarter of 2026 and 2025 and the first quarter of 2026 include the following: % % 2Q26 v 2Q26 v 2Q26* 2Q25* 2Q25 1Q26* 1Q26 Active Rigs: U.S. 554 571 (3.0 %) 548 1.1 % Canada 150 129 16.3 % 201 (25.4 %) International 1,056 1,078 (2.0 %) 1,083 (2.5 %) Worldwide 1,760 1,778 (1.0 %) 1,832 (3.9 %) WTI ($/bbl) $ 95.75 $ 64.63 48.2 % $ 71.98 33.0 % Natural Gas Prices ($/MMBtu) $ 2.95 $ 3.19 (7.5 %) $ 4.79 (38.4 %) Hot-Rolled Coil Prices (steel) ($/short ton) $ 1,045.84 $ 901.50 16.0 % $ 923.51 13.2 % U.S. Wells Completed 3,018 3,066 (1.6 %) 2,943 2.5 % * Monthly averages for the quarters indicated, except for U.S. Wells Completed. See sources on following page. 23 The following table details the U.S., Canadian and international rig activity and West Texas Intermediate oil prices for the past nine quarters ended June 30, 2026. In the third quarter of 2025, Baker Hughes’s methodology for calculating rig counts in the Kingdom of Saudi Arabia has been updated effective for periods beginning January 2024. As a result, previously reported international rig counts have been recast to conform to the updated methodology. Sources: Rig count: Baker Hughes, Inc. (www.bakerhughes.com); West Texas Intermediate Crude and Natural Gas Prices: Department of Energy, Energy Information Administration (“EIA”) (www.eia.gov); Hot-Rolled Coil Prices: SteelBenchmarker™ Hot Roll Coil USA (www.steelbenchmarker.com); U.S. Wells Completed: Department of Energy, Energy Information Administration (www.eia.gov) (As revised). The worldwide quarterly average rig count declined 3.9% (from 1,832 rigs to 1,760 rigs) and the U.S. increased 1.1% (from 548 to 554 rigs) in the second quarter of 2026 compared to the first quarter of 2026. The average price per barrel of WTI Crude increased 33.0% (from $71.98 per barrel to $95.75 per barrel), and average natural gas prices declined 38.4% (from $4.79 per MMBtu to $2.95 per MMBtu) in the second quarter of 2026 compared to the first quarter of 2026. The average price per short ton of Hot-Rolled Coil increased 13.2% (from $923.51 per short ton to $1,045.84 per short ton) in the second quarter of 2026 compared to the first quarter of 2026. U.S. Wells Completed increased 2.5% (from 2,943 completion count to 3,018 completion count) in the second quarter of 2026 compared to the first quarter of 2026. Longer Term Outlook We play a vital role in supporting customers’ supply chains, providing essential products for energy and industrial markets, including infrastructure across upstream, gas utilities, midstream, downstream and industrial sectors. Our business depends on both capital and maintenance spending by our customers. Global oil and gas consumption is rising due to population growth and expanding energy needs in emerging markets. The EIA projects world energy consumption to increase 34% between 2022 and 2050, with significant growth in renewables (118%), natural gas (29%) and hydrocarbon-based liquids (23%). U.S. oil production is expected to peak at 14 million barrels per day in 2028 and gradually decline, while natural gas production will grow, largely driven by LNG expansion and 24 power generation. The gas utilities industry is expected to grow as aging distribution networks prompt replacement and modernization. PHMSA estimates that roughly 33% of gas distribution lines are over 40 years old or of unknown origin, driving ongoing maintenance. Housing market growth further increases demand for related infrastructure products. According to the EIA, the U.S. will remain a net exporter of petroleum products due to expanded terminal capacity, with strong markets for our goods and services. This projected increase in oil and gas to meet the rise in international energy demand continues to provide a robust market for our existing goods and services. We anticipate future growth from energy transition projects, as traditional energy customers shift capital to these areas. Our established relationships and experience position us well for this evolving market. The U.S. midstream sector is expanding, particularly in natural gas infrastructure to meet LNG export and power demands. Federal policies have accelerated project reviews and simplified processes for pipeline development. According to a 2025 INGAA Foundation report, to meet energy demand through 2052, North America will require more than $1 trillion in capital investment across natural gas, oil, natural gas liquids, hydrogen and CO2 infrastructure, averaging $40 billion to $48 billion annually, varying by investment. Globally, refining capacity—especially in Asia and the Middle East—is projected to outpace demand growth later in the decade; the U.S. market remains stable but faces planned capacity reductions. As refineries age or convert to renewable fuels, we supply critical infrastructure for continued operations and conversions. The U.S. chemicals market is expected to grow steadily, while short term cycles will exist and remain globally competitive through 2040, due to feedstock cost advantage from shale gas and natural gas liquids (“NGLs”). The European market is transitioning toward specialty and sustainable chemicals with commodity chemicals declining. Demand for our products is shaped by operational budgets, capacity expansions, and compliance needs. Results of Operations The results of operations are presented before consideration of the noncontrolling interests. Our results of operations are as follows (in millions): Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Revenue: United States $ 1,109 $ 528 $ 2,094 $ 1,002 Canada 47 48 98 110 International 151 52 298 115 Total revenue $ 1,307 $ 628 $ 2,490 $ 1,227 Operating (loss) profit: United States $ (8 ) $ 15 $ (62 ) $ 36 Canada 1 — 2 4 International 8 2 11 6 Total operating profit (loss) $ 1 $ 17 $ (49 ) $ 46 Other (expense) income, net (10 ) — (20 ) — (Loss) income before income taxes (9 ) 17 (69 ) 46 Income tax provision (benefit) 12 3 (4 ) 10 Net (loss) income (21 ) 14 (65 ) 36 Net income attributable to noncontrolling interests — — — 1 Net (loss) income attributable to DNOW Inc. $ (21 ) $ 14 $ (65 ) $ 35 Gross Profit $ 243 $ 129 $ 436 $ 267 Adjusted Gross Profit (1) $ 272 $ 146 $ 528 $ 287 Adjusted EBITDA (1) $ 60 $ 51 $ 99 $ 97 (1)Adjusted Gross Profit and Adjusted EBITDA are non-GAAP financial measures. For a reconciliation of these measures to an equivalent GAAP measure, see pages 26-28 herein. Revenue. Our revenue was $1,307 million and $2,490 million for the three and six months ended June 30, 2026 as compared to $628 million and $1,227 million for the corresponding periods of 2025, an increase of $679 million, or 108.1%, and an increase of $1,263 million, or 102.9%, respectively. U.S. Segment—Revenue was $1,109 million and $2,094 million for the three and six months ended June 30, 2026, an increase of $581 million and an increase of $1,092 million compared to the corresponding periods of 2025. The increase for the three and six months ended June 30, 2026 was primarily driven by incremental revenue from the MRC Global acquisition completed in the fourth quarter of 2025. 25 Canada Segment—Revenue was $47 million and $98 million for the three and six months ended June 30, 2026, a decrease of $1 million, or 2.1% and a decrease of $12 million, or 10.9%, compared to the corresponding periods of 2025. For the six months ended June 30, 2026, the decrease was primarily due to lower project-related activity. Our Canadian revenue was approximately 4% of total revenue for both the three and six months ended June 30, 2026, compared to 8% and 9% for the three and six months ended June 30, 2025, respectively. We are subject to fluctuations in foreign currency exchange rates relative to the U.S. dollar. Our Canadian revenue is favorably impacted as the U.S. dollar weakens relative to the Canadian dollar, and unfavorably impacted as the U.S. dollar strengthens relative to the Canadian dollar. For the three and six months ended June 30, 2026, our Canadian segment revenue was unfavorably impacted by less than $1 million and favorably impacted by approximately $2 million, respectively, due to changes in foreign currency exchange rates. International Segment—Revenue was $151 million and $298 million for the three and six months ended June 30, 2026, an increase of $99 million and an increase of $183 million compared to the corresponding periods of 2025. The increase was primarily due to the acquisition of MRC Global in the fourth quarter of 2025. Our international revenue was approximately 11% and 12% of total revenue for the three and six months ended June 30, 2026, compared to 8% and 9% for the three and six months ended June 30, 2025, respectively. We are subject to fluctuations in foreign currency exchange rates relative to the U.S. dollar. Our international revenue is favorably impacted as the U.S. dollar weakens relative to other foreign currencies, and unfavorably impacted as the U.S. dollar strengthens relative to other foreign currencies. For the three and six months ended June 30, 2026, our international segment revenue was favorably impacted by approximately $1 million and $4 million, respectively, due to changes in foreign currency exchange rates. Gross Profit. Our gross profit was $243 million (18.6% of revenue) and $436 million (17.5% of revenue) for the three and six months ended June 30, 2026, respectively, as compared to $129 million (20.5% of revenue) and $267 million (21.8% of revenue) for the three and six months ended June 30, 2025, respectively. The increase was primarily attributable to incremental revenue due to the acquisition of MRC Global in November 2025. Compared to average cost, our LIFO inventory costing methodology increased cost of products by $19 million and $35 million for the three and six months ended June 30, 2026, respectively, as compared to a $15 million and $16 million increase in cost of products for the three and six months ended June 30, 2025, respectively. Adjusted Gross Profit. Adjusted Gross Profit increased to $272 million (20.8% of revenue) and $528 million (21.2% of revenue) for the three and six months ended June 30, 2026 from $146 million (23.2% of revenue) and $287 million (23.4% of revenue) for the three and six months ended June 30, 2025, an increase of $126 million and $241 million, respectively. For the three and six months ended June 30, 2026, the increase was primarily driven by the U.S. and International segments, partially offset by the Canada segment. The reduced margin percentage is primarily due to changes in product and customer mix resulting from the integration of MRC Global's product portfolio into the Company's expanded offering. Adjusted Gross Profit is a non-GAAP financial measure. We define Adjusted Gross Profit as revenues, less cost of products, plus amortization of intangibles, plus inventory-related charges incremental to normal operations, plus transaction costs associated with acquisitions, such as inventory fair value step-up or write-downs, and plus or minus the impact of our LIFO inventory costing methodology. We present Adjusted Gross Profit because we believe it is a useful indicator of our operating performance without regard to items, such as amortization of intangibles that can vary substantially from company to company depending upon the nature and extent of acquisitions. Similarly, the impact of the LIFO inventory costing method can cause results to vary substantially from company to company depending upon whether they elect to utilize LIFO and depending upon which method they may elect. We use Adjusted Gross Profit as a key performance indicator in managing our business. We believe that gross profit is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to Adjusted Gross Profit. The following table reconciles gross profit, as derived from our consolidated financial statements, with Adjusted Gross Profit, a non-GAAP financial measure (in millions): Three months ended June 30, Six months ended June 30, 2026 As a % of revenue 2025 As a % of revenue 2026 As a % of revenue 2025 As a % of revenue Gross profit, as reported $ 243 18.6 % $ 129 20.5 % $ 436 17.5 % $ 267 21.8 % Amortization of intangibles 7 2 13 4 Increase in LIFO reserve 19 15 35 16 Inventory-related transaction charges 3 — 44 — Adjusted Gross Profit $ 272 20.8 % $ 146 23.2 % $ 528 21.2 % $ 287 23.4 % Selling, general and administrative (“SG&A”) expenses. SG&A expenses were $238 million and $481 million for the three and six months ended June 30, 2026, compared to $112 million and $221 million for the corresponding periods of 2025, an increase of $126 million and $260 million, respectively. The increase was primarily driven by incremental expenses from the MRC Global acquisition completed in the fourth quarter of 2025. SG&A expenses include branch location, distribution center and regional expenses (including costs such as compensation, benefits and rent) as well as depreciation and corporate selling, general and administrative expenses. 26 Impairment and other charges. Impairment and other charges were $4 million for both the three and six months ended June 30, 2026, compared to nil for the corresponding periods of 2025. These impairment charges were related to the operating right-of-use asset associated with a corporate office lease in Houston, Texas. The impairment resulted from the Company's decision to permanently vacate the leased premises. Operating profit (loss). Our operating profit (loss) was $1 million and ($49) million for the three and six months ended June 30, 2026, compared to an operating profit of $17 million and $46 million for the corresponding periods of 2025, a decrease of $16 million and $95 million, respectively, primarily due to inventory-related transaction charges, our LIFO inventory costing methodology, reduced margins and increases in incremental SG&A expenses associated with the MRC Global acquisition. U.S. Segment—Operating loss was $8 million and $62 million for the three and six months ended June 30, 2026, a decrease of $23 million and a decrease of $98 million compared to the corresponding periods of 2025. Operating profit decreased primarily due to inventory-related transaction charges, our LIFO inventory costing methodology and increases in incremental expenses associated with the MRC Global acquisition. Canada Segment—Operating profit was $1 million and $2 million for the three and six months ended June 30, 2026, an increase of $1 million and a decrease of $2 million compared to the corresponding periods of 2025. Operating profit increased primarily due to a reduction in SG&A expenses for three months ended June 30, 2026. For the six months ended June 30, 2026 the decline in operating profit was driven by the decline in revenue discussed above. International Segment—Operating profit was $8 million and $11 million for the three and six months ended June 30, 2026, an increase of $6 million and an increase of $5 million compared to the corresponding periods of 2025. Other (expense) income, net. Other expense was $10 million and $20 million for the three and six months ended June 30, 2026 and was primarily attributable to interest expense on borrowings associated with the acquisition of MRC Global completed in the fourth quarter of 2025. Other (expense) income was nil for the corresponding periods of 2025. Income tax provision (benefit). The effective tax rate for the three and six months ended June 30, 2026, was (133.3%) and 5.8%, respectively, compared to 17.6% and 21.7%, respectively, for the corresponding periods of 2025. In general, the Company's effective tax rate differs from the U.S. statutory rate due to recurring items, such as differing tax rates on income earned in foreign jurisdictions, nondeductible expenses and state income taxes. The effective tax rate for the three and six months ended June 30, 2026 were impacted by changes in forecasted annual earnings and the geographic mix of those earnings, which resulted in a change in the estimated annual effective tax rate from the estimate used during the first quarter of 2026. The revised estimated annual effective tax rate contributed to income tax expense during the second quarter of 2026 despite a pretax loss for the quarter, resulting in a negative effective tax rate for the three months ended June 30, 2026. Net (loss) income attributable to DNOW Inc. Our net loss attributable to DNOW Inc. was $21 million and $65 million for the three and six months ended June 30, 2026, compared to net income attributable to DNOW Inc. of $14 million and $35 million for the three and six months ended June 30, 2025, a decrease of $35 million and $100 million, respectively, due to inventory-related transaction charges, our LIFO inventory costing methodology, reduced margins and increases in incremental SG&A expenses associated with the MRC Global acquisition. Adjusted EBITDA. Adjusted EBITDA, a non-GAAP financial measure, was $60 million (4.6% of revenue) and $99 million (4.0% of revenue) for the three and six months ended June 30, 2026, compared to $51 million (8.1% of revenue) and $97 million (7.9% of revenue) for the three and six months ended June 30, 2025. Our Adjusted EBITDA increased $9 million and $2 million, respectively, over the periods primarily due to increased revenue associated with the MRC Global acquisition partially offset by reduced margins and increased incremental SG&A costs associated with the MRC Global acquisition. We define Adjusted EBITDA as net (loss) income plus interest, taxes, depreciation and amortization and excluding other costs, such as stock-based compensation, restructuring and exit costs, transaction-related charges, inventory-related charges incremental to normal operations, long-lived asset impairments (including goodwill and intangible assets) and plus or minus the impact of our LIFO inventory costing methodology. Transaction-related charges include transaction costs, inventory fair value step-up and write-down, retention bonus accruals and integration expenses associated with acquisitions. This financial measure excludes the impact of certain amounts and is not calculated in accordance with GAAP. A reconciliation of this non-GAAP financial measure, to its most comparable GAAP financial measure, is included below. We believe Adjusted EBITDA provides investors with a helpful measure for comparing our operating performance with the performance of other companies that may have different financing and capital structures or tax rates. We believe it is a useful indicator of our operating performance without regard to items, such as amortization of intangibles, which can vary substantially from company to company depending upon the nature and extent of acquisitions. Similarly, the impact of the LIFO inventory costing method can cause results to vary substantially from company to company depending upon whether they elect to utilize LIFO and depending upon which method they may elect. We use Adjusted EBITDA internally to evaluate and manage the Company’s operations because we believe it provides useful supplemental information regarding the Company’s ongoing operating performance. Adjusted EBITDA has important limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. We believe that net (loss) income attributable to DNOW Inc. is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to Adjusted EBITDA. 27 The following table reconciles net (loss) income attributable to DNOW Inc., as derived from our consolidated financial statements, with Adjusted EBITDA, a non-GAAP financial measure (in millions): Three months ended June 30, Six months ended June 30, 2026 As a % of revenue 2025 As a % of revenue 2026 As a % of revenue 2025 As a % of revenue Net (loss) income attributable to DNOW Inc. $ (21 ) (1.6 )% $ 14 2.2 % $ (65 ) (2.6 )% $ 35 2.9 % Net income attributable to noncontrolling interests — — — 1 Interest expense (income), net 9 (1 ) 17 (2 ) Income tax provision (benefit) 12 3 (4 ) 10 Depreciation and amortization 23 10 46 21 Stock-based compensation (1) 4 4 8 7 Increase in LIFO reserve 19 15 35 16 Transaction-related charges (2) 6 5 11 7 Inventory-related transaction charges (3) 3 — 44 — Impairment and other charges (4) 4 — 4 — Restructuring and exit costs (2) — 1 — 2 Other (5) 1 — 3 — Adjusted EBITDA $ 60 4.6 % $ 51 8.1 % $ 99 4.0 % $ 97 7.9 % (1)For the three and six months ended June 30, 2026, stock-based compensation excludes $1 million and $2 million, respectively, and for the corresponding periods of 2025, stock-based compensation excludes less than $1 million and $1 million, respectively, as such amounts were reported in transaction-related charges. (2)Transaction-related charges and restructuring and exit costs are included in selling, general and administrative expenses. (3)Inventory-related transaction charges are included in cost of products. For the three and six months ended June 30, 2026, inventory-related transaction charges includes $3 million and $44 million, respectively, of charges related to inventory step-up and inventory write-downs. (4)For the three and six months ended June 30, 2026, impairment and other charges includes $4 million of impairment charges related to the operating right-of-use asset associated with a corporate office lease in Houston, Texas. (5)For the three and six months ended June 30, 2026, other costs includes $1 million and $3 million, respectively, related to foreign currency losses. Liquidity and Capital Resources We assess liquidity in terms of our ability to generate cash to fund operating, investing and financing activities. We expect resources to be available to reinvest in existing businesses, strategic acquisitions and capital expenditures to meet short and long-term objectives. We believe that cash on hand, cash generated from expected results of operations and amounts available under our revolving credit facility will be sufficient to fund operations, anticipated working capital needs and other cash requirements, including capital expenditures and repurchases under our share repurchase program. As of June 30, 2026 and December 31, 2025, we had cash and cash equivalents of $114 million and $164 million, respectively. As of June 30, 2026, $108 million of our cash and cash equivalents were maintained in the accounts of our various foreign subsidiaries. During the first six months of 2026, we repatriated $41 million from our foreign subsidiaries. The Company makes a determination each period concerning its intent and ability to indefinitely reinvest the cash held by its foreign subsidiaries. The Company has not recorded deferred income taxes on undistributed foreign earnings that it considers to be indefinitely reinvested. Future changes to our indefinite reinvestment assertion could result in additional taxes, such as withholding and/or state taxes, offset by any available foreign tax credits. We maintain an $850 million five-year senior secured revolving credit facility that will mature on November 6, 2030. Availability under the revolving credit facility is limited to the lesser of the commitments and a borrowing base comprised of eligible account receivables, eligible inventory and eligible rental equipment assets of the Borrowers and subsidiary guarantors. As of June 30, 2026, we had $474 million borrowings against our revolving credit facility and had approximately $358 million in availability (as defined in the Amended Credit Facility). The credit facility includes a springing financial covenant that requires us to maintain, during any period when availability falls below specified thresholds, a minimum fixed charge coverage ratio (as defined in the Amended Credit Facility). The credit facility contains usual and customary affirmative and negative covenants for credit facilities of this type including financial covenants. As of June 30, 2026, we were in compliance with all covenants. We continuously monitor compliance with our debt covenants. A default, if not waived or amended, would prevent us from taking certain actions, such as incurring additional debt. In connection with acquisitions in 2024, 2025 and 2026, the Company is committed to total future retention payments of up to $11 million payable in 2027, 2028 and 2029. Payments are due to various employees if non-financial post combination service conditions are met pursuant to the terms and conditions of the retention agreements. 28 Cash Flows The following table summarizes our net cash flows provided by (used in) operating activities, investing activities and financing activities for the periods presented (in millions): Six months ended June 30, 2026 2025 Net cash provided by operating activities $ 38 $ 29 Net cash used in investing activities (61 ) (16 ) Net cash used in financing activities (24 ) (40 ) For the six months ended June 30, 2026, net cash provided by operating activities was $38 million compared to $29 million in the corresponding period of 2025. For the six months ended June 30, 2026, net cash provided by operating activities was primarily driven by a net increase of $31 million in working capital, mainly resulting from decreases in accrued liabilities for severance and legal and professional fees associated with the acquisition of MRC Global, as well as an increase in accounts receivable. These impacts were offset by an increase in accounts payable and a decrease in inventory. For the six months ended June 30, 2025, net cash provided by operating activities was primarily driven by a net increase of $70 million in working capital in 2025. The increase reflected a proactive investment of $28 million in inventory to support customer demand, coupled with $45 million increase in accounts receivable due to revenue growth. For the six months ended June 30, 2026, net cash used in investing activities was $61 million compared to $16 million in the corresponding period of 2025. For the six months ended June 30, 2026, net cash used in investing activities was primarily related to business acquisitions of $46 million and purchases of property, plant and equipment of $17 million. Net cash used in investing activities in the corresponding period of 2025 was primarily related to purchases of property, plant and equipment of $10 million and business acquisitions of $8 million. For the six months ended June 30, 2026, net cash used in financing activities was $24 million compared to $40 million in the corresponding period of 2025. For the six months ended June 30, 2026, net cash used in financing activities primarily related to share repurchases of $75 million and shares withheld for taxes for employee awards of $5 million, partially offset by net borrowings under the revolving credit facility of $63 million. Net cash used in financing activities in the corresponding period of 2025 was primarily related to share repurchases of $27 million and shares withheld for taxes for employee awards of $8 million. Capital Spending We intend to pursue additional acquisition candidates, but the timing, size or success of any acquisition effort and the related potential capital commitments cannot be predicted. We continue to expect to fund future cash acquisitions primarily with cash on hand, cash flow from operations and the usage of the available portion of the revolving credit facility. There can be no assurance that additional financing will be available at terms acceptable to us. Share Repurchase Program On January 24, 2025, the Company’s Board of Directors authorized a new share repurchase program to purchase up to $160 million of its outstanding common stock. We expect to fund share repurchases primarily with cash on hand, cash flow from operations and the usage of the available portion of the revolving credit facility. The timing and amount of any repurchases will be made at our discretion, taking into account a number of factors, including market conditions. The share repurchase program does not obligate the Company to repurchase shares and may be suspended or discontinued at any time at our discretion. All shares repurchased shall be retired pursuant to the terms of the share repurchase program. For the six months ended June 30, 2026, we repurchased 6,057,772 shares of our common stock for a total of approximately $75 million. As of June 30, 2026, we had approximately $48 million remaining under the program’s authorization. Critical Accounting Estimates For a discussion of the critical accounting estimates that we use in the preparation of our consolidated financial statements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2025. Since the filing of our Form 10-K, there have been no material changes in our critical accounting estimates from those disclosed therein. In preparing the financial statements, the Company makes assumptions, estimates and judgments that affect the amounts reported. The Company periodically evaluates its estimates and judgments that are most critical in nature, which are related to allowance for credit losses, inventory reserves, goodwill, purchase price allocation of acquisitions and income taxes. Its estimates are based on historical experience and on its future expectations that the Company believes are reasonable. The combination of these factors forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results are likely to differ from our current estimates, and those differences may be material. 29