10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2017

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-36325

NOW INC.

(Exact name of registrant as specified in its charter)

Delaware	46-4191184
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

7402 North Eldridge Parkway,

Houston, Texas 77041

(Address of principal executive offices)

(281) 823-4700

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐  (Do not check if a small reporting company)	Small reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of July 25, 2017 the registrant had 107,721,334 shares of common stock (excluding 1,966,085 unvested restricted shares), par value $0.01 per share, outstanding.

NOW INC.

TABLE OF CONTENTS

Part I - Financial Information
Item 1.	Financial Statements	3
	Consolidated Balance Sheets as of June 30, 2017 (Unaudited) and December 31, 2016	3
	Consolidated Statements of Operations (Unaudited) for the three and six months ended June 30, 2017 and 2016	4
	Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the three and six months ended June 30, 2017 and 2016	5
	Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 2017 and 2016	6
	Notes to Unaudited Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	25
Part II - Other Information
Item 6.	Exhibits	26

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

NOW INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

	June 30, 2017			December 31, 2016
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	97		$	106
Receivables, net		418			354
Inventories, net		529			483
Prepaid and other current assets		21			16
Total current assets		1,065			959
Property, plant and equipment, net		130			143
Deferred income taxes		2			1
Goodwill		322			311
Intangibles, net		176			184
Other assets		3			5
Total assets	$	1,698		$	1,603
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	285		$	246
Accrued liabilities		101			100
Other current liabilities		—			1
Total current liabilities		386			347
Long-term debt		128			65
Deferred income taxes		7			7
Other long-term liabilities		1			1
Total liabilities		522			420
Commitments and contingencies
Stockholders' equity:
Preferred stock—par value $0.01; 20 million shares authorized;    no shares issued and outstanding		—			—
Common stock - par value $0.01; 330 million shares authorized;    107,720,668 and 107,474,904 shares issued and outstanding at June 30, 2017    and December 31, 2016, respectively		1			1
Additional paid-in capital		2,013			2,002
Accumulated deficit		(718	)		(678	)
Accumulated other comprehensive loss		(120	)		(142	)
Total stockholders' equity		1,176			1,183
Total liabilities and stockholders' equity	$	1,698		$	1,603

See notes to unaudited consolidated financial statements.

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NOW INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In millions, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenue	$	651		$	501		$	1,282		$	1,049
Operating expenses:
Cost of products		527			418			1,044			879
Warehousing, selling and administrative		138			140			273			292
Operating loss		(14	)		(57	)		(35	)		(122	)
Other expense		(3	)		(2	)		(5	)		(4	)
Loss before income taxes		(17	)		(59	)		(40	)		(126	)
Income tax provision (benefit)		—			(15	)		—			(19	)
Net loss	$	(17	)	$	(44	)	$	(40	)	$	(107	)
Loss per share:
Basic loss per common share	$	(0.16	)	$	(0.40	)	$	(0.37	)	$	(0.99	)
Diluted loss per common share	$	(0.16	)	$	(0.40	)	$	(0.37	)	$	(0.99	)
Weighted-average common shares outstanding, basic		108			107			108			107
Weighted-average common shares outstanding, diluted		108			107			108			107

See notes to unaudited consolidated financial statements.

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NOW INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(In millions)

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Net loss	$	(17	)	$	(44	)	$	(40	)	$	(107	)
Other comprehensive income (loss):
Foreign currency translation adjustments		12			(8	)		22			15
Comprehensive loss	$	(5	)	$	(52	)	$	(18	)	$	(92	)

See notes to unaudited consolidated financial statements.

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NOW INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In millions)

	Six Months Ended June 30,
	2017			2016
Cash flows from operating activities:
Net loss	$	(40	)	$	(107	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		26			25
Deferred income taxes		(1	)		(24	)
Stock-based compensation		11			12
Provision for doubtful accounts		2			14
Provision for inventory		8			23
Other, net		—			1
Change in operating assets and liabilities, net of acquisitions:
Receivables		(61	)		115
Inventories		(50	)		104
Prepaid and other current assets		(5	)		(6	)
Accounts payable and accrued liabilities		37			(26	)
Income taxes receivable, net		(1	)		25
Other assets / liabilities, net		—			(1	)
Net cash provided by (used in) operating activities		(74	)		155
Cash flows from investing activities:
Purchases of property, plant and equipment		(1	)		(2	)
Business acquisitions, net of cash acquired		(4	)		(182	)
Purchases of intangible assets		—			(7	)
Other, net		3			1
Net cash used in investing activities		(2	)		(190	)
Cash flows from financing activities:
Borrowing under the revolving credit facility		172			194
Repayments under the revolving credit facility		(109	)		(122	)
Other		—			(4	)
Net cash provided by financing activities		63			68
Effect of exchange rates on cash and cash equivalents		4			13
Net change in cash and cash equivalents		(9	)		46
Cash and cash equivalents, beginning of period		106			90
Cash and cash equivalents, end of period	$	97		$	136

 See notes to unaudited consolidated financial statements.

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NOW INC.

Notes to Unaudited Consolidated Financial Statements

1. Organization and Basis of Presentation

Nature of Operations

NOW Inc. (“NOW” or the “Company”) is a holding company headquartered in Houston, Texas that was incorporated in Delaware on November 22, 2013. NOW operates primarily under the DistributionNOW and Wilson Export brands. NOW is a global distributor of energy products as well as products for industrial applications through its locations in the U.S., Canada and internationally which are geographically positioned to serve the energy and industrial markets in over 80 countries. NOW’s energy product offerings are used in the oil and gas industry including upstream drilling and completion, exploration and production, midstream infrastructure development and downstream petroleum refining – as well as in other industries, such as chemical processing, power generation and industrial manufacturing operations. The industrial distribution portion of NOW’s business targets a diverse range of manufacturing and other facilities across numerous industries and end markets. NOW also provides supply chain management to drilling contractors, E&P operators, midstream operators, downstream energy and industrial manufacturing companies. NOW’s supplier network consists of thousands of vendors in approximately 40 countries.

Basis of Presentation

All significant intercompany transactions and accounts have been eliminated. The unaudited consolidated financial information included in this report has been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and Article 10 of SEC Regulation S-X. The principles for interim financial information do not require the inclusion of all the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with the financial statements included in the Company’s most recent Annual Report on Form 10-K. In the opinion of the Company’s management, the consolidated financial statements include all adjustments, all of which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods. The results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the results to be expected for the full year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported and contingent amounts of assets and liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassification

Certain amounts in the prior periods presented have been reclassified to conform to the current period financial statement presentation. These reclassifications have no effect on previously reported results of operations.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, receivables and payables approximated fair value because of the relatively short maturity of these instruments. Cash equivalents include only those investments having a maturity date of three months or less at the time of purchase. See Note 11 “Derivative Financial Instruments” for the fair value of derivative financial instruments.

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Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 affects any entity using GAAP that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in Revenue Recognition (Topic 605), and most industry-specific guidance. The ASU provides two transition methods: (i) retrospectively to each prior reporting period presented or (ii) retrospectively with the cumulative effect of initially applying this ASU recognized at the date of initial application. In August 2015, the FASB proposed the effective date to be the annual reporting periods beginning after December 15, 2017, and interim periods therein. In May 2016, the FASB issued ASU 2016-12, Narrow-Scope Improvements and Practical Expedients (Topic 606), which clarifies implementation guidance on assessing collectability, presentation of sales tax, noncash consideration and completed contracts and contract modifications at transition. The Company plans to adopt Topic 606 in the first quarter of fiscal year 2018 pursuant to the aforementioned adoption method (ii). While the Company is currently assessing the impact of the new standard, revenue is primarily generated from the sale of finished product to customers. Those sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risks and rewards transfer. These are largely unimpacted by the new standard. The Company continues to review key contracts with customers and anticipates to complete this review during the third quarter of 2017. In addition, the implementation team is currently assessing the impact of the standard on our internal control processes and business information systems and quantifying the cumulative effect adjustment to the opening balance of retained earnings. Based on this preliminary assessment, which is subject to change, the Company believes that significant modifications to our systems and controls will not be required and does not expect the cumulative adjustment to have a material impact on the consolidated financial statements as a result of the adoption of the new standard. The Company expects to expand its revenue recognition disclosures to address the quantitative and qualitative requirements in the standard.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize a lease liability and a right-to-use asset for all leases, including operating leases, with a term greater than twelve months on its balance sheet. ASU 2016-02 is effective for annual and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted, and requires a modified retrospective transition method. The Company is currently assessing the impact of ASU 2016-02 on its consolidated financial statements. The Company expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon the adoption of ASU 2016-02, which will increase the total assets and total liabilities that are reported relative to such amounts prior to adoption.

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), which replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates. ASU 2016-13 requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. ASU 2016-13 is effective for annual and interim periods in fiscal years beginning after December 15, 2019, with early adoption permitted as of December 15, 2018, and requires modified retrospective transition method. The Company is currently assessing the impact of ASU 2016-13 on its consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715). ASU 2017-07 requires the disaggregation of the service cost component from the other components of net periodic benefit cost and allows only the service cost component of net benefit cost to be eligible for capitalization. ASU 2017-07 is effective for annual and interim periods in fiscal years beginning after December 15, 2017. The Company sponsors two defined benefit plans in the UK under which accrual of pension benefits has ceased and there will not be a service cost component to the net periodic pension cost. Plan members benefits that have previously been accrued are indexed in line with inflation during the period up to retirement in order to protect their purchasing power. The Company plans to adopt this standard in the first quarter of fiscal year 2018 and does not expect a material effect on its consolidated financial statements. The Company expects to expand its defined benefit plan agreement disclosures to address the quantitative and qualitative requirements in the standard.

Recently Adopted Accounting Standards

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory (Topic 330). Under ASU 2015-11, inventory will be measured at the “lower of cost and net realizable value.” ASU 2015-11 defines net realizable value as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.” ASU 2015-11 is effective for annual and interim periods in fiscal years beginning after December 15, 2016. The Company adopted this standard as of January 1, 2017, with no material impact on its consolidated financial statements.

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In October 2016, the FASB issued ASU 2016-16, Intra-Entity Transfers of Assets Other than Inventory (Topic 740), to recognize the income tax consequences of intra-entity transfers of an asset other than inventory when the transfer occurs. ASU 2016-16 is effective for annual and interim periods in fiscal years beginning after December 15, 2017 with early adoption permitted in the first interim period of fiscal year 2017. Upon adoption, any deferred charge established upon the intra-company transfer would be recorded as a cumulative-effect adjustment to retained earnings. The Company early adopted this standard in the first quarter of fiscal year 2017 and reversed a deferred charge of $1 million previously recorded in prepaid and other current assets in the accompanying consolidated balance sheets. However, due to the Company’s full valuation allowance in the U.S., the deferred charge recorded as a cumulative-effect adjustment to accumulated deficit netted to zero.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (Topic 350), which eliminates Step 2 from the goodwill impairment test. ASU 2017-04 is effective for annual and interim periods in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017 and should be applied prospectively.The Company early adopted this standard as of January 1, 2017, for use in its goodwill impairment testing.

2. Property, Plant and Equipment, net

Property, plant and equipment consist of (in millions): 

	Estimated Useful Lives	June 30, 2017			December 31, 2016
Information technology assets	1-7 Years	$	47		$	47
Operating equipment	2-15 Years		92			93
Buildings and land (1)	5-35 Years		98			95
Construction in progress			—			1
Total property, plant and equipment			237			236
Less: accumulated depreciation			(107	)		(93	)
Property, plant and equipment, net		$	130		$	143

⁽¹⁾ Land has an indefinite life.

3. Accrued Liabilities

Accrued liabilities consist of (in millions):

	June 30, 2017		December 31, 2016
Compensation and other related expenses	$	30	$	25
Customer credits and prepayments		25		27
Taxes (non-income)		13		17
Other		33		31
Total	$	101	$	100

4. Debt

On January 20, 2016, the Company entered into an amendment (the “Amendment”) to its credit facility dated as of April 18, 2014 (the “Credit Agreement”). The Amendment, among other things, (i) suspends, until the Company elects otherwise, the Credit Agreement’s minimum interest coverage ratio effective as of December 30, 2015, (ii) adds a minimum asset coverage ratio (as defined in the Credit Agreement), which requires that the ratio of the value of the Company’s eligible assets (value of qualified cash, eligible inventory and eligible accounts receivable) to the amount of its outstanding obligations under the Credit Agreement is no less than 1.50 to 1.00, (iii) reduces the maximum capitalization ratio (as defined in the Credit Agreement) from 50% to 45%, (iv) increases the applicable interest margin on current borrowings by 75 basis points and the current commitment fee by 5 basis points and (v) reduces sub-facilities for standby letters of credit and swingline loans to $40 million and $25 million, respectively. In connection with the Amendment, the Company also entered into a Security Agreement dated as of January 20, 2016 (the “Security Agreement”) pursuant to which it granted the lenders under the Credit Agreement customary security interests in substantially all of the Company’s U.S. assets and in approximately 65% of the equity interests of the Company’s first-tier foreign subsidiaries.  

As of June 30, 2017, the Company had borrowed $128 million against its senior secured revolving credit facility, and had $437 million in availability (as defined in the Credit Agreement) resulting in the excess availability (as defined in the Credit Agreement) of 77%, subject to certain restrictions. Borrowings that result in the excess availability dropping below 25% are conditioned upon compliance

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with or waiver of a minimum fixed charge ratio (as defined in the Credit Agreement). The Company was not obligated to pay back the borrowing against the senior secured revolving credit facility until the expiration date of April 18, 2019, as such the outstanding borrowing is classified as long term.As of June 30, 2017, the Company was in compliance with all financial covenants in the credit facility. Total commitments under the amended credit facility remain at $750 million and the amended credit facility continues to include a $250 million accordion feature, subject to certain conditions.

5. Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss) are as follows (in millions): 

	Foreign
	Currency
	Translation
	Adjustments
Balance at December 31, 2016	$	(142	)
Other comprehensive income		22
Balance at June 30, 2017	$	(120	)

The Company’s reporting currency is the U.S. dollar. A majority of the Company’s international entities in which there is a substantial investment have the local currency as their functional currency. As a result, foreign currency translation adjustments resulting from the process of translating the entities’ financial statements into the reporting currency are reported in other comprehensive income (loss) in accordance with ASC Topic 830, “Foreign Currency Matters.”

6. Business Segments

Operating results by reportable segment are as follows (in millions):  

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenue:
United States	$	481		$	337		$	920		$	694
Canada		79			55			175			118
International		91			109			187			237
Total revenue	$	651		$	501		$	1,282		$	1,049
Operating profit (loss):
United States	$	(16	)	$	(44	)	$	(42	)	$	(103	)
Canada		2			(8	)		5			(14	)
International		—			(5	)		2			(5	)
Total operating loss	$	(14	)	$	(57	)	$	(35	)	$	(122	)
Operating profit (loss) % of    revenue:
United States		(3.3	%)		(13.1	%)		(4.6	%)		(14.8	%)
Canada		2.5	%		(14.5	%)		2.9	%		(11.9	%)
International		0.0	%		(4.6	%)		1.1	%		(2.1	%)
Total operating loss %		(2.2	%)		(11.4	%)		(2.7	%)		(11.6	%)

7. Income Taxes

On May 1, 2014, the National Oilwell Varco, Inc. (“NOV”) Board of Directors approved the Spin-Off (the “Spin-Off” or “Separation”) of its distribution business into an independent, publicly traded company named NOW Inc.  In connection with the Separation, the Company and NOV entered into a Tax Matters Agreement, dated as of May 29, 2014 (the “Tax Matters Agreement”).  The Tax Matters Agreement sets forth the Company and NOV’s rights and obligations related to the allocation of federal, state, local and foreign taxes for periods before and after the Spin-Off, as well as taxes attributable to the Spin-Off, and related matters such as the filing of tax returns and the conduct of IRS and other audits.  Pursuant to the Tax Matters Agreement, NOV has prepared and filed the consolidated federal income tax return, and any other tax returns that include both NOV and the Company for all the liability periods ended on or prior to May 30, 2014.  The income tax provision (benefit) for periods prior to the Separation has been computed as if NOW were a stand-alone company.  NOV will indemnify and hold harmless the Company for any income tax liability for periods

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before the Separation date.  The Company will prepare and file all tax returns that include solely the Company for all taxable periods ending after that date.  Settlements of tax payments between NOV and the Company were generally treated as contributions from or distributions to NOV in periods prior to the Separation date.

The effective tax rates for the three and six months ended June 30, 2017 were (0.1%) and 1.0%, compared to 26.3% and 15.1% for the same periods in 2016. Compared to the U.S. statutory rate, the effective tax rate was impacted by recurring items, such as lower tax rates on income earned in foreign jurisdictions that is permanently reinvested, offset by nondeductible expenses, state income taxes and the change in valuation allowance recorded against deferred tax assets. Due to the continuing uncertainty in our industry and thus our outlook, the Company continues to utilize the method of recording income taxes on a year-to-date effective tax rate for the three and six months ended June 30, 2017. The Company will evaluate its use of this method each quarter until such time as a return to the annualized estimated effective tax rate method is deemed appropriate.

During the second quarter of 2016, the Company acquired Power Service and recorded a deferred tax liability of $19 million related to basis differences between U.S. GAAP and U.S. Tax associated with the acquisition and step-up to fair value of certain assets, primarily intangible assets.  The step up in basis resulted in higher future taxable temporary differences and a corresponding reduction in the valuation allowance recorded against deferred tax assets in the U.S.

To the extent penalties and interest would be assessed on any underpayment of income tax, such accrued amounts would be classified as a component of income tax provision (benefit) in the financial statements consistent with the Company’s policy.

The Company is subject to taxation in the United States, various states and foreign jurisdictions. The Company has significant operations in the United States and Canada and to a lesser extent in various other international jurisdictions. Tax years that remain subject to examination by major tax jurisdictions vary by legal entity, but are generally open in the U.S. for the tax years ending after 2012 and outside the U.S. for the tax years ending after 2010. The Company is indemnified for any income tax exposures related to the periods prior to the Separation under the Tax Matters Agreement with NOV.

8. Loss Per Share (“EPS”)

For the three and six months ended June 30, 2017 and 2016, 8,210,009 and 7,986,161, 7,412,133 and 7,181,595, respectively, of potentially dilutive shares were excluded from the computation of diluted loss per share due to the Company recognizing a net loss for the period.

Basic and diluted loss per share follows (in millions, except share data): 

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Numerator for basic and diluted net loss    per share attributable to the Company's    stockholders:
Net loss attributable to the Company's    stockholders	$	(17	)	$	(44	)	$	(40	)	$	(107	)
Denominator for basic loss per share    attributable to the Company's stockholders:
Weighted average common shares    outstanding		107,689,554			107,442,304			107,635,122			107,357,620
Effect of dilutive securities:
Dilutive effect of stock-based    compensation		—			—			—			—
Denominator for diluted loss per share    attributable to the Company's stockholders		107,689,554			107,442,304			107,635,122			107,357,620
Loss per share attributable to the Company's    stockholders:
Basic	$	(0.16	)	$	(0.40	)	$	(0.37	)	$	(0.99	)
Diluted	$	(0.16	)	$	(0.40	)	$	(0.37	)	$	(0.99	)

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ASC Topic 260, “Earnings Per Share,” requires companies with unvested participating securities to utilize a two-class method for the computation of net income attributable to the Company per share. The two-class method requires a portion of net income attributable to the Company to be allocated to participating securities, which are unvested awards of share-based payments with non-forfeitable rights to receive dividends or dividend equivalents, if declared. Net losses are not allocated to nonvested shares in periods that the Company determines that those shares are not obligated to participate in losses.

9. Stock-based Compensation and Outstanding Awards

In connection with the Separation, the Company and NOV entered into the Employee Matters Agreement which governs the Company and NOV’s compensation and employee benefit obligations with respect to current and former employees of each company, and generally allocates liabilities and responsibilities relating to employee compensation and benefit plans and programs. Such agreement provided the adjustment mechanisms applied as a result of the Spin-Off to convert outstanding NOV equity awards held by Company employees to Company awards.

The Company has a stock-based compensation plan known as the NOW Inc. Long-Term Incentive Plan (the “Plan”). Under the Plan, the Company’s employees are eligible to be granted stock options, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and performance stock awards (“PSAs”).

For the six months ended June 30, 2017, the Company granted 915,037 stock options with a weighted average fair value of $7.07 per share and 194,183 shares of RSAs and RSUs with a weighted average fair value of $19.92 per share. In addition, the Company granted PSAs to senior management employees with potential payouts varying from zero to 169,346 shares. These options vest over a three-year period from the grant date on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards. The RSAs and RSUs vest on the first and third anniversary of the date of grant. The PSAs can be earned based on performance against established metrics over a three-year performance period. The PSAs are divided into three equal, independent parts that are subject to three separate performance metrics: (i) one-third of the PSAs have a Total Shareholder Return (TSR) metric, (ii) one-third of the PSAs have an EBITDA metric, and (iii) one-third of the PSAs have a Working Capital (WC) metric.

Performance against the TSR metric is determined by comparing the performance of the Company’s TSR with the TSR performance of designated peer companies for the three-year performance period. Performance against the EBITDA metric is determined by comparing the performance of the Company’s actual EBITDA average for each of the three-years of the performance period against the EBITDA metrics set by the Company’s Compensation Committee of the Board of Directors.  Performance against the WC metric is determined by comparing the performance of the Company’s actual WC average for each of the three-years of the performance period against the WC metrics set by the Company’s Compensation Committee of the Board of Directors.

Stock-based compensation expense totaled $5 million and $11 million for the three and six months ended June 30, 2017, respectively, and $6 million and $12 million for the same periods in 2016, respectively.

10. Commitments and Contingencies

In connection with the Spin-Off, the Company and NOV entered into a Separation and Distribution Agreement which contains the key provisions related to the separation from NOV and the distribution of the Company’s common stock to NOV shareholders. The Separation and Distribution Agreement separated the assets related to the Company’s business from NOV, along with liabilities related to such assets, which now reside with the Company. In general, the Company agrees to indemnify NOV from liabilities arising from the Company’s business and assets, and NOV agrees to indemnify the Company from liabilities arising from NOV’s business and assets (that remained with NOV), except as otherwise provided in such agreement.

The Company is involved in various claims, regulatory agency audits and pending or threatened legal actions involving a variety of matters. The Company has also assessed the potential for additional losses above the amounts accrued as well as potential losses for matters that are not probable, but are reasonably possible. The total potential loss on these matters cannot be determined; however, in the Company’s opinion, any ultimate liability, to the extent not otherwise recorded or accrued for, will not materially affect the Company’s financial position, cash flow or results of operations. These estimated liabilities are based on the Company’s assessment of the nature of these matters, their progress toward resolution, the advice of legal counsel and outside experts as well as management’s intention and experience.

The Company’s business is affected both directly and indirectly by governmental laws and regulations relating to the oilfield service industry in general, as well as by environmental and safety regulations that specifically apply to the Company’s business. Although the Company has not incurred material costs in connection with its compliance with such laws, there can be no assurance that other

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developments, such as new environmental laws, regulations and enforcement policies hereunder may not result in additional, presently unquantifiable, costs or liabilities to the Company.

The Company does not accrue for contingent losses that, in its judgment, are considered to be reasonably possible, but not probable. Estimating reasonably possible losses also requires the analysis of multiple possible outcomes that often depend on judgments about potential actions by third parties. NOW’s management currently estimates a range of loss for reasonably possible losses for which an estimate can be made is between zero and $14 million in the international segment primarily attributable to accounts receivable with one customer. The Company has accrued its best estimate for loss as of June 30, 2017.  Factors underlying this estimated range of loss may change from time to time, and actual results may vary significantly from this estimate.

The Company maintains credit arrangements with several banks providing for short-term borrowing capacity, overdraft protection and other bonding requirements. As of June 30, 2017, these credit arrangements totaled approximately $47 million, of which the Company was contingently liable for approximately $9 million of outstanding standby letters of credit, including bid and performance related bonds and surety bonds. The Company does not believe, based on historical experience and information currently available, that it is probable that any amounts will be required to be paid.

11. Derivative Financial Instruments

The Company is exposed to certain risks relating to its ongoing business operations. The primary risk managed by using derivative instruments is foreign currency exchange rate risk. The Company has entered into certain financial derivative instruments to manage this risk.

The derivative financial instruments the Company has entered into are forward exchange contracts which have terms of less than one year to economically hedge foreign currency exchange rate risk on recognized non-functional currency monetary accounts. The purpose of the Company’s foreign currency economic hedging activities is to economically hedge the Company’s risk from changes in the fair value of non-functional currency denominated monetary accounts.

The Company records all derivative financial instruments at their fair value in its consolidated balance sheets. None of the derivative financial instruments that the Company holds are designated as either a fair value hedge or cash flow hedge and the gain or loss on the derivative instrument is recorded in earnings. The Company has determined that the fair value of its derivative financial instruments are computed using level 2 inputs (inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability) in the fair value hierarchy as the fair value is based on publicly available foreign exchange rates at each financial reporting date.     

The table below provides data about the fair value of the derivative instruments that are recorded in the consolidated balance sheets (in millions):

	June 30, 2017				December 31, 2016
	Assets		Liabilities		Assets		Liabilities
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts(1)	$	—	$	—	$	1	$	—

⁽¹⁾ Included in other current liabilities and other current assets in the consolidated balance sheets. The total notional amount of the forward foreign exchange contracts was approximately $38 million and $76 million at June 30, 2017 and December 31, 2016, respectively.

The table below provides the gains (losses) recognized in other income in the accompanying consolidated statements of operations related to the Company’s derivative instruments (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts	$	—	$	4	$	1	$	10

As of June 30, 2017, the Company’s financial instruments do not contain any credit-risk-related or other contingent features that could cause accelerated payments when the Company’s financial instruments are in net liability positions. The Company does not use derivative financial instruments for trading or speculative purposes.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Some of the information in this document contains, or has incorporated by reference, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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 “may,” “believe,” “anticipate,” “expect,” “plan,” “predict,” “estimate,” “will be” or other similar words and phrases, although some forward-looking statements are expressed differently. 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, including, but not limited to, changes in oil and gas prices, changes in the energy markets, customer demand for our products, significant changes in the size of our customers, difficulties encountered in integrating mergers and acquisitions, general volatility in the capital markets, changes in applicable government regulations, increased borrowing costs, competition between us and our former parent company, NOV, the triggering of rights and obligations by the Spin-Off or any litigation arising out of or related to the Separation, impairments in goodwill or other intangible assets and worldwide economic activity. You should also consider carefully the statements under “Risk Factors,” as disclosed in our Form 10-K, which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements. 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 future events or developments.

Company Overview

We are a global distributor to the oil and gas and industrial markets with a legacy of over 150 years. We operate primarily under the DistributionNOW and Wilson Export brands. Through our network of approximately 300 locations and 4,600 employees worldwide, we stock and sell a comprehensive offering of energy products as well as an extensive selection of products for industrial applications. Our energy product offering is consumed throughout all sectors of the oil and gas industry – from upstream drilling and completion, exploration and production (“E&P”), midstream infrastructure development to downstream petroleum refining – as well as in other industries, such as chemical processing, mining, utilities and industrial manufacturing operations. The industrial distribution end markets include manufacturing, aerospace, automotive, refineries and engineering and construction. We also provide supply chain management solutions to drilling contractors, E&P operators, midstream operators and downstream energy and industrial manufacturing companies around the world.

Our global product offering includes consumable maintenance, repair and operating (“MRO”) supplies, pipe, valves, fittings, flanges, gaskets, fasteners, electrical, instrumentation, artificial lift, pumping solutions, valve actuation and modular process, measurement and control equipment. We also offer warehouse and inventory management solutions as part of a comprehensive supply chain and materials management offering. Through focused effort, we have developed expertise in providing application systems and parts integration, optimization solutions and after-sales support.

Our solutions can include outsourcing the functions of procurement, inventory and warehouse management, logistics, point of issue technology, project management, business process and performance metrics reporting. These solutions allow us to leverage the infrastructure of our SAP™ Enterprise Resource Planning (“ERP”) system and other technologies to streamline our customers’ purchasing process, from requisition to procurement to payment, by digitally managing workflow, improving approval routing and providing robust reporting functionality.

We support land and offshore operations for all the major oil and gas producing regions around the world through our comprehensive network of locations. Our key markets, beyond North America, include Latin America, the North Sea, the Middle East, Asia Pacific and the Former Soviet Union (“FSU”). Products sold through our locations support greenfield expansion upstream capital projects, midstream infrastructure and transmission and MRO consumables used in day-to-day production. We provide downstream energy and industrial products for petroleum refining, chemical processing, LNG terminals, power generation utilities and industrial manufacturing operations and customer on-site locations.

We stock or sell more than 300,000 stock keeping units (“SKUs”) through our branch network. Our supplier network consists of thousands of vendors in approximately 40 countries. From our operations in over 20 countries we sell to customers operating in approximately 80 countries. The supplies and equipment stocked by each of our branches is customized to meet varied and changing local customer demands. The breadth and scale of our offering enhances our value proposition to our customers, suppliers and shareholders.

We employ advanced information technologies, including a common ERP platform across most of our business, to provide complete procurement, materials management and logistics coordination to our customers around the globe. Having a common ERP platform allows immediate visibility into the Company’s financials and operations worldwide, enhancing decision making and efficiency.

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Demand for our products is driven primarily by the level of oil and gas drilling, servicing and production, transmission, refining and petrochemical and industrial manufacturing activities. It is also influenced by the global economy in general and by government policies. Several factors drive spending, such as investment in energy infrastructure, the North American conventional and shale plays, market expectations of future developments in the oil, natural gas, liquids, refined products, petrochemical, plant maintenance and other industrial, manufacturing and energy sectors.

We have expanded globally, through acquisitions and organic investments, into Australia, Azerbaijan, Brazil, Canada, China, Colombia, Egypt, England, India, Indonesia, Kazakhstan, Kuwait, Mexico, Netherlands, Norway, Oman, Peru, the Philippines, Russia, Saudi Arabia, Scotland, Singapore, the United Arab Emirates and the United States.

Summary of Reportable Segments

We operate through three reportable segments: United States (“U.S.”), Canada and International. The segment data included in our Management’s Discussion and Analysis (“MD&A”) are presented on a basis consistent with our internal management reporting. Segment information appearing in Note 6 “Business Segments” of the notes to the unaudited consolidated financial statements (Part I, Item 1 of this Form 10-Q) is also presented on this basis.

United States

We have more than 200 locations in the U.S., which are geographically positioned to best serve the upstream, midstream and downstream energy and industrial markets.

We offer higher value solutions in key product lines in the U.S. which broaden and deepen our customer relationships and related product line value. Examples of these include artificial lift, pumps, valves and valve actuation, process equipment, fluid transfer products, measurement and controls, along with many other products required by our customers, which enable them to focus on their core business while we manage their supply chain. We also provide additional value to our customers through the design, assembly, fabrication and optimization of products and equipment essential to the safe and efficient production, transportation and processing of oil and gas and industrial manufacturing.

Canada

We have a network of more than 55 locations in the Canadian oilfield, predominantly in the oil rich provinces of Alberta and Saskatchewan in Western Canada. Our Canada segment primarily serves the energy exploration, production, mining and drilling business, offering customers many of the same products and value-added solutions that we perform in the U.S. In Canada, we also provide training for, and supervise the installation of, jointed and spoolable composite pipe. This product line is supported by inventory and product and installation expertise to serve our customers.

International

We operate in approximately 20 countries and serve the needs of our international customers from approximately 35 locations outside of the U.S. and Canada, which are strategically located in major oil and gas development areas. Our approach in these markets is similar to our approach in the U.S., as our customers turn to us to provide inventory and support closer to their drilling and exploration activities. Our long legacy of operating in many international regions, combined with significant expansion into several key markets, provides a competitive advantage as few of our competitors have a presence in most of the global energy producing regions.

Basis of Presentation

All significant intercompany transactions and accounts have been eliminated. The unaudited consolidated financial information included in this report has been prepared in accordance with GAAP for interim financial information and Article 10 of SEC Regulation S-X. The principles for interim financial information do not require the inclusion of all the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with the financial statements included in the Company’s most recent Annual Report on Form 10-K. In the opinion of our management, the consolidated financial statements include all adjustments, all of which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods. The results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the results to be expected for the full year.

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Operating Environment Overview

Our results are dependent on, among other things, the level of worldwide oil and gas drilling, well remediation activity, crude oil and natural gas prices, capital spending by oilfield service companies and drilling contractors, and worldwide oil and gas inventory levels. Key industry indicators for the second quarter of 2017 and 2016 and the first quarter of 2017 include the following:

					%					%
					2Q17 v					2Q17 v
	2Q17*		2Q16*		2Q16			1Q17*		1Q17
Active Drilling Rigs:
U.S.		892		421		111.9	%		739		20.7	%
Canada		114		49		132.7	%		299		(61.9	%)
International		958		943		1.6	%		939		2.0	%
Worldwide		1,964		1,413		39.0	%		1,977		(0.7	%)
West Texas Intermediate Crude Prices (per barrel)	$	48.24	$	45.41		6.2	%	$	51.77		(6.8	%)
Natural Gas Prices ($/MMBtu)	$	3.08	$	2.14		43.9	%	$	3.01		2.3	%
Hot-Rolled Coil Prices (steel) ($/short ton)	$	623.65	$	552.24		12.9	%	$	620.66		0.5	%

* Averages for the quarters indicated. See sources on following page.

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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, 2017, on a quarterly basis:

Sources: Rig count: Baker Hughes, Inc. (www.bakerhughes.com); West Texas Intermediate Crude and Natural Gas Prices: Department of Energy, Energy Information Administration (www.eia.doe.gov); Hot-Rolled Coil Prices: American Metal Market SteelBenchmarker™ Hot Roll Coil USA (www.amm.com).

The worldwide quarterly average rig count declined 0.7% (from 1,977 rigs to 1,964 rigs) and the U.S. increased 20.7% (from 739 rigs to 892 rigs) in the second quarter of 2017 compared to the first quarter of 2017. The average price per barrel of West Texas Intermediate Crude declined 6.8% (from $51.77 per barrel to $48.24 per barrel) and natural gas prices increased 2.3% (from $3.01 per MMBtu to $3.08 per MMBtu) in the second quarter of 2017 compared to the first quarter of 2017.The average price per short ton of Hot-Rolled Coil increased 0.5% (from $620.66 per short ton to $623.65 per short ton) in the second quarter of 2017 compared to the first quarter of 2017.

U.S. rig count at July 14, 2017 was 952 rigs, up 60 rigs compared to the second quarter of 2017 average of 892 rigs. The price for West Texas Intermediate Crude was $46.53 per barrel at July 14, 2017, down 3.5% from the second quarter average of 2017. The price for natural gas was $2.94 per MMBtu at July 14, 2017, down 4.5% from the second quarter average of 2017. The price for Hot-Rolled Coil was $609.63 per short ton at July 10, 2017, down 2.2% from the second quarter average of 2017.

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Executive Summary

For the three and six months ended June 30, 2017, the Company generated a net loss of $17 million and $40 million on $651 million and $1,282 million in revenue, respectively. Revenue increased $150 million or 29.9%, and $233 million or 22.2%, for the three and six months ended June 30, 2017, respectively, when compared to the corresponding periods of 2016. For the three and six months ended June 30, 2017, net loss improved $27 million and $67 million, respectively, when compared to the corresponding periods of 2016.

For the three and six months ended June 30, 2017, the Company generated operating losses of $14 million or negative 2.2% of revenue, and  $35 million or negative 2.7%, compared to operating losses of $57 million or negative 11.4% of revenue, and $122 million or negative 11.6% of revenue, respectively, for the corresponding periods of 2016.

Outlook

Our outlook for the Company remains tied to global rig count and drilling and completion expenditures, particularly in North America. Oil prices and U.S. oil storage levels will continue to be the primary catalysts determining U.S. rig activity. Our approach continues to be to focus on what we can control. We take a long-term approach advancing our strategic goals, managing the Company based on current market conditions. We remain diligent about controlling expenses and managing capital in the current environment, while being prudent about future demand requirements so as not to constrain our resources as market realities shift. We believe that our history of managing through these cycles, paired with our resources and minimal capital expenditure requirements, enable us to maximize new opportunities.

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Results of Operations

Operating results by reportable segment are as follows (in millions):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenue:
United States	$	481		$	337		$	920		$	694
Canada		79			55			175			118
International		91			109			187			237
Total revenue	$	651		$	501		$	1,282		$	1,049
Operating profit (loss):
United States	$	(16	)	$	(44	)	$	(42	)	$	(103	)
Canada		2			(8	)		5			(14	)
International		—			(5	)		2			(5	)
Total operating loss	$	(14	)	$	(57	)	$	(35	)	$	(122	)
Operating profit (loss) % of    revenue:
United States		(3.3	%)		(13.1	%)		(4.6	%)		(14.8	%)
Canada		2.5	%		(14.5	%)		2.9	%		(11.9	%)
International		0.0	%		(4.6	%)		1.1	%		(2.1	%)
Total operating loss %		(2.2	%)		(11.4	%)		(2.7	%)		(11.6	%)

United States

For the three and six months ended June 30, 2017, revenue was $481 million and $920 million, an increase of $144 million or 42.7% and $226 million or 32.6%, respectively, when compared to the corresponding periods of 2016. These increases were primarily driven by a year over year improvement in U.S. rig count, coupled with incremental revenue gains of approximately $20 million and $50 million, from an acquisition completed in the second quarter of 2016, in the three and six months ended June 30, 2017, respectively.

For the three and six months ended June 30, 2017, the U.S. generated operating losses of $16 million or negative 3.3% of revenue and $42 million or negative 4.6% of revenue, respectively, an improvement of $28 million and $61 million, respectively, when compared to the corresponding periods of 2016. For the three and six months ended June 30, 2017, U.S. operating losses narrowed primarily due to the increases in volume discussed above and improved product margins in the periods.

Canada

For the three and six months ended June 30, 2017, revenue was $79 million and $175 million, respectively, an increase of $24 million or 43.6% and $57 million or 48.3%, respectively, when compared to the corresponding periods of 2016. These increases were primarily driven by a year over year improvement in Canadian rig count.

For the three and six months ended June 30, 2017, Canada generated an operating profit of $2 million or 2.5% of revenue and $5 million or 2.9% of revenue, respectively, an improvement of $10 million and  $19 million, respectively, when compared to the corresponding periods of 2016. Operating profits increased in the periods primarily due to the increases in volume discussed above and lower inventory charges in the periods.

International

For the three and six months ended June 30, 2017, revenue was $91 million and $187 million, respectively, a decline of $18 million or 16.5% and $50 million or 21.1%, respectively, when compared to the corresponding periods of 2016. These decreases were primarily a result of the completion of large projects in the first half of 2016 that did not repeat, coupled with a softening in the offshore rig market.

For the three and six months ended June 30, 2017, the international segment generated an operating profit of nil and $2 million or 1.1% of revenue, respectively, an improvement of $5 million and  $7 million, respectively, when compared to the corresponding periods of 2016. Despite the revenue decline discussed above, overall operating profit improved primarily due to reduced bad debt charges and realized cost savings.

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Cost of products

For the three and six months ended June 30, 2017, cost of products was $527 million and $1,044 million, respectively, compared to $418 million and $879 million, respectively, for the corresponding periods in 2016. The changes were primarily due to an increase in revenue, offset by a reduction in inventory charges made in the period. Cost of products includes the cost of inventory sold and related items, such as vendor consideration, inventory allowances, amortization of intangibles and inbound and outbound freight.

Warehousing, selling and administrative

For the three and six months ended June 30, 2017, warehousing, selling and administrative costs were $138 million and $273 million, respectively, compared to $140 million and $292 million, respectively, for the corresponding periods of 2016. These decreases are related to reductions in accounts receivable charges, as well as, lower property tax charges due to reduced inventory levels, offset by the impact of additional operating expenses associated with an acquisition. Warehousing, selling and administrative costs include general corporate expenses, depreciation and branch, distribution center and regional expenses (including costs such as compensation, benefits and rent).

Other expense

For the three and six months ended June 30, 2017, other expense was $3 million and $5 million, respectively, compared to $2 million and $4 million, respectively, for the corresponding periods of 2016. These charges were mainly attributable to interest and bank charges associated with utilizing the credit facility and foreign currency exchange rate fluctuations.

Income tax provision (benefit)

The effective tax rate for the three and six months ended June 30, 2017 was (0.1%) and 1.0%, respectively, compared to 26.3% and 15.1%, respectively, for the same periods in 2016. Compared to the U.S. statutory rate, the effective tax rate was impacted by recurring items, such as lower tax rates on income earned in foreign jurisdictions that is permanently reinvested, offset by nondeductible expenses, state income taxes and the change in valuation allowance recorded against deferred tax assets. Due to the continuing uncertainty in our industry and thus our outlook, we continue to utilize the method of recording income taxes on a year-to-date effective tax rate for the three and six months ended June 30, 2017. We will evaluate the use of this method each quarter until such time as a return to the annualized estimated effective tax rate method is deemed appropriate.

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Non-GAAP Financial Measure and Reconciliation

In an effort to provide investors with additional information regarding our results as determined by GAAP, we disclose a non-GAAP financial measure in our quarterly earnings press releases and other public disclosures. The primary non-GAAP financial measure we focus on is earnings before interest, taxes, depreciation and amortization, excluding other costs (“EBITDA excluding other costs”). This financial measure excludes the impact of certain amounts as further identified below and has not been calculated in accordance with GAAP. A reconciliation of this non-GAAP financial measure to its most comparable GAAP financial measure is included below.

We use this non-GAAP financial measure internally to evaluate and manage the Company’s operations because we believe it provides useful supplemental information regarding the Company’s ongoing economic performance. We have chosen to provide this information to investors to enable them to perform more meaningful comparisons of operating results.

The following table sets forth the reconciliation of EBITDA excluding other costs to its most comparable GAAP financial measure (in millions):

EBITDA excluding other costs

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
GAAP net loss (1)	$	(17	)	$	(44	)	$	(40	)	$	(107	)
Interest, net		1			1			2			1
Income tax provision (benefit)		—			(15	)		—			(19	)
Depreciation and amortization		13			13			26			25
Other costs (2)		1			3			1			7
EBITDA excluding other costs	$	(2	)	$	(42	)	$	(11	)	$	(93	)
EBITDA % excluding other costs (3)		(0.3	%)		(8.4	%)		(0.9	%)		(8.9	%)

⁽¹⁾ We believe that net loss is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to EBITDA excluding other costs. EBITDA excluding other costs measures the Company’s operating performance without regard to certain expenses. EBITDA excluding other costs is not a presentation made in accordance with GAAP and our computation of EBITDA excluding other costs may vary from others in the industry. EBITDA excluding other costs 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.

⁽²⁾ Other costs primarily includes the transaction costs associated with acquisition activity, including the cost of inventory that was stepped up to fair value during purchase accounting related to acquisitions and severance expenses which are included in operating loss.

⁽³⁾ EBITDA % excluding other costs is defined as EBITDA excluding other costs divided by Revenue.

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Liquidity and Capital Resources

We assess liquidity in terms of our ability to generate cash to fund operating, investing and financing activities. We expect to remain in a strong financial position, with resources expected 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.

As of June 30, 2017 and December 31, 2016, the Company had cash and cash equivalents of $97 million and $106 million, respectively. As of June 30, 2017, approximately $77 million of our cash and cash equivalents were maintained in the accounts of our various foreign subsidiaries and, if such amounts were transferred among countries or repatriated to the U.S., may be subject to additional tax liabilities, which would be recognized in our financial statements in the period during which such decisions were made. We currently have the intent and ability to permanently reinvest the cash held by our foreign subsidiaries and there are currently no plans for the repatriation of such amounts.

At June 30, 2017, the Company had $128 million of borrowings against its revolving 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, 2017, the Company was in compliance with all covenants. We continuously monitor compliance with debt covenants. A default, if not waived or amended, would prevent the Company from taking certain actions, such as incurring additional debt.

The following table summarizes our net cash flows provided by (used in) operating activities, net cash used in investing activities and net cash provided by financing activities for the periods presented (in millions):

	Six Months Ended June 30,
	2017			2016
Net cash provided by (used in) operating activities	$	(74	)	$	155
Net cash used in investing activities		(2	)		(190	)
Net cash provided by financing activities		63			68

Operating Activities

For the six months ended June 30, 2017, net cash used in operating activities was $74 million, compared to net cash provided by operating activities of $155 million in the corresponding period of 2016. For the six months ended June 30, 2017, net cash used in operating activities was primarily driven by an increase in receivables and inventories of $61 million and $50 million, respectively, offset by an increase in accounts payable and accrued liabilities of $37 million. These increases were a result of improved market conditions resulting in higher sales and purchases in the period.

Investing Activities

For the six months ended June 30, 2017, net cash used in investing activities was $2 million compared to $190 million in the corresponding period of 2016. For the six months ended June 30, 2017, the Company paid $3 million in relation to making an Internal Revenue Code Section 338(h)(10) election to treat the Power Service acquisition as an asset purchase for U.S. income tax purposes, as well as, paid $1 million in the second quarter of 2017 related to a first quarter measurement period adjustment for the acquisition, offset by approximately $3 million from proceeds on disposal of assets. Purchases of property, plant and equipment was approximately $1 million in the period.

Financing Activities

For the six months ended June 30, 2017, net cash provided by financing activities was $63 million, compared to $68 million for the corresponding period of 2016. The activity in the period was primarily attributed to the Company making repayments under, and borrowing against, its credit facility.

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Other

For the six months ended June 30, 2017, the effect of the change in exchange rates on cash and cash equivalents was an increase of $4 million compared to an increase of $13 million for the corresponding period of 2016. The primary driver was less volatility in the exchange rates in 2017 versus 2016, namely, related to the Canadian dollar and British pound, compared to the U.S. dollar.

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 determined with certainty. We continue to expect to fund future acquisitions primarily with cash flows from operations and borrowings, including the undrawn portion of the credit facility or new debt issuances, but may also issue additional equity either directly or in connection with acquisitions. There can be no assurance that additional financing for acquisitions will be available at terms acceptable to us.

Critical Accounting Policies and Estimates

For a discussion of the critical accounting policies and 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.  In preparing the financial statements, we make assumptions, estimates and judgments that affect the amounts reported. We periodically evaluate our estimates and judgments that are most critical in nature which are related to allowance for doubtful accounts, inventory reserves, goodwill, purchase price allocation of acquisitions, vendor consideration and income taxes. Our estimates are based on historical experience and on our future expectations that we believe 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 may differ from our current estimates and those differences may be material.

Generally accepted accounting principles require us to test goodwill and other indefinite-lived intangible assets for impairment at least annually (performed in the fourth quarter) or more frequently whenever events or circumstances occur indicating that goodwill or other indefinite-lived intangible assets might be impaired. Adverse market conditions could result in the recognition of impairment if we determine that the fair values of its reporting units have fallen below their carrying values. Events or circumstances which could require interim testing include (but are not limited to) a significant reduction in worldwide oil and gas prices or drilling; a significant reduction in profitability or cash flow of oil and gas companies or drilling contractors; a significant reduction in worldwide well remediation activity; a significant reduction in capital investment by other oilfield service companies; or a significant increase in worldwide inventories of oil or gas.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to certain market risks that are inherent in our financial instruments and arise from changes in interest rates and foreign currency exchange rates. The Company may enter into derivative financial instrument transactions to manage or reduce market risk but do not enter into derivative financial instrument transactions for speculative purposes. The Company does not currently have any material outstanding derivative instruments. See Note 11 “Derivative Financial Instruments” to the consolidated financial statements.

A discussion of our primary market risk exposure in financial instruments is presented below.

Foreign Currency Exchange Rate Risk

The Company has operations in foreign countries and transacts business globally in multiple currencies. Its net assets, as well as, its revenue, costs and expenses, denominated in foreign currencies expose the Company to the risk of fluctuations in foreign currency exchange rates against the U.S. dollar. Because we operate globally and nearly one-third of the Company’s first half of 2017 revenue was outside the United States, foreign currency exchange rates can impact the Company’s financial position, results of operations and competitive position. The Company is a net receiver of foreign currencies and therefore benefits from a weakening of the U.S. dollar and is adversely affected by a strengthening of the U.S. dollar relative to the foreign currency. As of June 30, 2017, the most significant foreign currency exposure was to the Canadian dollar and the British pound with less significant foreign currency exposures to the Australian dollar and Mexican peso.

The financial statements of foreign subsidiaries are translated into their U.S. dollar equivalents at end-of-period exchange rates for assets and liabilities, while revenue, costs and expenses are translated at average monthly exchange rates. Translation gains and losses are components of other comprehensive income (loss) as reported in the consolidated statements of comprehensive income (loss). For the first half of 2017, the Company realized net foreign currency translation income totaling $22 million, which was included in other comprehensive income (loss).

Foreign currency exchange rate fluctuations generally do not materially affect our earnings since the functional currency is typically the local currency; however, our operations also have net assets not denominated in their functional currency, which exposes us to changes in foreign currency exchange rates that impact our earnings as foreign currency transaction gains and losses. Foreign currency transaction gains and losses arising from fluctuations in currency exchange rates on transactions denominated in currencies other than the functional currency are recognized in the consolidated statements of operations as a component of other expense. For the first six months of 2017 and 2016, the Company reported foreign currency transaction losses of $1 million and less than $1 million, respectively. Gains and losses are primarily due to exchange rate fluctuations related to monetary asset balances denominated in currencies other than the functional currency and fair value adjustments to economically hedged positions as a result of changes in foreign currency exchange rates.

Some of our revenue for our foreign operations are denominated in U.S. dollars, and therefore, changes in foreign currency exchange rates impact earnings to the extent that costs associated with those U.S. dollar revenues are denominated in the local currency. Similarly, some of our revenue for our foreign operations are denominated in foreign currencies, but have associated U.S. dollar costs, which also give rise to foreign currency exchange rate exposure. In order to mitigate those risks, we may utilize foreign currency forward contracts to better match the currency of the revenues and the associated costs. Although we may utilize foreign currency forward contracts to economically hedge certain foreign currency denominated balances or transactions, we do not currently hedge the net investments in our foreign operations. The counterparties to our forward contracts are major financial institutions. The credit ratings and concentration of risk of these financial institutions are monitored by us on a continuing basis. In the event that the counterparties fail to meet the terms of a foreign currency contract, our exposure is limited to the foreign currency rate differential.

The average foreign exchange rate for the first six months of 2017, compared to the average for the same period in 2016, decreased by approximately 3% compared to the U.S. dollar based on the aggregated weighted average revenue of our foreign-currency denominated foreign operations. The British pound and Mexican peso decreased in relation to the U.S. dollar by approximately 12% and 7%, respectively, while the Australian dollar increased in relation to the U.S. dollar by approximately 3%. The Canadian dollar remained approximately flat in relation to the U.S. dollar during the same comparative period.

We utilized a sensitivity analysis to measure the potential impact on earnings based on a hypothetical 10% change in foreign currency rates. A 10% change from the levels experienced during the first six months of 2017 of the U.S. dollar relative to foreign currencies that affected the Company would have resulted in less than a $1 million change in net loss for the same period.

24

Commodity Steel Pricing

Our business is sensitive to steel prices, which can impact our product pricing, with steel tubular prices generally having the highest degree of sensitivity. While we cannot predict steel prices, we mitigate this risk by managing our inventory levels, including maintaining sufficient quantity on hand to meet demand, while limiting the risk of overstocking.

Interest Rates

We are subject to interest rate risk with our credit facility. The credit facility requires us to pay interest on outstanding borrowings at variable rates. Each one percentage point change in interest rates associated with the facility would result in a less than $1 million change in our quarterly cash interest expense based on the balance at June 30, 2017.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. The Company’s disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by the Company in the reports it files under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures and is recorded, processed, summarized and reported within the time period specified in the rules and forms of the Securities and Exchange Commission. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this report at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

25

PART II—OTHER INFORMATION

Item 6. Exhibits

Reference is hereby made to the Index to Exhibits commencing on page 28.

26

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 2, 2017

By:	/s/ Daniel L. Molinaro
	Daniel L. Molinaro
	Senior Vice President and Chief Financial Officer

27

INDEX TO EXHIBITS

(a) Exhibits

Exhibit No.	Exhibit Description
2.1	Separation and Distribution Agreement between National Oilwell Varco, Inc. and NOW Inc. dated May 29, 2014 (1)
3.1	NOW Inc. Amended and Restated Certificate of Incorporation (1)
3.2	NOW Inc. Amended and Restated Bylaws (1)
10.1	Tax Matters Agreement between National Oilwell Varco, Inc. and NOW Inc. dated May 29, 2014 (1)
10.2	Employee Matters Agreement between National Oilwell Varco, Inc. and NOW Inc. dated May 29, 2014 (1)
10.3	Master Distributor Agreement between National Oilwell Varco, L.P. and DNOW L.P. dated May 29, 2014 (1)
10.4	Master Service Agreement between National Oilwell Varco, L.P. and DNOW L.P. dated May 29, 2014 (1)
10.5	Employment Agreement of Merrill A. Miller, Jr. dated May 30, 2014 (1)
10.6	Form of Employment Agreement for Executive Officers (1)
10.7	NOW Inc. 2014 Incentive Compensation Plan (2)
10.8	Credit Agreement among NOW Inc., Wells Fargo Bank, National Association, as Administrative Agent, and the lenders and other financial institutions named therein, dated as of April 18, 2014 (3)
10.9	Agreement and Amendment No. 1 to Credit Agreement among NOW Inc., and Wells Fargo Bank, National Association, as   administrative agent, and the lenders and other financial institutions named thereto, dated as of January 20, 2016 (4)
10.10	Pledge and Security Agreement, dated as of January 20, 2016 (4)
10.11	Form of Restricted Stock Award Agreement (6 year cliff vest) (5)
10.12	Form of Nonqualified Stock Option Agreement (6)
10.13	Form of Restricted Stock Award Agreement (3 year cliff vest) (6)
10.14	Form of Performance Award Agreement (6)
10.15	Form of Amendment to Employment Agreement for Executive Officers (7)
31.1	Certification pursuant to Rule 13a-14a and Rule 15d-14(a) of the Securities and Exchange Act, as amended
31.2	Certification pursuant to Rule 13a-14a and Rule 15d-14(a) of the Securities and Exchange Act, as amended
32.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

⁽¹⁾ Filed as an Exhibit to our Current Report on Form 8-K filed on May 30, 2014

⁽²⁾ Filed as an Exhibit to our Amendment No.1 to Form 10, as amended, Registration Statement filed on April 8, 2014

⁽³⁾ Filed as an Exhibit to our Amendment No. 2 to Form 10, as amended, Registration Statement filed on April 23, 2014

⁽⁴⁾ Filed as an Exhibit to our Current Report on Form 8-K filed on January 21, 2016

⁽⁵⁾ Filed as an Exhibit to our Current Report on Form 8-K filed on November 19, 2014

⁽⁶⁾ Filed as an Exhibit to our Quarterly Report on Form 10-Q filed on May 7, 2015

⁽⁷⁾ Filed as an Exhibit to our Quarterly Report on Form 10-Q filed on November 2, 2016

We hereby undertake, pursuant to Regulation S-K, Item 601(b), paragraph (4) (iii), to furnish to the U.S. Securities and Exchange Commission, upon request, all constituent instruments defining the rights of holders of our long-term debt not filed herewith.

28

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Robert R. Workman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of NOW Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its combined subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 2, 2017

By:	/s/ Robert R. Workman
	Robert R. Workman
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Daniel L. Molinaro, certify that:

1. I have reviewed this quarterly report on Form 10-Q of NOW Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its combined subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 2, 2017

By:	/s/ Daniel L. Molinaro
	Daniel L. Molinaro
	Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of NOW Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Robert R. Workman, President and Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(i) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

The certification is given to the knowledge of the undersigned.

By:	/s/ Robert R. Workman
	Robert R. Workman
	President and Chief Executive Officer
	August 2, 2017

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of NOW Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Daniel L. Molinaro, Senior Vice President and Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(i) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

The certification is given to the knowledge of the undersigned.

By:	/s/ Daniel L. Molinaro
	Daniel L. Molinaro
	Senior Vice President and Chief Financial Officer
	August 2, 2017

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Jul. 25, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Trading Symbol	DNOW
Entity Registrant Name	NOW INC.
Entity Central Index Key	0001599617
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		107,721,334

XML

Consolidated Balance Sheets - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 97	$ 106
Receivables, net	418	354
Inventories, net	529	483
Prepaid and other current assets	21	16
Total current assets	1,065	959
Property, plant and equipment, net	130	143
Deferred income taxes	2	1
Goodwill	322	311
Intangibles, net	176	184
Other assets	3	5
Total assets	1,698	1,603
Current liabilities:
Accounts payable	285	246
Accrued liabilities	101	100
Other current liabilities		1
Total current liabilities	386	347
Long-term debt	128	65
Deferred income taxes	7	7
Other long-term liabilities	1	1
Total liabilities	522	420
Commitments and contingencies
Stockholders' equity:
Preferred stock—par value $0.01; 20 million shares authorized; no shares issued and outstanding
Common stock - par value $0.01; 330 million shares authorized; 107,720,668 and 107,474,904 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively	1	1
Additional paid-in capital	2,013	2,002
Accumulated deficit	(718)	(678)
Accumulated other comprehensive loss	(120)	(142)
Total stockholders' equity	1,176	1,183
Total liabilities and stockholders' equity	$ 1,698	$ 1,603

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2017	Dec. 31, 2016
Statement Of Financial Position [Abstract]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	330,000,000	330,000,000
Common stock, shares issued	107,720,668	107,474,904
Common stock, shares outstanding	107,720,668	107,474,904

XML

Consolidated Statements of Operations (Unaudited) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Statement [Abstract]
Revenue	$ 651	$ 501	$ 1,282	$ 1,049
Operating expenses:
Cost of products	527	418	1,044	879
Warehousing, selling and administrative	138	140	273	292
Operating loss	(14)	(57)	(35)	(122)
Other expense	(3)	(2)	(5)	(4)
Loss before income taxes	(17)	(59)	(40)	(126)
Income tax provision (benefit)	0	(15)	0	(19)
Net loss	$ (17)	$ (44)	$ (40)	$ (107)
Loss per share:
Basic loss per common share	$ (0.16)	$ (0.40)	$ (0.37)	$ (0.99)
Diluted loss per common share	$ (0.16)	$ (0.40)	$ (0.37)	$ (0.99)
Weighted-average common shares outstanding, basic	107,689,554	107,442,304	107,635,122	107,357,620
Weighted-average common shares outstanding, diluted	107,689,554	107,442,304	107,635,122	107,357,620

XML

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Statement Of Income And Comprehensive Income [Abstract]
Net loss	$ (17)	$ (44)	$ (40)	$ (107)
Other comprehensive income (loss):
Foreign currency translation adjustments	12	(8)	22	15
Comprehensive loss	$ (5)	$ (52)	$ (18)	$ (92)

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities:
Net loss	$ (40)	$ (107)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	26	25
Deferred income taxes	(1)	(24)
Stock-based compensation	11	12
Provision for doubtful accounts	2	14
Provision for inventory	8	23
Other, net		1
Change in operating assets and liabilities, net of acquisitions:
Receivables	(61)	115
Inventories	(50)	104
Prepaid and other current assets	(5)	(6)
Accounts payable and accrued liabilities	37	(26)
Income taxes receivable, net	(1)	25
Other assets / liabilities, net		(1)
Net cash provided by (used in) operating activities	(74)	155
Cash flows from investing activities:
Purchases of property, plant and equipment	(1)	(2)
Business acquisitions, net of cash acquired	(4)	(182)
Purchases of intangible assets		(7)
Other, net	3	1
Net cash used in investing activities	(2)	(190)
Cash flows from financing activities:
Borrowing under the revolving credit facility	172	194
Repayments under the revolving credit facility	(109)	(122)
Other		(4)
Net cash provided by financing activities	63	68
Effect of exchange rates on cash and cash equivalents	4	13
Net change in cash and cash equivalents	(9)	46
Cash and cash equivalents, beginning of period	106	90
Cash and cash equivalents, end of period	$ 97	$ 136

XML

Organization and Basis of Presentation

6 Months Ended

Jun. 30, 2017

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization and Basis of Presentation

1. Organization and Basis of Presentation

Nature of Operations

NOW Inc. (“NOW” or the “Company”) is a holding company headquartered in Houston, Texas that was incorporated in Delaware on November 22, 2013. NOW operates primarily under the DistributionNOW and Wilson Export brands. NOW is a global distributor of energy products as well as products for industrial applications through its locations in the U.S., Canada and internationally which are geographically positioned to serve the energy and industrial markets in over 80 countries. NOW’s energy product offerings are used in the oil and gas industry including upstream drilling and completion, exploration and production, midstream infrastructure development and downstream petroleum refining – as well as in other industries, such as chemical processing, power generation and industrial manufacturing operations. The industrial distribution portion of NOW’s business targets a diverse range of manufacturing and other facilities across numerous industries and end markets. NOW also provides supply chain management to drilling contractors, E&P operators, midstream operators, downstream energy and industrial manufacturing companies. NOW’s supplier network consists of thousands of vendors in approximately 40 countries.

Basis of Presentation

All significant intercompany transactions and accounts have been eliminated. The unaudited consolidated financial information included in this report has been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and Article 10 of SEC Regulation S-X. The principles for interim financial information do not require the inclusion of all the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with the financial statements included in the Company’s most recent Annual Report on Form 10-K. In the opinion of the Company’s management, the consolidated financial statements include all adjustments, all of which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods. The results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the results to be expected for the full year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported and contingent amounts of assets and liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassification

Certain amounts in the prior periods presented have been reclassified to conform to the current period financial statement presentation. These reclassifications have no effect on previously reported results of operations.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, receivables and payables approximated fair value because of the relatively short maturity of these instruments. Cash equivalents include only those investments having a maturity date of three months or less at the time of purchase. See Note 11 “Derivative Financial Instruments” for the fair value of derivative financial instruments.

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 affects any entity using GAAP that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in Revenue Recognition (Topic 605), and most industry-specific guidance. The ASU provides two transition methods: (i) retrospectively to each prior reporting period presented or (ii) retrospectively with the cumulative effect of initially applying this ASU recognized at the date of initial application. In August 2015, the FASB proposed the effective date to be the annual reporting periods beginning after December 15, 2017, and interim periods therein. In May 2016, the FASB issued ASU 2016-12, Narrow-Scope Improvements and Practical Expedients (Topic 606), which clarifies implementation guidance on assessing collectability, presentation of sales tax, noncash consideration and completed contracts and contract modifications at transition. The Company plans to adopt Topic 606 in the first quarter of fiscal year 2018 pursuant to the aforementioned adoption method (ii). While the Company is currently assessing the impact of the new standard, revenue is primarily generated from the sale of finished product to customers. Those sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risks and rewards transfer. These are largely unimpacted by the new standard. The Company continues to review key contracts with customers and anticipates to complete this review during the third quarter of 2017. In addition, the implementation team is currently assessing the impact of the standard on our internal control processes and business information systems and quantifying the cumulative effect adjustment to the opening balance of retained earnings. Based on this preliminary assessment, which is subject to change, the Company believes that significant modifications to our systems and controls will not be required and does not expect the cumulative adjustment to have a material impact on the consolidated financial statements as a result of the adoption of the new standard. The Company expects to expand its revenue recognition disclosures to address the quantitative and qualitative requirements in the standard.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize a lease liability and a right-to-use asset for all leases, including operating leases, with a term greater than twelve months on its balance sheet. ASU 2016-02 is effective for annual and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted, and requires a modified retrospective transition method. The Company is currently assessing the impact of ASU 2016-02 on its consolidated financial statements. The Company expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon the adoption of ASU 2016-02, which will increase the total assets and total liabilities that are reported relative to such amounts prior to adoption.

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), which replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates. ASU 2016-13 requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. ASU 2016-13 is effective for annual and interim periods in fiscal years beginning after December 15, 2019, with early adoption permitted as of December 15, 2018, and requires modified retrospective transition method. The Company is currently assessing the impact of ASU 2016-13 on its consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715). ASU 2017-07 requires the disaggregation of the service cost component from the other components of net periodic benefit cost and allows only the service cost component of net benefit cost to be eligible for capitalization. ASU 2017-07 is effective for annual and interim periods in fiscal years beginning after December 15, 2017. The Company sponsors two defined benefit plans in the UK under which accrual of pension benefits has ceased and there will not be a service cost component to the net periodic pension cost. Plan members benefits that have previously been accrued are indexed in line with inflation during the period up to retirement in order to protect their purchasing power. The Company plans to adopt this standard in the first quarter of fiscal year 2018 and does not expect a material effect on its consolidated financial statements. The Company expects to expand its defined benefit plan agreement disclosures to address the quantitative and qualitative requirements in the standard.

Recently Adopted Accounting Standards

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory (Topic 330). Under ASU 2015-11, inventory will be measured at the “lower of cost and net realizable value.” ASU 2015-11 defines net realizable value as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.” ASU 2015-11 is effective for annual and interim periods in fiscal years beginning after December 15, 2016. The Company adopted this standard as of January 1, 2017, with no material impact on its consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, Intra-Entity Transfers of Assets Other than Inventory (Topic 740), to recognize the income tax consequences of intra-entity transfers of an asset other than inventory when the transfer occurs. ASU 2016-16 is effective for annual and interim periods in fiscal years beginning after December 15, 2017 with early adoption permitted in the first interim period of fiscal year 2017. Upon adoption, any deferred charge established upon the intra-company transfer would be recorded as a cumulative-effect adjustment to retained earnings. The Company early adopted this standard in the first quarter of fiscal year 2017 and reversed a deferred charge of $1 million previously recorded in prepaid and other current assets in the accompanying consolidated balance sheets. However, due to the Company’s full valuation allowance in the U.S., the deferred charge recorded as a cumulative-effect adjustment to accumulated deficit netted to zero.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (Topic 350), which eliminates Step 2 from the goodwill impairment test. ASU 2017-04 is effective for annual and interim periods in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017 and should be applied prospectively.The Company early adopted this standard as of January 1, 2017, for use in its goodwill impairment testing.

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Property, Plant and Equipment, net

6 Months Ended

Jun. 30, 2017

Property Plant And Equipment [Abstract]

Property, Plant and Equipment, net

2. Property, Plant and Equipment, net

Property, plant and equipment consist of (in millions): 

	Estimated Useful Lives	June 30, 2017			December 31, 2016
Information technology assets	1-7 Years	$	47		$	47
Operating equipment	2-15 Years		92			93
Buildings and land (1)	5-35 Years		98			95
Construction in progress			—			1
Total property, plant and equipment			237			236
Less: accumulated depreciation			(107	)		(93	)
Property, plant and equipment, net		$	130		$	143

⁽¹⁾ Land has an indefinite life.

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Accrued Liabilities

6 Months Ended

Jun. 30, 2017

Payables And Accruals [Abstract]

Accrued Liabilities

3. Accrued Liabilities

Accrued liabilities consist of (in millions):

	June 30, 2017		December 31, 2016
Compensation and other related expenses	$	30	$	25
Customer credits and prepayments		25		27
Taxes (non-income)		13		17
Other		33		31
Total	$	101	$	100

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Debt

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Debt

4. Debt

On January 20, 2016, the Company entered into an amendment (the “Amendment”) to its credit facility dated as of April 18, 2014 (the “Credit Agreement”). The Amendment, among other things, (i) suspends, until the Company elects otherwise, the Credit Agreement’s minimum interest coverage ratio effective as of December 30, 2015, (ii) adds a minimum asset coverage ratio (as defined in the Credit Agreement), which requires that the ratio of the value of the Company’s eligible assets (value of qualified cash, eligible inventory and eligible accounts receivable) to the amount of its outstanding obligations under the Credit Agreement is no less than 1.50 to 1.00, (iii) reduces the maximum capitalization ratio (as defined in the Credit Agreement) from 50% to 45%, (iv) increases the applicable interest margin on current borrowings by 75 basis points and the current commitment fee by 5 basis points and (v) reduces sub-facilities for standby letters of credit and swingline loans to $40 million and $25 million, respectively. In connection with the Amendment, the Company also entered into a Security Agreement dated as of January 20, 2016 (the “Security Agreement”) pursuant to which it granted the lenders under the Credit Agreement customary security interests in substantially all of the Company’s U.S. assets and in approximately 65% of the equity interests of the Company’s first-tier foreign subsidiaries.

As of June 30, 2017, the Company had borrowed $128 million against its senior secured revolving credit facility, and had $437 million in availability (as defined in the Credit Agreement) resulting in the excess availability (as defined in the Credit Agreement) of 77%, subject to certain restrictions. Borrowings that result in the excess availability dropping below 25% are conditioned upon compliance with or waiver of a minimum fixed charge ratio (as defined in the Credit Agreement). The Company was not obligated to pay back the borrowing against the senior secured revolving credit facility until the expiration date of April 18, 2019, as such the outstanding borrowing is classified as long term.As of June 30, 2017, the Company was in compliance with all financial covenants in the credit facility. Total commitments under the amended credit facility remain at $750 million and the amended credit facility continues to include a $250 million accordion feature, subject to certain conditions.

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Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2017

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

5. Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss) are as follows (in millions): 

	Foreign
	Currency
	Translation
	Adjustments
Balance at December 31, 2016	$	(142	)
Other comprehensive income		22
Balance at June 30, 2017	$	(120	)

The Company’s reporting currency is the U.S. dollar. A majority of the Company’s international entities in which there is a substantial investment have the local currency as their functional currency. As a result, foreign currency translation adjustments resulting from the process of translating the entities’ financial statements into the reporting currency are reported in other comprehensive income (loss) in accordance with ASC Topic 830, “Foreign Currency Matters.”

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Business Segments

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Business Segments

6. Business Segments

Operating results by reportable segment are as follows (in millions):  

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenue:
United States	$	481		$	337		$	920		$	694
Canada		79			55			175			118
International		91			109			187			237
Total revenue	$	651		$	501		$	1,282		$	1,049
Operating profit (loss):
United States	$	(16	)	$	(44	)	$	(42	)	$	(103	)
Canada		2			(8	)		5			(14	)
International		—			(5	)		2			(5	)
Total operating loss	$	(14	)	$	(57	)	$	(35	)	$	(122	)
Operating profit (loss) % of    revenue:
United States		(3.3	%)		(13.1	%)		(4.6	%)		(14.8	%)
Canada		2.5	%		(14.5	%)		2.9	%		(11.9	%)
International		0.0	%		(4.6	%)		1.1	%		(2.1	%)
Total operating loss %		(2.2	%)		(11.4	%)		(2.7	%)		(11.6	%)

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Income Taxes

6 Months Ended

Jun. 30, 2017

Income Tax Disclosure [Abstract]

Income Taxes

7. Income Taxes

On May 1, 2014, the National Oilwell Varco, Inc. (“NOV”) Board of Directors approved the Spin-Off (the “Spin-Off” or “Separation”) of its distribution business into an independent, publicly traded company named NOW Inc.  In connection with the Separation, the Company and NOV entered into a Tax Matters Agreement, dated as of May 29, 2014 (the “Tax Matters Agreement”).  The Tax Matters Agreement sets forth the Company and NOV’s rights and obligations related to the allocation of federal, state, local and foreign taxes for periods before and after the Spin-Off, as well as taxes attributable to the Spin-Off, and related matters such as the filing of tax returns and the conduct of IRS and other audits.  Pursuant to the Tax Matters Agreement, NOV has prepared and filed the consolidated federal income tax return, and any other tax returns that include both NOV and the Company for all the liability periods ended on or prior to May 30, 2014.  The income tax provision (benefit) for periods prior to the Separation has been computed as if NOW were a stand-alone company.  NOV will indemnify and hold harmless the Company for any income tax liability for periods before the Separation date.  The Company will prepare and file all tax returns that include solely the Company for all taxable periods ending after that date.  Settlements of tax payments between NOV and the Company were generally treated as contributions from or distributions to NOV in periods prior to the Separation date.

The effective tax rates for the three and six months ended June 30, 2017 were (0.1%) and 1.0%, compared to 26.3% and 15.1% for the same periods in 2016. Compared to the U.S. statutory rate, the effective tax rate was impacted by recurring items, such as lower tax rates on income earned in foreign jurisdictions that is permanently reinvested, offset by nondeductible expenses, state income taxes and the change in valuation allowance recorded against deferred tax assets. Due to the continuing uncertainty in our industry and thus our outlook, the Company continues to utilize the method of recording income taxes on a year-to-date effective tax rate for the three and six months ended June 30, 2017. The Company will evaluate its use of this method each quarter until such time as a return to the annualized estimated effective tax rate method is deemed appropriate.

During the second quarter of 2016, the Company acquired Power Service and recorded a deferred tax liability of $19 million related to basis differences between U.S. GAAP and U.S. Tax associated with the acquisition and step-up to fair value of certain assets, primarily intangible assets.  The step up in basis resulted in higher future taxable temporary differences and a corresponding reduction in the valuation allowance recorded against deferred tax assets in the U.S.

To the extent penalties and interest would be assessed on any underpayment of income tax, such accrued amounts would be classified as a component of income tax provision (benefit) in the financial statements consistent with the Company’s policy.

The Company is subject to taxation in the United States, various states and foreign jurisdictions. The Company has significant operations in the United States and Canada and to a lesser extent in various other international jurisdictions. Tax years that remain subject to examination by major tax jurisdictions vary by legal entity, but are generally open in the U.S. for the tax years ending after 2012 and outside the U.S. for the tax years ending after 2010. The Company is indemnified for any income tax exposures related to the periods prior to the Separation under the Tax Matters Agreement with NOV.

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Loss Per Share ("EPS")

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Loss Per Share ("EPS")

8. Loss Per Share (“EPS”)

For the three and six months ended June 30, 2017 and 2016, 8,210,009 and 7,986,161, 7,412,133 and 7,181,595, respectively, of potentially dilutive shares were excluded from the computation of diluted loss per share due to the Company recognizing a net loss for the period.

Basic and diluted loss per share follows (in millions, except share data): 

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Numerator for basic and diluted net loss    per share attributable to the Company's    stockholders:
Net loss attributable to the Company's    stockholders	$	(17	)	$	(44	)	$	(40	)	$	(107	)
Denominator for basic loss per share    attributable to the Company's stockholders:
Weighted average common shares    outstanding		107,689,554			107,442,304			107,635,122			107,357,620
Effect of dilutive securities:
Dilutive effect of stock-based    compensation		—			—			—			—
Denominator for diluted loss per share    attributable to the Company's stockholders		107,689,554			107,442,304			107,635,122			107,357,620
Loss per share attributable to the Company's    stockholders:
Basic	$	(0.16	)	$	(0.40	)	$	(0.37	)	$	(0.99	)
Diluted	$	(0.16	)	$	(0.40	)	$	(0.37	)	$	(0.99	)

ASC Topic 260, “Earnings Per Share,” requires companies with unvested participating securities to utilize a two-class method for the computation of net income attributable to the Company per share. The two-class method requires a portion of net income attributable to the Company to be allocated to participating securities, which are unvested awards of share-based payments with non-forfeitable rights to receive dividends or dividend equivalents, if declared. Net losses are not allocated to nonvested shares in periods that the Company determines that those shares are not obligated to participate in losses.

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Stock-based Compensation and Outstanding Awards

6 Months Ended

Jun. 30, 2017

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-based Compensation and Outstanding Awards

9. Stock-based Compensation and Outstanding Awards

In connection with the Separation, the Company and NOV entered into the Employee Matters Agreement which governs the Company and NOV’s compensation and employee benefit obligations with respect to current and former employees of each company, and generally allocates liabilities and responsibilities relating to employee compensation and benefit plans and programs. Such agreement provided the adjustment mechanisms applied as a result of the Spin-Off to convert outstanding NOV equity awards held by Company employees to Company awards.

The Company has a stock-based compensation plan known as the NOW Inc. Long-Term Incentive Plan (the “Plan”). Under the Plan, the Company’s employees are eligible to be granted stock options, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and performance stock awards (“PSAs”).

For the six months ended June 30, 2017, the Company granted 915,037 stock options with a weighted average fair value of $7.07 per share and 194,183 shares of RSAs and RSUs with a weighted average fair value of $19.92 per share. In addition, the Company granted PSAs to senior management employees with potential payouts varying from zero to 169,346 shares. These options vest over a three-year period from the grant date on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards. The RSAs and RSUs vest on the first and third anniversary of the date of grant. The PSAs can be earned based on performance against established metrics over a three-year performance period. The PSAs are divided into three equal, independent parts that are subject to three separate performance metrics: (i) one-third of the PSAs have a Total Shareholder Return (TSR) metric, (ii) one-third of the PSAs have an EBITDA metric, and (iii) one-third of the PSAs have a Working Capital (WC) metric.

Performance against the TSR metric is determined by comparing the performance of the Company’s TSR with the TSR performance of designated peer companies for the three-year performance period. Performance against the EBITDA metric is determined by comparing the performance of the Company’s actual EBITDA average for each of the three-years of the performance period against the EBITDA metrics set by the Company’s Compensation Committee of the Board of Directors.  Performance against the WC metric is determined by comparing the performance of the Company’s actual WC average for each of the three-years of the performance period against the WC metrics set by the Company’s Compensation Committee of the Board of Directors.

Stock-based compensation expense totaled $5 million and $11 million for the three and six months ended June 30, 2017, respectively, and $6 million and $12 million for the same periods in 2016, respectively.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2017

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

10. Commitments and Contingencies

In connection with the Spin-Off, the Company and NOV entered into a Separation and Distribution Agreement which contains the key provisions related to the separation from NOV and the distribution of the Company’s common stock to NOV shareholders. The Separation and Distribution Agreement separated the assets related to the Company’s business from NOV, along with liabilities related to such assets, which now reside with the Company. In general, the Company agrees to indemnify NOV from liabilities arising from the Company’s business and assets, and NOV agrees to indemnify the Company from liabilities arising from NOV’s business and assets (that remained with NOV), except as otherwise provided in such agreement.

The Company is involved in various claims, regulatory agency audits and pending or threatened legal actions involving a variety of matters. The Company has also assessed the potential for additional losses above the amounts accrued as well as potential losses for matters that are not probable, but are reasonably possible. The total potential loss on these matters cannot be determined; however, in the Company’s opinion, any ultimate liability, to the extent not otherwise recorded or accrued for, will not materially affect the Company’s financial position, cash flow or results of operations. These estimated liabilities are based on the Company’s assessment of the nature of these matters, their progress toward resolution, the advice of legal counsel and outside experts as well as management’s intention and experience.

The Company’s business is affected both directly and indirectly by governmental laws and regulations relating to the oilfield service industry in general, as well as by environmental and safety regulations that specifically apply to the Company’s business. Although the Company has not incurred material costs in connection with its compliance with such laws, there can be no assurance that other developments, such as new environmental laws, regulations and enforcement policies hereunder may not result in additional, presently unquantifiable, costs or liabilities to the Company.

The Company does not accrue for contingent losses that, in its judgment, are considered to be reasonably possible, but not probable. Estimating reasonably possible losses also requires the analysis of multiple possible outcomes that often depend on judgments about potential actions by third parties. NOW’s management currently estimates a range of loss for reasonably possible losses for which an estimate can be made is between zero and $14 million in the international segment primarily attributable to accounts receivable with one customer. The Company has accrued its best estimate for loss as of June 30, 2017.  Factors underlying this estimated range of loss may change from time to time, and actual results may vary significantly from this estimate.

The Company maintains credit arrangements with several banks providing for short-term borrowing capacity, overdraft protection and other bonding requirements. As of June 30, 2017, these credit arrangements totaled approximately $47 million, of which the Company was contingently liable for approximately $9 million of outstanding standby letters of credit, including bid and performance related bonds and surety bonds. The Company does not believe, based on historical experience and information currently available, that it is probable that any amounts will be required to be paid.

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2017

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

11. Derivative Financial Instruments

The Company is exposed to certain risks relating to its ongoing business operations. The primary risk managed by using derivative instruments is foreign currency exchange rate risk. The Company has entered into certain financial derivative instruments to manage this risk.

The derivative financial instruments the Company has entered into are forward exchange contracts which have terms of less than one year to economically hedge foreign currency exchange rate risk on recognized non-functional currency monetary accounts. The purpose of the Company’s foreign currency economic hedging activities is to economically hedge the Company’s risk from changes in the fair value of non-functional currency denominated monetary accounts.

The Company records all derivative financial instruments at their fair value in its consolidated balance sheets. None of the derivative financial instruments that the Company holds are designated as either a fair value hedge or cash flow hedge and the gain or loss on the derivative instrument is recorded in earnings. The Company has determined that the fair value of its derivative financial instruments are computed using level 2 inputs (inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability) in the fair value hierarchy as the fair value is based on publicly available foreign exchange rates at each financial reporting date.     

The table below provides data about the fair value of the derivative instruments that are recorded in the consolidated balance sheets (in millions):

	June 30, 2017				December 31, 2016
	Assets		Liabilities		Assets		Liabilities
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts(1)	$	—	$	—	$	1	$	—

⁽¹⁾ Included in other current liabilities and other current assets in the consolidated balance sheets. The total notional amount of the forward foreign exchange contracts was approximately $38 million and $76 million at June 30, 2017 and December 31, 2016, respectively.

The table below provides the gains (losses) recognized in other income in the accompanying consolidated statements of operations related to the Company’s derivative instruments (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts	$	—	$	4	$	1	$	10

As of June 30, 2017, the Company’s financial instruments do not contain any credit-risk-related or other contingent features that could cause accelerated payments when the Company’s financial instruments are in net liability positions. The Company does not use derivative financial instruments for trading or speculative purposes.

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Organization and Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Nature of Operations

Nature of Operations

NOW Inc. (“NOW” or the “Company”) is a holding company headquartered in Houston, Texas that was incorporated in Delaware on November 22, 2013. NOW operates primarily under the DistributionNOW and Wilson Export brands. NOW is a global distributor of energy products as well as products for industrial applications through its locations in the U.S., Canada and internationally which are geographically positioned to serve the energy and industrial markets in over 80 countries. NOW’s energy product offerings are used in the oil and gas industry including upstream drilling and completion, exploration and production, midstream infrastructure development and downstream petroleum refining – as well as in other industries, such as chemical processing, power generation and industrial manufacturing operations. The industrial distribution portion of NOW’s business targets a diverse range of manufacturing and other facilities across numerous industries and end markets. NOW also provides supply chain management to drilling contractors, E&P operators, midstream operators, downstream energy and industrial manufacturing companies. NOW’s supplier network consists of thousands of vendors in approximately 40 countries.

Basis of Presentation

Basis of Presentation

All significant intercompany transactions and accounts have been eliminated. The unaudited consolidated financial information included in this report has been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and Article 10 of SEC Regulation S-X. The principles for interim financial information do not require the inclusion of all the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with the financial statements included in the Company’s most recent Annual Report on Form 10-K. In the opinion of the Company’s management, the consolidated financial statements include all adjustments, all of which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods. The results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the results to be expected for the full year.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported and contingent amounts of assets and liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassification

Reclassification

Certain amounts in the prior periods presented have been reclassified to conform to the current period financial statement presentation. These reclassifications have no effect on previously reported results of operations.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, receivables and payables approximated fair value because of the relatively short maturity of these instruments. Cash equivalents include only those investments having a maturity date of three months or less at the time of purchase. See Note 11 “Derivative Financial Instruments” for the fair value of derivative financial instruments.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 affects any entity using GAAP that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in Revenue Recognition (Topic 605), and most industry-specific guidance. The ASU provides two transition methods: (i) retrospectively to each prior reporting period presented or (ii) retrospectively with the cumulative effect of initially applying this ASU recognized at the date of initial application. In August 2015, the FASB proposed the effective date to be the annual reporting periods beginning after December 15, 2017, and interim periods therein. In May 2016, the FASB issued ASU 2016-12, Narrow-Scope Improvements and Practical Expedients (Topic 606), which clarifies implementation guidance on assessing collectability, presentation of sales tax, noncash consideration and completed contracts and contract modifications at transition. The Company plans to adopt Topic 606 in the first quarter of fiscal year 2018 pursuant to the aforementioned adoption method (ii). While the Company is currently assessing the impact of the new standard, revenue is primarily generated from the sale of finished product to customers. Those sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risks and rewards transfer. These are largely unimpacted by the new standard. The Company continues to review key contracts with customers and anticipates to complete this review during the third quarter of 2017. In addition, the implementation team is currently assessing the impact of the standard on our internal control processes and business information systems and quantifying the cumulative effect adjustment to the opening balance of retained earnings. Based on this preliminary assessment, which is subject to change, the Company believes that significant modifications to our systems and controls will not be required and does not expect the cumulative adjustment to have a material impact on the consolidated financial statements as a result of the adoption of the new standard. The Company expects to expand its revenue recognition disclosures to address the quantitative and qualitative requirements in the standard.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize a lease liability and a right-to-use asset for all leases, including operating leases, with a term greater than twelve months on its balance sheet. ASU 2016-02 is effective for annual and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted, and requires a modified retrospective transition method. The Company is currently assessing the impact of ASU 2016-02 on its consolidated financial statements. The Company expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon the adoption of ASU 2016-02, which will increase the total assets and total liabilities that are reported relative to such amounts prior to adoption.

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), which replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates. ASU 2016-13 requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. ASU 2016-13 is effective for annual and interim periods in fiscal years beginning after December 15, 2019, with early adoption permitted as of December 15, 2018, and requires modified retrospective transition method. The Company is currently assessing the impact of ASU 2016-13 on its consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715). ASU 2017-07 requires the disaggregation of the service cost component from the other components of net periodic benefit cost and allows only the service cost component of net benefit cost to be eligible for capitalization. ASU 2017-07 is effective for annual and interim periods in fiscal years beginning after December 15, 2017. The Company sponsors two defined benefit plans in the UK under which accrual of pension benefits has ceased and there will not be a service cost component to the net periodic pension cost. Plan members benefits that have previously been accrued are indexed in line with inflation during the period up to retirement in order to protect their purchasing power. The Company plans to adopt this standard in the first quarter of fiscal year 2018 and does not expect a material effect on its consolidated financial statements. The Company expects to expand its defined benefit plan agreement disclosures to address the quantitative and qualitative requirements in the standard.

Recently Adopted Accounting Standards

Recently Adopted Accounting Standards

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory (Topic 330). Under ASU 2015-11, inventory will be measured at the “lower of cost and net realizable value.” ASU 2015-11 defines net realizable value as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.” ASU 2015-11 is effective for annual and interim periods in fiscal years beginning after December 15, 2016. The Company adopted this standard as of January 1, 2017, with no material impact on its consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, Intra-Entity Transfers of Assets Other than Inventory (Topic 740), to recognize the income tax consequences of intra-entity transfers of an asset other than inventory when the transfer occurs. ASU 2016-16 is effective for annual and interim periods in fiscal years beginning after December 15, 2017 with early adoption permitted in the first interim period of fiscal year 2017. Upon adoption, any deferred charge established upon the intra-company transfer would be recorded as a cumulative-effect adjustment to retained earnings. The Company early adopted this standard in the first quarter of fiscal year 2017 and reversed a deferred charge of $1 million previously recorded in prepaid and other current assets in the accompanying consolidated balance sheets. However, due to the Company’s full valuation allowance in the U.S., the deferred charge recorded as a cumulative-effect adjustment to accumulated deficit netted to zero.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (Topic 350), which eliminates Step 2 from the goodwill impairment test. ASU 2017-04 is effective for annual and interim periods in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017 and should be applied prospectively.The Company early adopted this standard as of January 1, 2017, for use in its goodwill impairment testing.

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Property, Plant and Equipment, net (Tables)

6 Months Ended

Jun. 30, 2017

Property Plant And Equipment [Abstract]

Summary of Property, Plant and Equipment

Property, plant and equipment consist of (in millions): 

	Estimated Useful Lives	June 30, 2017			December 31, 2016
Information technology assets	1-7 Years	$	47		$	47
Operating equipment	2-15 Years		92			93
Buildings and land (1)	5-35 Years		98			95
Construction in progress			—			1
Total property, plant and equipment			237			236
Less: accumulated depreciation			(107	)		(93	)
Property, plant and equipment, net		$	130		$	143

⁽¹⁾ Land has an indefinite life.

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Accrued Liabilities (Tables)

6 Months Ended

Jun. 30, 2017

Payables And Accruals [Abstract]

Summary of Accrued Liabilities

Accrued liabilities consist of (in millions):

	June 30, 2017		December 31, 2016
Compensation and other related expenses	$	30	$	25
Customer credits and prepayments		25		27
Taxes (non-income)		13		17
Other		33		31
Total	$	101	$	100

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Accumulated Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Jun. 30, 2017

Equity [Abstract]

Components of Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss) are as follows (in millions): 

	Foreign
	Currency
	Translation
	Adjustments
Balance at December 31, 2016	$	(142	)
Other comprehensive income		22
Balance at June 30, 2017	$	(120	)

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Business Segments (Tables)

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Summary of Operating Results by Reportable Segment

Operating results by reportable segment are as follows (in millions):  

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenue:
United States	$	481		$	337		$	920		$	694
Canada		79			55			175			118
International		91			109			187			237
Total revenue	$	651		$	501		$	1,282		$	1,049
Operating profit (loss):
United States	$	(16	)	$	(44	)	$	(42	)	$	(103	)
Canada		2			(8	)		5			(14	)
International		—			(5	)		2			(5	)
Total operating loss	$	(14	)	$	(57	)	$	(35	)	$	(122	)
Operating profit (loss) % of    revenue:
United States		(3.3	%)		(13.1	%)		(4.6	%)		(14.8	%)
Canada		2.5	%		(14.5	%)		2.9	%		(11.9	%)
International		0.0	%		(4.6	%)		1.1	%		(2.1	%)
Total operating loss %		(2.2	%)		(11.4	%)		(2.7	%)		(11.6	%)

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Loss Per Share ("EPS") (Tables)

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Computation of Basic and Diluted Loss Per Share

Basic and diluted loss per share follows (in millions, except share data): 

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Numerator for basic and diluted net loss    per share attributable to the Company's    stockholders:
Net loss attributable to the Company's    stockholders	$	(17	)	$	(44	)	$	(40	)	$	(107	)
Denominator for basic loss per share    attributable to the Company's stockholders:
Weighted average common shares    outstanding		107,689,554			107,442,304			107,635,122			107,357,620
Effect of dilutive securities:
Dilutive effect of stock-based    compensation		—			—			—			—
Denominator for diluted loss per share    attributable to the Company's stockholders		107,689,554			107,442,304			107,635,122			107,357,620
Loss per share attributable to the Company's    stockholders:
Basic	$	(0.16	)	$	(0.40	)	$	(0.37	)	$	(0.99	)
Diluted	$	(0.16	)	$	(0.40	)	$	(0.37	)	$	(0.99	)

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Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2017

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Schedule of Fair Value of Derivative Instruments

The table below provides data about the fair value of the derivative instruments that are recorded in the consolidated balance sheets (in millions):

	June 30, 2017				December 31, 2016
	Assets		Liabilities		Assets		Liabilities
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts(1)	$	—	$	—	$	1	$	—

⁽¹⁾ Included in other current liabilities and other current assets in the consolidated balance sheets. The total notional amount of the forward foreign exchange contracts was approximately $38 million and $76 million at June 30, 2017 and December 31, 2016, respectively.

Schedule of Gains (Losses) Recognized

The table below provides the gains (losses) recognized in other income in the accompanying consolidated statements of operations related to the Company’s derivative instruments (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts	$	—	$	4	$	1	$	10

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Organization and Basis of Presentation - Additional Information (Detail)	Nov. 22, 2013 GeographicMarket Vendor Country	Jun. 30, 2017 USD ($) Pension_Plan	Mar. 31, 2017 USD ($)
Basis Of Presentation And Organization [Line Items]
Number of geographical area covered | GeographicMarket	80
Number of vendors | Vendor	1,000
Number of countries distribution occur through vendors | Country	40
ASU 2016-16 [Member]
Basis Of Presentation And Organization [Line Items]
Upon adoption of deferred charge cumulative-effect adjustment to accumulated deficit netted		$ 0
Prepaid and Other Current Assets [Member] | ASU 2016-16 [Member]
Basis Of Presentation And Organization [Line Items]
Reversal of deferred charge			$ 1,000,000
UK [Member]
Basis Of Presentation And Organization [Line Items]
Number of defined benefit plan | Pension_Plan		2

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Property, Plant and Equipment, net - Summary of Property, Plant and Equipment (Detail) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Property Plant And Equipment [Line Items]
Property, plant and equipment, gross	$ 237	$ 236
Less: accumulated depreciation	(107)	(93)
Property, plant and equipment, net	130	143
Information Technology Assets [Member]
Property Plant And Equipment [Line Items]
Property, plant and equipment, gross	47	47
Operating Equipment [Member]
Property Plant And Equipment [Line Items]
Property, plant and equipment, gross	92	93
Buildings and Land [Member]
Property Plant And Equipment [Line Items]
Property, plant and equipment, gross	$ 98	95
Construction in progress [Member]
Property Plant And Equipment [Line Items]
Property, plant and equipment, gross		$ 1
Minimum [Member] | Information Technology Assets [Member]
Property Plant And Equipment [Line Items]
Property plant and equipment estimated useful lives	1 year
Minimum [Member] | Operating Equipment [Member]
Property Plant And Equipment [Line Items]
Property plant and equipment estimated useful lives	2 years
Minimum [Member] | Buildings [Member]
Property Plant And Equipment [Line Items]
Property plant and equipment estimated useful lives	5 years
Maximum [Member] | Information Technology Assets [Member]
Property Plant And Equipment [Line Items]
Property plant and equipment estimated useful lives	7 years
Maximum [Member] | Operating Equipment [Member]
Property Plant And Equipment [Line Items]
Property plant and equipment estimated useful lives	15 years
Maximum [Member] | Buildings [Member]
Property Plant And Equipment [Line Items]
Property plant and equipment estimated useful lives	35 years

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Accrued Liabilities - Summary of Accrued Liabilities (Detail) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Payables And Accruals [Abstract]
Compensation and other related expenses	$ 30	$ 25
Customer credits and prepayments	25	27
Taxes (non-income)	13	17
Other	33	31
Total	$ 101	$ 100

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Debt - Additional Information (Detail) - USD ($)		6 Months Ended	12 Months Ended
	Jan. 20, 2016	Jun. 30, 2017	Dec. 31, 2015
Debt Instrument [Line Items]
Agreement date		Apr. 18, 2014
Minimum asset coverage ratio	150.00%
Maximum capitalization ratio	45.00%		50.00%
Base rate	0.75%
Percentage increase in commitment fee	0.05%
Percentage of equity in customary security interest	65.00%
Senior secured revolving credit facility commitment		$ 750,000,000
Line of Credit Facility, Expiration Date		Apr. 18, 2019
Minimum [Member]
Debt Instrument [Line Items]
Line of credit covenant trigger percentage		25.00%
Standby Letters of Credit
Debt Instrument [Line Items]
Line of credit facility borrowings	$ 40,000,000
Swing Line Loan
Debt Instrument [Line Items]
Line of credit facility borrowings	$ 25,000,000
Senior Secured Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Line of credit facility borrowings		$ 128,000,000
Line of Credit Facility, Available Borrowing Capacity		$ 437,000,000
Line Of credit Unused Capacity Percentage		77.00%
Accordion Debt [member]
Debt Instrument [Line Items]
Senior secured revolving credit facility commitment		$ 250,000,000

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Accumulated Other Comprehensive Income (Loss) - Components of Accumulated Other Comprehensive Income (Loss) (Detail) $ in Millions	6 Months Ended
	Jun. 30, 2017 USD ($)
Accumulated other comprehensive income (loss), Beginning balance	$ (142)
Accumulated other comprehensive income (loss), Ending balance	(120)
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated other comprehensive income (loss), Beginning balance	(142)
Other comprehensive income	22
Accumulated other comprehensive income (loss), Ending balance	$ (120)

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Business Segments - Summary of Operating Results by Reportable Segment (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Revenue:
Total revenue	$ 651	$ 501	$ 1,282	$ 1,049
Operating profit (loss):
Total operating loss	$ (14)	$ (57)	$ (35)	$ (122)
Operating profit (loss) % of revenue:
Total operating loss %	(2.20%)	(11.40%)	(2.70%)	(11.60%)
United States [Member]
Revenue:
Total revenue	$ 481	$ 337	$ 920	$ 694
Operating profit (loss):
Total operating loss	$ (16)	$ (44)	$ (42)	$ (103)
Operating profit (loss) % of revenue:
Total operating loss %	(3.30%)	(13.10%)	(4.60%)	(14.80%)
Canada [Member]
Revenue:
Total revenue	$ 79	$ 55	$ 175	$ 118
Operating profit (loss):
Total operating loss	$ 2	$ (8)	$ 5	$ (14)
Operating profit (loss) % of revenue:
Total operating loss %	2.50%	(14.50%)	2.90%	(11.90%)
International [Member]
Revenue:
Total revenue	$ 91	$ 109	$ 187	$ 237
Operating profit (loss):
Total operating loss		$ (5)	$ 2	$ (5)
Operating profit (loss) % of revenue:
Total operating loss %	0.00%	(4.60%)	1.10%	(2.10%)

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Income Taxes - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Schedule Of Income Tax [Line Items]
Effective tax rates	(0.10%)	26.30%	1.00%	15.10%
Power Service [Member]
Schedule Of Income Tax [Line Items]
Deferred tax liability of intangible assets		$ 19		$ 19

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Loss Per Share ("EPS") - Additional Information (Detail) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Earnings Per Share [Abstract]
Antidilutive Securities excluded from Computation of Earnings Per Share	8,210,009	7,412,133	7,986,161	7,181,595

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Loss Per Share ("EPS") - Computation of Basic and Diluted Loss Per Share (Detail) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Numerator for basic and diluted net loss per share attributable to the Company's stockholders:
Net loss attributable to the Company's stockholders	$ (17)	$ (44)	$ (40)	$ (107)
Denominator for basic loss per share attributable to the Company's stockholders:
Weighted-average common shares outstanding, basic	107,689,554	107,442,304	107,635,122	107,357,620
Effect of dilutive securities:
Denominator for diluted loss per share attributable to the Company's stockholders	107,689,554	107,442,304	107,635,122	107,357,620
Basic loss per common share	$ (0.16)	$ (0.40)	$ (0.37)	$ (0.99)
Diluted loss per common share	$ (0.16)	$ (0.40)	$ (0.37)	$ (0.99)

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Stock-based Compensation and Outstanding Awards - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock option granted			915,037
Stock option granted, weighted average fair value			$ 7.07
Stock-based compensation expense	$ 5	$ 6	$ 11	$ 12
Restricted Stock and Restricted Stock Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock based awards, shares granted			194,183
Stock based awards, shares granted, weighted average fair value			$ 19.92
Performance-base restricted stock [Member] | Minimum [Member] | Senior Management Employees [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock based awards, shares granted			0
Performance-base restricted stock [Member] | Maximum [Member] | Senior Management Employees [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock based awards, shares granted			169,346
Stock Options [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock based awards, vested, number of years			3 years
TSR metric [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Performance based restricted stock awards granted in percent			33.33%
Performance based restricted stock awards goals over performance period			3 years
EBITDA metric [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Performance based restricted stock awards granted in percent			33.33%
Performance based restricted stock awards goals over performance period			3 years
Working Capital (WC) metric [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Performance based restricted stock awards granted in percent			33.33%
Performance based restricted stock awards goals over performance period			3 years

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Commitments and Contingencies - Additional Information (Detail)	Jun. 30, 2017 USD ($)
Loss Contingencies [Line Items]
Credit arrangements	$ 47,000,000
Contingent liability	9,000,000
Minimum [Member]
Loss Contingencies [Line Items]
Range of reasonably possible losses	0
Maximum [Member]
Loss Contingencies [Line Items]
Range of reasonably possible losses	$ 14,000,000

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Derivative Financial Instruments - Schedule of Fair Value of Derivative Instruments (Detail) $ in Millions	Dec. 31, 2016 USD ($)
Derivatives Not Designated as Hedging Instrument [Member]
Derivatives Fair Value [Line Items]
Foreign exchange forward contracts, Assets	$ 1

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Derivative Financial Instruments - Schedule of Fair Value of Derivative Instruments (Parenthetical) (Detail) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Forward Contracts [Member]
Derivatives Fair Value [Line Items]
Notional amount of forward foreign exchange contracts	$ 38	$ 76

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Derivative Financial Instruments - Schedule of Gains (Losses) Recognized (Detail) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Derivatives Not Designated as Hedging Instrument [Member]
Derivative Instruments Gain Loss [Line Items]
Foreign exchange forward contracts	$ 4	$ 1	$ 10