DNOW IR-Presentation

2014 COPYRIGHT DISTRIBUTIONNOW

Investor Presentation

November 2014

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2014 COPYRIGHT DISTRIBUTIONNOW 2014 COPYRIGHT DISTRIBUTIONNOW

Disclosure Statement

Statements made in the course of this presentation that state the Company's or management'sintentions, 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 thoseprojected in such forward-looking statements. Additional information concerning factors that couldcause actual results to differ materially from those in the forward-looking statements is containedfrom time-to-time in the Company's filings with the U.S. Securities and Exchange Commission. Anydecision regarding the Company or its securities should be made upon careful consideration of notonly the information here presented, but also other available information, including theinformation filed by the Company with the SEC. Copies of these filings may be obtained bycontacting the Company or the SEC.

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Transaction Overview

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Form 10 registration statement for NOW Inc. declared effective by SEC

DNOWTicker

NYSEExchange

1 share of DNOW stock for every 4 shares of NOV stock Exchange ratio

107 millionExpected number of shares

May 20, 2014When-issued trading begins

May 22, 2014Record date

May 30, 2014 Distribution of NOW shares

June 2, 2014First day of regular-way trading


Vision

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DistributionNOW will be recognized as the market Leader in Supply Chain Management through superior customer service by leveraging the strengths of our employees, processes, suppliers and information.


Countries 20+Locations 330+Employees 5,300+ERP System SAP


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Company Snapshot

One of the largest distributors to the energy industry

Legacy of over 150 years operating

Support major land and offshore operations for all the key energy producing regions around the world

Comprehensive network of more than 270 Energy Branches and more than 60 Supply Chain locations

2013 revenue of $4.3 billion and EBITDA of $239 million

Operates under the DistributionNOW and Wilson Export brands

More than 300,000 stock keeping units (SKUs)

Thousands of vendors in approximately 40 countries

Presence in over 20 countries supporting customer operations in more than 90 countries

Key markets include North America, Latin America, the North Sea, the Middle East, the Commonwealth of Independent States and Southeast Asia

International15%

United States67%

Canada18%

2013 Revenue by Segment

Energy Branches

83%

Supply Chain17%

>270 Energy Branches

>60 Supply Chain locations

2013 Revenue by Channel


USA

CANADA

COLUMBIA

BRAZIL

CHINA

INDIA

AUSTRALIA

RUSSIA

KAZAKHSTAN

AZERBAIJAN

NORWAY

UK

NETHERLANDS

MEXICO

Global Customer Reach

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CanadaEdmonton, AlbertaEstevan, Saskatchewan

Estevan

Edmonton

EuropeAberdeen, Scotland

Aberdeen

AsiaJurong, Singapore

United StatesHouston, TXLos Angeles, CASouth Plainfield, NJ

South Plainfield

Houston

Los Angeles

MENAJebel Ali, U.A.E.

OMAN

EGYPTSAUDI

ARABIA

KUWAIT

Company Locations

Energy Branches

Distribution Centers

Distribution Centers:

PERU

POLAND

SOUTH AFRICA

Sales Offices

UAEJebelAli

SINGAPORE

INDONESIA

Jurong


Global Customer Reach

Aberdeen

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Dubai

Export Country Crossover

Export by Country

Houston

U.S. Wilson Export

UK Export

Dubai Export


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Comprehensive Product Offering and Balanced Revenue Mix

Drilling and Production

38%

Pipe9%

Valves12%

Fittings and Flanges

12%

Mill Tool, MRO, Safety and Other

29%

2011 2013

Drilling and Production

23%

Pipe20%

Valves20%

Fittings and Flanges

15%

Mill Tool, MRO, Safety and Other

22%

DNOW carries a broad range of products to meet rapid and critical deliveries to customers in remote areas of service

Limited exposure to commodities

Oil country tubular goods (OCTG) comprise a small portion of sales and inventory (


Value Proposition

Product Offering Market SegmentsA Critical Link Through Leading Supply Chain Technology

Knowledgeable people Customer

Product

Application

Materials management

Proven processes Quality management

Supply chain expertise

Extensive infrastructure United States

Canada

International

Procurement advantage Broad supplier base

Single source provider

Global sourcing

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Blue-Chip Customers and Suppliers

Customers

/

Drilling Contractors

Exploration & Production

Midstream

Downstream & Industrial

Suppliers


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Flexible Operational Model

Branch network model supported by Distribution

Centers to ensure inventory is maintained locally.

Right inventory in right place at the right time

BRANCHES

Broad sourcing capability to consolidate customer

requirements on multiple lower value or non-core items

EXPORT SUPPLY CHAIN SERVICES

Vast offering of supply chain services to increase efficiency

and lower cost within the supply chain

CAPITAL PROJECTS & VALVE ACTUATION

Global sourcing and expediting capability to ensure correct

product is delivered to the job site in accordance with project requirements

Distribution centers ensure replenishment of branches

and direct shipment to customer facility

REGIONAL DISTRIBUTION CENTER


Quality-Triple Impact Supplier Program

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SUPPLIER AUDITS

Assessment and qualification of new suppliers

Reassessment of existing suppliers

Follow up on supplier quality issue

Rotational on-site physical audits

Foundry evaluation on key valve manufacturers

QUALITY CHECKPOINTS

Supplier performance reporting (KPIs)

Trial order lab testing

Quarterly enhanced lab testing

Manufacturer pre-ship inspection

Overstock return inspections

Verification of supplier corrective action

SAMPLING STANDARD

Monitoring and measuring

Daily audit of incoming products

QA/QC inspection (MTR review, PMI on SS and alloys, threading, dim. and visual)

Full traceability (marking check)

Acceptable Quality Limit (AQL) 1.5


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Key Investment Highlights

1 Leading distributor in a large, growing and highly fragmented market

Operational initiatives and scalability drive margin improvement4

Macro industry trends favor players with extensive scale5

3 Unmatched IT capabilities underpin efficient operations and differentiated value proposition

6 Key end markets still strong

7 Demonstrated successful acquisition and integration track record

8 Attractive cash generation and returns through the cycle

9 Experienced management team

2 Focused growth strategy as an independent company


Leading Distributor in a Large, Growing and Highly Fragmented Market

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1

$20bn+ addressable market in North America

Global market estimated to exceed $50bn

Highly fragmented market

DistributionNOW differentiated by scale and global reach

Majority of competitors are small, local/regional players

DistributionNOW is one of the largest distributors to the energy industry worldwide

Over $850 million in inventory to support customers

More than 300,000 SKUs

Thousands of vendors in approximately 40 countries

Quality offering ensured through AML

Network of over 330 locations worldwide

Presence in 20+ countries

230+ locations in the U.S.

70+ locations in Canada

30+ international locations

Supported by 8 distribution centers

MRC24%

DNOW19%

Other57%


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Growth Strategy through Capital Allocation2

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2 3

Energy Branches: Organic Growth

Supply Chain Services: Growth through Capital Allocation

Future Opportunities

Increase presence in non-conventional energy plays

Continued market share gains in the U.S. and Canada

Further expansion to and within new markets outside of the U.S. and Canada

Further penetrate downstream and industrial channel

Expand product lines such as valves / actuation, safety services and electrical

Rapidly grow market share with manufacturing customers

Broaden scope and reach of industrial offering

Industrial MRO

OEM supply

New product lines

New end markets

Logistics

Equipment rentals


Unmatched IT Capabilities Underpin Efficient Operations and Differentiated Value Proposition

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3

DNOW has implemented a single integrated ERP system linking global branches, customers and suppliers

Greatly enhances operational efficiency

Enables immediacy of decision-making

Reduces total procurement costs for DNOW and customers

Supports planning and optimization of supply chain processes

Sample ApplicationsSystem Highlights

Integrated with customer ERP

Approximately 3 billion electronic transactions processed in 2013

In-house support allows DNOW to tailor its system to better meet customers needs and increase operational efficiency

Demand management, statistical forecasting and lifecycle planning expedite decision making and allow flexible assortment planning

An integrated warehouse management system; voice and wireless bar code scanners increase warehouse efficiencies

MetalTrace (MT) allows for the storage and retrieval of manufacturer documentation such as Safety Data Sheets (SDS) and Mill Test Reports (MTRs) in a consolidated, indexed environment. MT is integrated with DNOWs ERP system for enhanced traceabilityof material and faster order processing


Operational Initiatives and Scalability Drive Margin Improvement

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4

Target:Return to previously

achieved 8%+ EBITDA margin

Highly flexible model

One global ERP system

Centralized pricing discipline

Leveraged international sourcing

Distribution center supported inventory replenishment

Operational Excellence

Low fixed costs

Incremental margins well in excess of total margins

Limited capital needs to support expansion

Integration of acquisitions

Incentives tied to profitability

Highly Scalable Business Model


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Macro Industry Trends Favor Players With Extensive Scale

DNOW has sophistication, scale and geographic reach to serve an increasingly consolidated and global customer base

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TrendCustomer centralizing procurement functions and consolidating suppliers to enhance operational efficiency

DNOW Capability

Integrated supply model and comprehensive supply services to manage customer procurement and inventory

Industry consolidation of customer base through acquisitions and international expansion

Trend

DNOW Capability

Size and geographic reach to serve global customer need in existing and new geographies

Case StudyCase StudyPrivately owned independent, vertically integrated oil and gas company

Operations in South Texas and Northern Mexico (Eagle Ford) and Colombia

Customer consolidating spending for core products previously sourced from several supply companies

Customer engaged DNOW in materials management program to support Eagle Ford and Colombian assets

Warehouse and inventory management, material identification and product consolidation to reduce operations cost

Large public independent oil and gas company

DNOW is preferred material management partner within Customers Regional Distribution Concept (RDC)

Provide full cycle material management solutions across Customers assets in U.S. and Canada

Customer recently made acquisition in South Texas (Eagle Ford)

DNOW implementing of the RDC model at new Eagle Ford assets

Displaces current suppliers


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Key End Markets Still Strong6

GDP GrowthUpstream Development Capex Spending

Industrial Capacity Utilization and Production

(4%)

(2%)

0%

2%

4%

6%

2003 2005 2007 2009 2011 2013 2015 2017

United States Canada World

$132 $136 $137 $144 $154

$54 $50 $45 $44 $47

$222 $253 $249 $242 $223

$408 $439 $431 $430 $424

2012A 2013A 2014E 2015E 2016E

United States Canada Top 10 Countries (ex-U.S. and Canada)

80

85

90

95

100

105

110

66%

69%

72%

75%

78%

81%

84%

2003 2005 2007 2009 2011 2013

Capacity Utilization Production

Source: Wood MackenzieNote: Top 10 Countries include Australia, Brazil, Canada, China, Iraq, Mexico, Norway, Russia, U.K. and U.S.

Source: U.S. Federal Reserve

Source: IHS Economics

($ in billions)

Average Annual Rig Count

1,190 1,380 1,648 1,768 1,878

1,086 1,541 1,875

1,919 1,761 1,845

369 458

470 343 379

221

351 423 365 355 371 836

908 925 1,005

1,079

997

1,094 1,167 1,234 1,296 1,344

Canada International

Source: Baker Hughes, Inc. Note: YTD2014 includes rig count through September 2014

(number of rigs)


Demonstrated Successful Acquisition and Integration Track Record

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Wilson and CE Franklin HighlightsSelected Historical Acquisitions

M&A Strategy

Expanded DNOWs end market offering with immediate entry into midstream, downstream and industrial markets

New customer base provided increasedselling opportunity

Strengthened brand and existing customer relationships

Expanded DNOWs capabilities in vending and tool crib supply chain solutions

Utilize strong balance sheet to allocate capital towards strengthening market positions

Enhance product offering and geographic reach in Energy Branches

Accelerate expansion in downstream & industrial segments

Expand eCommerce and supply chainsolutions technologies

Date Acquisition Country

December 1998 Dominion Oilfield Supply (DOSCO/TS&M) Canada

June 1999 Continental Emsco Company (via Wilson) United States / Canada

July 1999 Dupre Supply United States

January 2000 Texas Mill Supply (via Wilson) United States

January 2000 Republic Supply Company United States

November 2000 Hart Sales Company United States

January 2001 Van Leeuwen Pipe & Tube (via Wilson) United States

March 2001 DEMIJ-Rotterdam The Netherlands

June 2001 Rye Supply United States

August 2001 Texas Oil Works Supply United States

August 2001 AMTEX Pump & Supply United States

June 2002 STS Supply United States

January 2003 LSI Specialty Electrical Products United States

August 2003 WTM Sales United States

August 2003 Neven Handelsonderneming The Netherlands

October 2004 Roma General Welding Services Australia

December 2008 Sakhalin Outfitters Russia

March 2010 PLT United States

August 2010 Group KZ Kazakhstan

February 2011 Capital Valves United Kingdom

May 2012 Wilson Distribution U.S., Canada, International

June 2012 Engco Canada

July 2012 CE Franklin Canada


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Attractive Cash Generation and Returns Through the Cycle8

Free Cash Flow and EBITDA

Robust free cash flow despite headwinds in 2013 from a down year in the broader energy sector

Continued to reinvest in the business to improve operations and support future growth

Flexible cost structure and disciplined working capital management underpin cash flow generation through the cycle

$224 $246

$184

$235

$264 $239

2011 2012 2013

Free Cash Flow EBITDA

(1) ROCE excludes goodwill, which is primarily associated with the acquisitions of Wilson and CE Franklin(2) Estimated, Pro Forma(3) Free Cash Flow is defined as EBITDA less capital expenditures(4) EBITDA is defined as earnings before Interest, Taxes, Depreciation and Amortization

(2)

(3)

(2)

($ in millions)

2013 Financial Snapshot

Revenue: $4.3 billion Gross margin: ~19% EBITDA: $239 million

5.6% margin Free cash flow: $184 million ROCE(1): 15%

(4)


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Experienced Management Team

21-year average tenure of Operations team, including NOV and its predecessor entities

Extensive industry experience

Focus on results, process and relationships

Note: Tenure at DNOW / NOV includes predecessor entities

David A. CherechinskyChief Accounting Officer

25 years at DNOW / NOV

Daniel L. MolinaroChief Financial Officer


Raymond W. ChangGeneral Counsel


Robert R. WorkmanPresident and Chief Executive Officer


Burk L. EllisonPresident, Energy Branches


Merrill A. Pete Miller, Jr.Executive Chairman


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Financial Overview

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Financial Highlights

Solid organic revenue growth underpinned by strong end market

Robust cash flow generation through the cycle

Substantial operating leverage drives margin improvement

Low capital intensity business model requires limited investment

Cost savings to be realized from integration of Wilson and CE Franklin

Capital structure provides significant financial flexibility

Debt free; $750 million undrawn revolver

~$200 million of cash on hand

Conservative financial profile and highly disciplined management team


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Historical Financial Summary (Pro Forma)

Gross Profit and MarginRevenue

Net Income and MarginEBITDA and Margin

$4,260 $4,613

$4,296

2011 2012 2013

$769 $843

$797

18.1% 18.3% 18.6%

2011 2012 2013

Gross profit % Margin

$235 $264

$239

5.5% 5.7% 5.6%

2011 2012 2013

EBITDA % Margin

$141 $164

$147

3.3% 3.6%

3.4%

2011 2012 2013

Net Income % Margin

(1) Estimated, Pro Forma

(1) (1)

(1) (1)(1) (1)

($ in millions) ($ in millions)



Low Capital Intensity Business Model Requires Limited Investment

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$11 $8 $10 $10

$45

0.3% 0.4%

1.3%

2011 2012 2013

Spin / Integration Related Investments

Maintenance Capex

Total Capex as a % of Sales

Working CapitalCapital Expenditures

Spin / Integration Related Investments

Global SAP ERP system implementation

New corporate headquarters and warehouse

Distribution Centers in Edmonton, Estevan and Dubai

Expansion of integrated warehouse management system

Global rebranding to DistributionNOW from NOV Wilson

Spin-related systems and software

Disciplined and focused approach to manage working capital

Improving receivables collection and customer contracts

Elevated inventory levels post acquisition will normalize post-integration and benefit from ERP system implementation

Strong liquidity profile

Debt free; $750 million undrawn revolver

~$200 million of cash on hand

(1) (1)

$1,188

$1,491

$1,299

27.9% 32.3%

30.2%

2011 2012 2013

Working Capital % of Sales

(1)(1)


(1) Estimated, Pro Forma


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Attractive Cash Generation and Returns Through the Cycle

Strong cash flow generation to support growth

Disciplined working capital management across all business units

Substantial non-recurring investments in 2013 and 2014

$224 $246

$184 95% 93%

77%

2011 2012 2013

FCF FCF Conversion

(1) Estimated, Pro Forma(2) Free Cash Flow (FCF) is defined as EBITDA less capital expenditures(3) FCF Conversion is defined as FCF as a percentage of EBITDA(4) Pretax ROCE is defined as EBIT as a percentage of Capital Employed(5) Average goodwill of $338 million in 2013

(2) (3)

(1) (1)

Free Cash Flow and FCF Conversion($ in millions)

Capital Employed and Pretax ROCE

2013 ROCE of 15%, excluding goodwill(5)

High returns on investments driven by strategic capital allocations, continuous investments in growth opportunities and opportunistic acquisitions

$1,420

$1,982 $1,820

15.7%

12.8% 12.3%

2011 2012 2013

Capital Employed Pretax ROCE

(1)

(4)

(1)

($ in millions)


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YTD September 2014 Summary Results (Unaudited)

Gross Profit and MarginRevenue

Net Income and MarginEBITDA and Margin

$3,255 $3,099

9M13 9M14

$600 $614

18.4% 19.8%

9M13 9M14

Gross profit % Margin

$186 $168

5.7% 5.4%

9M13 9M14

EBITDA % Margin

$113 $100

3.5% 3.2%

9M13 9M14

Net Income % Margin




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Short-term Outlook

Stabilization: Completion of spin and ERP rollout

Q214 Perfect storm of disruptions

Q314 Beginning of top line recovery and the completion of public expense buildout

Q414 Continued recovery from spin and ERP implementation, but P&L still noisy as we complete projects

Q115Should mark end of integration distractions

Capital: Anomalous trends ending

Completion of majority of one-time, large cap-ex projects

Resumption of capital allocated to M&A

Exhibit significant progress of reducing DSOs by 15+ days


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Outlook

Growth target: organic market share gains of 3 5% each year

Energy Branch segment revenues will track well completions and rig count

Supply Chain solutions intended to be the largest beneficiary of capital allocations

Margin target: return to previously achieved 8%+ EBITDA as Wilson and CE Franklin are fully integrated

Incremental EBITDA margins exceed current profitability

Run-rate maintenance Capex of approximately $10 $20 million annually

Generally, capital allocated to M&A will be consistent with cash flow


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