177.3%. That was DNOW’s inventory growth between the comparable June 30 balances. Revenue grew 108.1% over the same comparable period, largely because the company added MRC Global, but the warehouse expanded faster than the sales line.
The surface reading is easy: DNOW more than doubled revenue to $1.3 billion after completing the acquisition in November 2025. Its stock closed at $15.38 on August 6, up 8.1% that day. The harder part is what happened underneath the new scale: operating income fell from $17 million to $1 million, and net income went from $14 million to a $21 million loss.
Gross margin also slipped from 20.5% to 18.6%. Diluted shares rose 71.7% to 182 million, so the larger business is being measured across a much larger ownership base too.
DNOW gives several reasons for the decline in operating income, including inventory-related transaction charges, its LIFO inventory accounting, lower margins, and incremental selling, general and administrative costs tied to MRC Global. Management also says adjusted EBITDA increased by $9 million for the three months, primarily from the acquired revenue, partly offset by reduced margins and acquisition costs.
The company’s explanation for the margin pressure is specific:
"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."
DNOW 10-Q, August 6, 2026
In plain English, more products and customers produced more sales, but the combined mix generated less gross profit per dollar of revenue. That is why a revenue chart alone misses the filing’s central tension.
The operating-income disclosure adds the other half of the picture:
"Our operating profit (loss) wa s $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 correspondi ng 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."
DNOW 10-Q, August 6, 2026
The acquisition did not merely add revenue to the existing business. The reported numbers also include acquisition-related costs and accounting effects, a lower-margin product mix linked to the integration, and a much larger inventory balance.
Cash offers another receipt, though not a clean resolution. Cash fell to $114 million from $232 million, while the company said six-month operating cash flow was primarily driven by a $31 million increase in working capital, including lower accrued liabilities tied to severance and professional fees and higher accounts receivable. The cause of the inventory increase itself is not disclosed.
DNOW’s annual results show the same broad shift arriving before this latest report: revenue reached $2.8 billion in 2025, up 18.8%, while operating margin was negative 3.3%. The MRC Global deal made the top line much larger, and the latest three-month figures show operating margin at 0.1%.
The unresolved number is inventory. DNOW’s next three-month report can be read against the $1.1 billion balance disclosed here, alongside whether operating income has moved away from $1 million. That comparison leaves the filing’s main question in one place: how much of the new revenue base can become operating profit once the acquisition-related charges and mix effects pass through.
Source: DNOW’s 10-Q filed August 6, 2026, including the reported $1.1 billion inventory balance.