# EDGAR Filing Document

**Accession Number:** 0001599617
**File Stem:** 0001193125-26-015345
**Filing Date:** 2026-1
**Character Count:** 282335
**Document Hash:** fd854149ea0f1bbfd32d448feb986579
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-26-015345.hdr.sgml**: 20260116

**ACCESSION NUMBER**: 0001193125-26-015345

**CONFORMED SUBMISSION TYPE**: 8-K/A

**PUBLIC DOCUMENT COUNT**: 17

**CONFORMED PERIOD OF REPORT**: 20251106

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20260116

**DATE AS OF CHANGE**: 20260116

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** DNOW Inc.
- **CENTRAL INDEX KEY:** 0001599617
- **STANDARD INDUSTRIAL CLASSIFICATION:** OIL & GAS FILED MACHINERY & EQUIPMENT [3533]
- **ORGANIZATION NAME:** 01 Energy & Transportation
- **EIN:** 464191184
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K/A
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-36325
- **FILM NUMBER:** 26539457

**BUSINESS ADDRESS:**
- **STREET 1:** 7402 NORTH ELDRIDGE PARKWAY
- **CITY:** HOUSTON
- **STATE:** TX
- **ZIP:** 77041
- **BUSINESS PHONE:** 281-823-4700

**MAIL ADDRESS:**
- **STREET 1:** 7402 NORTH ELDRIDGE PARKWAY
- **CITY:** HOUSTON
- **STATE:** TX
- **ZIP:** 77041

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** NOW Inc.
- **DATE OF NAME CHANGE:** 20140207

?xml version='1.0' encoding='ASCII'? 8-K/A

### UNITED STATES

### SECURITIES AND EXCHANGE COMMISSION

#### Washington, D.C. 20549

### FORM 8-K/A

#### CURRENT REPORT

#### Pursuant to Section 13 OR 15(d)

#### of The Securities Exchange Act of 1934

#### Date of Report (Date of earliest event reported): November 6, 2025

## DNOW INC.

#### (Exact name of registrant as specified in its charter)
![LOGO](g949225dsp1.jpg)

---

| | | |
|:---|:---|:---|
| **Delaware** | **001-36325** | **46-4191184** |
| **(State or other jurisdiction of**<br> **incorporation or organization)** | **(Commission**<br> **File Number)** | **(I.R.S. Employer**<br> **Identification No.)** |

---

---

| | |
|:---|:---|
| **7402 North Eldridge Parkway**<br> **Houston, Texas** | **77041** |
| **(Address of principal executive offices)** | **(Zip Code)** |

---

#### Registrant's telephone number, including area code: (918) 742-5531

#### (Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading**<br> **symbol(s)** | **Name of each exchange**<br> **on which registered** |
| Common Stock, par value $0.01 | DNOW | New York Stock Exchange |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ☐

------

#### Explanatory Note
This Amendment No. 1 on Form 8-K/A (this "Amendment") is being filed by DNOW Inc., a Delaware corporation (the "Company"), to amend and supplement its Current Report on Form 8-K filed with the Securities and Exchange Commission on November 6, 2025 (the "Original Report"). As previously disclosed in the Original Report, on November 6, 2025, the Company completed its acquisition of MRC Global Inc., a Delaware corporation ("MRC Global") and its subsidiaries.

The Company is filing this Amendment solely to supplement Item 9.01 of the Original Report to file (i) the audited consolidated financial statements of MRC Global as of the years ended December 31, 2024 and 2023 and for the years ended December 31, 2024, 2023 and 2022, (ii) the interim unaudited condensed consolidated financial statements of MRC Global as of September 30, 2025 and for the nine months ended September 30, 2025 and September 30, 2024 and (iii) the unaudited pro forma condensed combined balance sheet of the Company and its subsidiaries as of September 30, 2025, the unaudited pro forma condensed combined statements of comprehensive income for the year ended December 31, 2024 and the nine months ended September 30, 2025 and the related notes. Except for the foregoing, this Amendment does not modify or update any other disclosure contained in the Original Report.

---

| | |
|:---|:---|
| **Item 9.01.** | **Financial Statements and Exhibits.**  |

---

(a) *Financial statements of businesses acquired.* 

The Company is filing: (i) the audited consolidated balance sheets of MRC Global as of the years ended December 31, 2024 and 2023, the audited consolidated statements of operations, the audited consolidated statements of comprehensive income (loss), the audited consolidated statements of stockholders' equity and the audited consolidated statements of cash flows for the years ended December 31, 2024, 2023 and 2022, and the related notes thereto, which are attached hereto as Exhibit 99.1 and are incorporated herein by reference; (ii) the interim unaudited condensed consolidated financial statements of MRC Global as of September 30, 2025 and for the nine months ended September 30, 2025 and September 30, 2024, and the related notes thereto, which are attached hereto as Exhibit 99.2 and are incorporated herein by reference; and (iii) the consent of Ernst & Young, LLP, independent registered public accounting firm of MRC Global, which is attached hereto as Exhibit 23.1.

(b) *Pro forma financial information.* 

The unaudited pro forma condensed combined balance sheet of the Company and its subsidiaries as of September 30, 2025, the unaudited pro forma condensed combined statements of comprehensive income for the year ended December 31, 2024 and the nine months ended September 30, 2025 and the related notes thereto are filed herewith and attached hereto as Exhibit 99.3, and are incorporated herein by reference.

------

(c) *Exhibits.* 

---

| | |
|:---|:---|
| **Exhibit<br>No.** | **Description** |
| 23.1 | [Consent of Ernst & Young LLP, independent auditors for MRC Global Inc.](d949225dex231.htm) |
| 99.1 | [Audited Consolidated Financial Statements of MRC Global Inc. as of the years ended December 31, 2024 and 2023 and for the years ended December 31, 2024, 2023 and 2022.](d949225dex991.htm) |
| 99.2 | [Unaudited Condensed Consolidated Financial Statements of MRC Global Inc. as of and for the nine months ended September 30, 2025 and 2024.](d949225dex992.htm) |
| 99.3 | [Unaudited Pro Forma Condensed Combined Financial Information of DNOW Inc. as of September 30, 2025, for the year ended December 31, 2024 and for the nine months ended September 30, 2025.](d949225dex993.htm) |
| 104 | Cover page Interactive Data File - the cover page XBRL tags are embedded within the inline XBRL document. |

---

------

#### SIGNATURES
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 hereunto duly authorized.

---

| | | |
|:---|:---|:---|
| Date: January 16, 2026 | DNOW INC. | DNOW INC. |
|  | By: | /s/ Raymond Chang |
|  | Name: | Raymond W. Chang |
|  | Title: | Vice President & General Counsel |

---

## Exhibit 23.1

**Exhibit 23.1** 

**Consent of Independent Registered Public Accounting Firm** 

We consent to the incorporation by reference in Registration Statement Nos. 333-291442, 333-196529 and 333-279712 on Form S-8 of DNOW Inc. of our report dated March 14, 2025, relating to the consolidated financial statements of MRC Global Inc. as of and for the years ended December 31, 2024 and 2023 appearing in this Current Report on Form 8-K/A of DNOW Inc.

/s/ Ernst & Young LLP

Houston, Texas

January 9, 2026

## Exhibit 99.1

**Exhibit 99.1** 

**MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING** 

MRC Global Inc.'s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, as amended. The Company's internal control system was designed 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.

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of these limitations, there is a risk that material misstatements may not be prevented or detected and corrected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

Management has used the framework set forth in the report entitled "Internal Control—Integrated Framework" issued by the Committee of Sponsoring Organizations ("COSO") of the Treadway Commission (2013 framework) to evaluate the effectiveness of the Company's internal control over financial reporting. Based on this assessment, management has identified a material weakness regarding the operating effectiveness of the Company's inventory cycle count control of our North American inventory for the year ended December 31, 2024. Specifically, the Company failed to consistently reflect counted quantities from the cycle counts into the inventory perpetual system which resulted in the failure to record identified cycle count adjustments. The material weakness did not result in any material misstatements to the Company's consolidated financial statements. As a result of this material weakness, management determined that our internal control over financial reporting was not effective as of December 31, 2024.

Because of this material weakness, to confirm the existence of the Company's inventory balance on its financial statements for the year ended December 31, 2024, the Company performed physical inventory counts at certain locations subsequent to December 31, 2024 and reconciled its inventory balances back to the year ended December 31, 2024 inventory balances.

**Remediation Plan for the Material Weakness in Internal Control over Financial Reporting** 

To address the material weakness, management of the Company has planned the following remediation program to enhance the operating effectiveness of its inventory cycle count control:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Company will hire additional resources with expertise to oversee inventory management and develop
improved monitoring capabilities related to the cycle count process;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Company will engage a consulting firm with supply chain expertise to review and provide recommendations to
improve our process;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Company will enhance its training program for operational leaders and warehouse staff on our cycle count
process;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Company also expects to implement a new modern cloud-based ERP system by the end of 2025, that is expected to
provide additional controls and improved monitoring capabilities compared to our current mainframe ERP system.

The Company anticipates the actions described above and resulting improvements in the operating effectiveness of the cycle count control will strengthen the Company's processes and procedures and will address the related material weakness described above. However, the material weakness cannot be considered fully remediated until the remediation processes have been in operation for a period of time and successfully tested.

Ernst & Young LLP, the independent registered public accounting firm that audited the Company's consolidated financial statements included in this Form 10-K, has issued an attestation report on the Company's internal control over financial reporting. Ernst & Young LLP's attestation report on the Company's internal control over financial reporting is included in this Form 10-K.

---

| |
|:---|
| /s/ ROBERT J. SALTIEL, JR.  |
| **Robert J. Saltiel, Jr.**<br> **President and Chief Executive Officer** |
| /s/ KELLY YOUNGBLOOD  |
| **Kelly Youngblood**<br> **Executive Vice President and Chief Financial Officer** |

---

Houston, Texas

March 14, 2025

------

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** 

To the Stockholders and the Board of Directors of MRC Global Inc.

**Opinion on Internal Control Over Financial Reporting** 

We have audited MRC Global Inc.'s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, MRC Global Inc. (the Company) has not maintained effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management's assessment. Management has identified a material weakness regarding the operating effectiveness of the Company's inventory cycle count control of its North American inventory for the year ended December 31, 2024.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes. This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2024 consolidated financial statements, and this report does not affect our report dated March 14, 2025, which expressed an unqualified opinion thereon.

**Basis for Opinion** 

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

**Definition and Limitations of Internal Control Over Financial Reporting** 

A company's internal control over financial reporting is a process designed 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. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Houston, Texas

March 14, 2025

------

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** 

To the Stockholders and the Board of Directors of MRC Global Inc.

**Opinion on the Financial Statements** 

We have audited the accompanying consolidated balance sheets of MRC Global Inc. (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss)**,** stockholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 14, 2025,expressed an adverse opinion thereon.

**Basis for Opinion** 

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

**Critical Audit Matter** 

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

---

| | |
|:---|:---|
|  | ***LIFO inventory valuation*** |
| Description of the Matter | At December 31, 2024, the Company's inventory balance was $415 million, of which $335 million was held in the U.S. As discussed in Notes 1 and 5 to the consolidated financial statements, the Company's U.S. inventories are stated at the lower of cost, using the last-in, first-out (LIFO) method, or market. The Company maintains its inventory accounting records on a weighted-average cost basis and adjusts U.S. inventory and cost of goods sold from weighted-average cost to LIFO at period end.<br>Auditing the adjustment of U.S. inventory and cost of goods sold from weighted-average cost to LIFO was complex due to the use of multiple inflation indices across various product categories within the Company U.S. inventory balance.. |
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company's controls over its process to adjust U.S. inventory and cost of goods sold from weighted-average cost to LIFO. |
|  | To test the LIFO inventory balance, we performed audit procedures that included, among others, assessing methodologies and testing the underlying data used to adjust the weighted-average cost inventory balances to LIFO. We also tested the mathematical accuracy of the Company's calculations. |

---

/s/ Ernst & Young LLP

We have served as the Company's auditor since 2007.

Houston, Texas

March 14, 2025

------

CONSOLIDATED BALANCE SHEETS

MRC GLOBAL INC.

*(in millions, except shares)* 

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2024*** | ***2023*** |
|  **Assets** |  |  |
|  Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash | $**63** | $131 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable, net | **378** | 410 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventories, net | **415** | 511 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other current assets | **29** | 34 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current assets of discontinued operations | **36** | 69 |
|  Total current assets | **921** | 1155 |
|  Long-term assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease assets | **170** | 196 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property, plant and equipment, net | **89** | 77 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other assets | **37** | 21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Noncurrent assets of discontinued operations | **—** | 10 |
|  Intangible assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Goodwill, net | **264** | 264 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other intangible assets, net | **143** | 163 |
|  Total assets | $**1624** | $1886 |
|  **Liabilities and stockholders' equity** |  |  |
|  Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade accounts payable | $**329** | $340 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other current liabilities | **124** | 100 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities | **31** | 32 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current portion of debt obligations | **3** | 292 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current liabilities of discontinued operations | **21** | 19 |
|  Total current liabilities | **508** | 783 |
|  Long-term obligations: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Long-term debt | **384** | 9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities | **153** | 179 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred income taxes | **35** | 45 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other liabilities | **28** | 20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Noncurrent liabilities of discontinued operations | **—** | 7 |
|  Commitments and contingencies |  |  |
|  6.5% Series A Convertible Perpetual Preferred Stock, $0.01 par value; authorized no and 363,000 shares, respectively; no and 363,000 shares issued and outstanding, respectively | **—** | 355 |
|  Stockholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock, $0.01 par value per share: 500 million shares authorized, 109,460,293 and 108,531,564 issued, respectively | **1** | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additional paid-in capital | **1779** | 1768 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retained deficit | **(652)** | (678) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Treasury stock at cost: 24,216,330 shares | **(375)** | (375) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive loss | **(237)** | (228) |
|  Total stockholders' equity | **516** | 488 |
|  Total liabilities and stockholders' equity | $**1624** | $1886 |

---

*See notes to consolidated financial statements.* 

------

CONSOLIDATED STATEMENTS OF OPERATIONS

MRC GLOBAL INC.

*(in millions, except per share amounts)* 

---

| | | | |
|:---|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2023*** | ***2022*** |
|  Sales | $**3011** | $3266 | $3197 |
|  Cost of sales | **2391** | 2596 | 2613 |
|  Gross profit | **620** | 670 | 584 |
|  Selling, general and administrative expenses | **485** | 482 | 449 |
|  Operating income | **135** | 188 | 135 |
|  Other (expense) income: |  |  |  |
|  Interest expense | **(26)** | (32) | (24) |
|  Other, net | **(4)** | (2) | (6) |
|  Income from continuing operations before income taxes | **105** | 154 | 105 |
|  Income tax expense from continuing operations | **27** | 39 | 35 |
|  Net income from continuing operations | **78** | 115 | 70 |
| (Loss) income from discontinued operations, net of tax | **(23)** | (1) | 5 |
|  Net income | **55** | 114 | 75 |
|  Series A preferred stock dividends | **20** | 24 | 24 |
|  Loss on repurchase and retirement of preferred stock | **9** |  |  |
|  Net income attributable to common stockholders | $**26** | $90 | $51 |
|  Basic earnings (loss) per common share: |  |  |  |
|  Income from continued operations | $**0.58** | $1.08 | $0.55 |
| (Loss) income from discontinued operations | $**(0.27)** | $(0.01) | $0.06 |
|  Basic earnings per common share | $**0.31** | $1.07 | $0.61 |
|  Diluted earnings (loss) per common share: |  |  |  |
|  Income from continued operations | $**0.57** | $1.06 | $0.54 |
| (Loss) income from discontinued operations | $**(0.27)** | $(0.01) | $0.06 |
|  Diluted earnings per common share | $**0.30** | $1.05 | $0.60 |
|  Weighted-average common shares, basic | **85.1** | 84.2 | 83.5 |
|  Weighted-average common shares, diluted | **86.6** | 85.5 | 84.9 |

---

*See notes to consolidated financial statements.* 

------

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

MRC GLOBAL INC.

*(in millions)*

---

| | | | |
|:---|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2023*** | ***2022*** |
|  Net income from continuing operations | $**78** | $115 | $70 |
| (Loss) income from discontinued operations, net of tax | **(23)** | (1) | 5 |
|  Net income | $**55** | $114 | $75 |
|  Other comprehensive (loss) income |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign currency translation adjustments | **(9)** | 3 | (5) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hedge accounting adjustments, net of tax | **—** | (1) | 6 |
|  Total other comprehensive (loss) income, net of tax | **(9)** | 2 | 1 |
|  Comprehensive income | $**46** | $116 | $76 |

---

*See notes to consolidated financial statements.* 

------

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

MRC GLOBAL INC.

*(in millions)* 

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | | | | | | | ***Accumulated*** | |
|  | ***Common Stock*** | ***Common Stock*** | | | ***Treasury Stock*** | ***Treasury Stock*** | | |
|  | ***Shares*** | ***Amount*** |<br>***Additional***<br>***Paid-in***<br>***Capital*** |<br>***Retained***<br>***(Deficit)*** | ***Shares*** | ***Amount*** | ***Other***<br>***Comprehensive***<br>***(Loss)*** |<br>***Total***<br>***Stockholders'***<br>***Equity*** |
|  Balance at December 31, 2021 | 106 | $1 | $1747 | $(819) | (24) | $(375) | $(231) | $323 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income |  |  |  | 75 |  |  |  | 75 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign currency translation |  |  |  |  |  |  | (5) | (5) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hedge accounting adjustments |  |  |  |  |  |  | 6 | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Vesting of restricted stock | 2 |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shares withheld for taxes |  |  | (2) |  |  |  |  | (2) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity-based compensation expense |  |  | 13 |  |  |  |  | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends declared on preferred stock |  |  |  | (24) |  |  |  | (24) |
|  Balance at December 31, 2022 | 108 | $1 | $1758 | $(768) | (24) | $(375) | $(230) | $386 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income |  |  |  | 114 |  |  |  | 114 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign currency translation |  |  |  |  |  |  | 3 | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hedge accounting adjustments |  |  |  |  |  |  | (1) | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Vesting of restricted stock | 1 |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shares withheld for taxes |  |  | (4) |  |  |  |  | (4) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity-based compensation expense |  |  | 14 |  |  |  |  | 14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends declared on preferred stock |  |  |  | (24) |  |  |  | (24) |
|  Balance at December 31, 2023 | 109 | $1 | $1768 | $(678) | (24) | $(375) | $(228) | $488 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | **—** | **—** | **—** | **55** | **—** | **—** | **—** | **55** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign currency translation |  |  |  |  |  |  | **(9)** | **(9)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shares withheld for taxes |  |  | **(5)** |  |  |  |  | **(5)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity-based compensation expense |  |  | **16** |  |  |  |  | **16** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends declared on preferred stock |  |  |  | **(20)** |  |  |  | **(20)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on repurchase of preferred stock |  |  |  | **(9)** |  |  |  | **(9)** |
|  Balance at December 31, 2024 | **109** | $**1** | $**1779** | $**(652)** | **(24)** | $**(375)** | $**(237)** | $**516** |

---

*See notes to consolidated financial statements.* 

------

CONSOLIDATED STATEMENTS OF CASH FLOWS

MRC GLOBAL INC.

*(in millions)* 

---

| | | | |
|:---|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2023*** | ***2022*** |
|  **Operating activities** |  |  |  |
|  Net income from continuing operations | $**78** | $115 | $70 |
|  Adjustments to reconcile net income from continuing operations to net cash provided by (used in) continuing operations: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | **21** | 19 | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of intangibles | **19** | 21 | 21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity-based compensation expense | **16** | 14 | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred income tax benefit | **(8)** | (7) | (7) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Decrease) increase in LIFO reserve | **(2)** | 2 | 66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign currency losses | **5** | 3 | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other non-cash items | **7** | 3 | (5) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in operating assets and liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | **25** | 57 | (124) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventories | **90** | 15 | (185) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other current assets | **—** | (3) | (9) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | **(10)** | (47) | 86 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other current liabilities | **27** | (15) | 33 |
|  Operating cash flows from continuing operations | **268** | 177 | (15) |
|  Operating cash flows from discontinued operations | **8** | 4 | (5) |
|  Net cash provided by (used in) operating activities | **276** | 181 | (20) |
|  **Investing activities** |  |  |  |
|  Purchases of property, plant and equipment | **(28)** | (14) | (11) |
|  Proceeds from the disposition of property, plant and equipment | **—** | 1 |  |
|  Other investing activities | **1** |  |  |
|  Investing cash flows from continuing operations | **(27)** | (13) | (11) |
|  Investing cash flows from discontinued operations |  | (1) |  |
|  Net cash used in investing activities | **(27)** | (14) | (11) |
|  **Financing activities** |  |  |  |
|  Payments on revolving credit facilities | **(449)** | (882) | (779) |
|  Proceeds from revolving credit facilities | **484** | 847 | 824 |
|  Payments on debt obligations | **(295)** | (3) | (2) |
|  Proceeds from term loan | **348** |  |  |
|  Debt issuance costs paid | **(7)** | (1) |  |
|  Repurchase of preferred stock | **(365)** |  |  |
|  Dividends paid on preferred stock | **(23)** | (24) | (24) |
|  Repurchases of shares to satisfy tax withholdings | **(5)** | (4) | (2) |
|  Other financing activities | **(2)** |  |  |
|  Financing cash flows from continuing operations | **(314)** | (67) | 17 |
|  Financing cash flows from discontinued operations | **—** |  |  |
|  Net cash (used in) provided by financing activities | **(314)** | (67) | 17 |
| (Decrease) increase in cash | **(65)** | 100 | (14) |
|  Effect of foreign exchange rate on cash | **(3)** | (1) | (2) |
|  Cash beginning of year | **131** | 32 | 48 |
|  Cash end of year | $**63** | $131 | $32 |
|  **Supplemental cash flow information:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash paid for interest, net of capitalized interest | $**18** | $33 | $21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash paid for income taxes | **40** | 55 | 35 |
|  **Supplemental non-cash transactions:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity-based compensation expense capitalized to software development costs | $**1** | $— | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in accrued purchases of property, plant and equipment | **5** |  |  |

---

*See notes to consolidated financial statements.* 

------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MRC GLOBAL INC.

December 31, 2024

**<u>NOTE</u> *<u>1—SIGNIFICANT</u>* <u>ACCOUNTING POLICIES</u>**

**<u>Business Operations</u>:**MRC Global Inc. is a holding company headquartered in Houston, Texas. Our wholly owned subsidiaries are global distributors of pipe, valves, fittings ("PVF") and infrastructure products and services across each of the following sectors:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Gas Utilities:** gas utilities (storage and distribution of natural gas)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **DIET:** downstream, industrial and energy transition (crude oil refining, petrochemical and
chemical processing, general industrials and energy transition projects)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **PTI:** production and transmission infrastructure (exploration, production and extraction,
gathering, processing and transmission of oil and gas)

We have service centers in industrial, chemical, gas distribution and hydrocarbon producing and refining areas throughout the United States, Europe, Asia, Australasia and the Middle East. We obtain products from a broad range of suppliers.

**<u>Basis of Presentation</u>:** The accompanying consolidated financial statements include the accounts of MRC Global Inc. and its wholly owned and majority owned subsidiaries (collectively referred to as the "Company" or by such terms as "we," "our" or "us"). All intercompany balances and transactions have been eliminated in consolidation.

On *December 13, 2024,* we entered into a definitive agreement to sell our Canada operations to EMCO Corporation, and on *March 14, 2025,* we completed the sale. The historical results of the Canada segment have been reflected as discontinued operations in our audited consolidated financial statements for all periods prior to the definitive agreement. As a result of the sale, a pre-tax, non-cash loss on discontinued operations of approximately $22 million was recorded in the *fourth* quarter of *2024.* Assets and liabilities associated with the Canada segment are classified as assets and liabilities of discontinued operations in our audited Consolidated Balance Sheets as of *December 31, 2024* and *2023.* Additional disclosures regarding the sale of assets and assumption of liabilities associated with our Canada operations are provided in Note *2.*

**<u>Use of Estimates</u>:** The preparation of financial statements in conformity with the accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. We believe that our most significant estimates and assumptions are associated with the last-in, *first*-out ("LIFO") inventory costing methodology, estimating net realizable value on excess and obsolete inventories, goodwill, indefinite-lived intangible assets, realizability of deferred taxes and self-insurance programs. Actual results could differ materially from those estimates.

**<u>Cash Equivalents</u>:** We consider all highly liquid investments with maturities of *three* months or less at the date of purchase to be cash equivalents.

**<u>Allowance for Credit Losses</u>:** We evaluate the adequacy of the allowance for credit losses on receivables based upon periodic evaluation of accounts that *may* have a higher credit risk using information available about the customer and other relevant data. This formal analysis is inherently subjective and requires us to make significant estimates of factors affecting credit losses including customer specific information, current economic conditions, volume, growth and composition of the account, and other factors such as financial statements, news reports and published credit ratings. The amount of the allowance for the remainder of the trade balance is *not* evaluated individually but is based upon historical loss experience. Because this process is subjective and based on estimates, ultimate losses *may* differ from those estimates. Receivable balances are written off when we determine that the balance is uncollectible. Subsequent recoveries, if any, are credited to the allowance when received. The provision for credit losses is included in selling, general and administrative expenses in the accompanying consolidated statements of operations.

**<u>Inventories</u>:** Our U.S. inventories of $335 million and $411 million at *December 31, 2024* and *2023*, respectively, are valued at the lower of cost, principally LIFO, or market. We believe that the use of LIFO results in a better matching of costs and revenue. Inventories held outside of the U.S. of $80 million and $100 million at *December 31, 2024* and *2023*, respectively, are valued at the lower of weighted-average cost or net realizable value. Our inventory is substantially comprised of finished goods.

Reserves for excess and obsolete inventories are determined based on analyses comparing inventories on hand to historical sales activity. The reserve, which totaled $15 million and $15 million at *December 31, 2024* and *2023*, respectively, is the amount deemed necessary to reduce the cost of the inventory to its estimated net realizable value.

**<u>Property, Plant and Equipment</u>:** Property, plant and equipment are recorded at cost. Depreciation is provided using the estimated useful lives of such assets principally by the straight-line method. Leasehold improvements are amortized using the straight-line method over the shorter of the remaining lease term or the estimated useful life of the improvements. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is reflected in income for the period. Maintenance and repairs are charged to expense as incurred.

Certain systems development costs related to the purchase, development and installation of computer software are capitalized and amortized over the estimated useful life of the related asset. Software development costs consist of certain payroll and equity-based compensation costs incurred to develop functionality of our internal-use software solutions. We capitalize certain software development costs for new offerings as well as significant upgrades and enhancements to our existing software solutions. We do *not* transfer ownership of our software, license, or lease our software to *third* parties. Costs incurred prior to the development stage, as well as maintenance, training costs and general and administrative expenses are expensed as incurred.

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**<u>Goodwill and Other Intangible Assets</u>:** Goodwill represents the excess of acquisition cost over the fair value of net assets acquired. Goodwill and intangible assets with indefinite useful lives are tested for impairment annually, or more frequently if circumstances indicate that impairment *may* exist. We evaluate goodwill for impairment at the reporting unit level. Within each reporting unit, we have elected to aggregate the component countries and regions into a single reporting unit based on their similar economic characteristics, products, customers, suppliers, methods of distribution and the manner in which we operate each reporting unit. We perform our annual tests for goodwill impairment as of *October 1* of each year, updating on an interim basis should indications of impairment exist. Our annual impairment test *may* be performed utilizing either a qualitative or quantitative assessment; however, if a qualitative assessment is performed and we determine that the fair value of a reporting unit is more likely than *not* (*i.e.* a likelihood of more than *50* percent) to be less than its carrying amount, a quantitative test is performed.

The goodwill impairment test compares the carrying value of the reporting unit that has the goodwill with the estimated fair value of that reporting unit. To the extent the carrying value of a reporting unit is greater than its estimated fair value, a goodwill impairment charge is recorded for the difference, up to the carrying value of goodwill. Our impairment methodology uses discounted cash flow and multiples of cash earnings valuation techniques, acquisition control premium and valuation comparisons to similar businesses. Each of these methods involves Level *3* unobservable market inputs and requires us to make certain assumptions and estimates regarding future operating results, the extent and timing of future cash flows, working capital, sales prices, profitability, discount rates and growth trends. While we believe that such assumptions and estimates are reasonable, the actual results *may* differ materially from the projected results.

Intangible assets with indefinite useful lives are tested for impairment annually or more frequently if circumstances indicate that impairment *may* exist. Similar to goodwill, our annual impairment test *may* be performed utilizing either a qualitative or quantitative assessment; however, if a qualitative assessment is performed and we determine that the fair value of an indefinite-lived intangible asset is more likely than (*i.e.*, a likelihood of more than *50* percent) to be less than its carrying amount, a quantitative test is performed. This test compares the carrying value of the indefinite-lived intangible assets with their estimated fair value. If the carrying value is more than the estimated fair value, impairment losses are recognized in an amount equal to the excess of the carrying value over the estimated fair value. Our impairment methodology uses discounted cash flow and estimated royalty rate valuation techniques. Each of these methods involves Level *3* unobservable market inputs and requires us to make certain assumptions and estimates regarding future operating results, sales prices, discount rates and growth trends. While we believe that such assumptions and estimates are reasonable, the actual results *may* differ materially from the projected results.

Other intangible assets primarily include trade names and customer bases resulting from business acquisitions. Other intangible assets are recorded at fair value at the date of acquisition. Amortization is provided using the straight-line method over their estimated useful lives, ranging from two years to twenty years.

The carrying value of amortizable intangible assets is subject to an impairment test when events or circumstances indicate a possible impairment. When events or circumstances indicate a possible impairment, we assess recoverability from future operations using undiscounted cash flows derived from the lowest appropriate asset group. If the carrying value exceeds the undiscounted cash flows, an impairment charge would be recognized to the extent that the carrying value exceeds the fair value, which is determined based on a discounted cash flow analysis. While we believe that assumptions and estimates utilized in the impairment analysis are reasonable, the actual results *may* differ materially from the projected results. These impairments are determined prior to performing our goodwill impairment test.

**<u>Derivatives and Hedging</u>:** From time to time, we utilize interest rate swaps to reduce our exposure to potential interest rate increases. We have designated our interest rate swap as an effective cash flow hedge utilizing the guidance under Accounting Standards Update "ASU" *2017*-*12.* As such, the valuation of the interest rate swap is recorded as an asset or liability, and the gain or loss on the derivative is recorded as a component of other comprehensive income. Interest rate swap agreements are reported on the accompanying balance sheets at fair value utilizing observable Level *2* inputs such as yield curves and other market-based factors. We obtain dealer quotations to value our interest rate swap agreements. The fair value of our interest rate swap is estimated based on the present value of the difference between expected cash flows calculated at the contracted interest rates and the expected cash flows at current market interest rates.

We utilize foreign exchange forward contracts (exchange contracts) and options to manage our foreign exchange rate risks resulting from purchase commitments and sales orders. Changes in the fair values of our exchange contracts are based upon independent market quotes. We do *not* designate our exchange contracts as hedging instruments; therefore, we record our exchange contracts on the consolidated balance sheets at fair value, with the gains and losses recognized in earnings in the period of change.

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**<u>Fair Value</u>:** We measure certain of our assets and liabilities at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. A *three*-tier fair value hierarchy is established as a basis for considering these assumptions for inputs used in the valuation methodologies for measuring fair value:

**Level *1***: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date.

**Level *2***: Significant observable inputs other than quoted prices included within Level *1* that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are *not* active, and other inputs that are observable or can be corroborated by observable market data.

**Level *3***: Significant unobservable inputs for the asset or liability. Unobservable inputs reflect our own assumptions about the assumptions that market participants would use in pricing an asset or liability (including all assumptions about risk).

Certain assets and liabilities are measured at fair value on a nonrecurring basis. Our assets and liabilities measured at fair value on a nonrecurring basis include property, plant and equipment, goodwill and other intangible assets. We do *not* measure these assets at fair value on an ongoing basis; however, these assets are subject to fair value adjustments in certain circumstances, such as when we recognize an impairment.

Our impairment methodology for goodwill and other indefinite-lived intangible assets uses both (i) a discounted cash flow analysis requiring certain assumptions and estimates to be made regarding the extent and timing of future cash flows, discount rates and growth trends and (ii) valuation based on our publicly traded common stock. As all of the assumptions employed to measure these assets and liabilities on a nonrecurring basis are based on management's judgment using internal and external data, these fair value determinations are classified as Level *3.* We have *not* elected to apply the fair value option to any of our eligible financial assets and liabilities.

**<u>Insurance</u>:** We are self-insured for U.S. employee healthcare as well as physical damage to automobiles that we own, lease or rent, and product warranty and recall liabilities. In addition, we maintain a deductible/retention program as it relates to insurance for property, inventory, workers' compensation, automobile liability, asbestos claims with exposure claimed or occurring prior to *1994,* general liability claims (including, among others, certain product liability claims for property damage, death or injury) and cybersecurity claims. These programs have deductibles and self-insured retentions ranging up to $6 million and are secured by various letters of credit totaling $5 million. Our estimated liability and related expenses for claims are based in part upon estimates that insurance carriers, *third*-party administrators and actuaries provide. We believe that insurance reserves are sufficient to cover outstanding claims, including those incurred but *not* reported as of the estimation date. Further, we maintain commercially reasonable umbrella/excess policy coverage in excess of the primary limits. We do *not* have excess coverage for physical damage to automobiles that we own, lease or rent, and product warranty and recall liabilities. Our accrued liabilities related to deductibles/retentions under insurance programs (other than employee healthcare) were $7 million and $8 million as of *December 31, 2024* and *2023*. In the area of employee healthcare, we have a commercially reasonable excess stop loss protection on a per person per year basis. Reserves for self-insurance accrued liabilities for employee healthcare were $3 million and $2 million as of *December 31, 2024* and *2023*, respectively.

**<u>Income Taxes</u>:** We account for our income taxes under the liability method using currently enacted tax laws and rates. A valuation allowance to reduce deferred tax assets is established when it is more likely than *not* that some portion or all of the deferred tax assets will *not* be realized.

In determining the need for valuation allowances and our ability to utilize our deferred tax assets, we consider and make judgments regarding all the available positive and negative evidence, including the timing of the reversal of deferred tax liabilities, estimated future taxable income, ongoing, prudent and feasible tax planning strategies and recent financial results of operations. The amount of valuation allowances, however, could be adjusted in the future if objective negative evidence in the form of cumulative losses is *no* longer present in certain jurisdictions and additional weight *may* be given to subjective evidence such as our projections for growth.

Our tax provision is based upon our expected taxable income and statutory rates in effect in each country in which we operate. We are subject to the jurisdiction of numerous domestic and foreign tax authorities, as well as to tax agreements and treaties among these governments. Determination of taxable income in any jurisdiction requires the interpretation of the related tax laws and regulations and the use of estimates and assumptions regarding significant future events such as the amount, timing and character of deductions, permissible revenue recognition methods under the tax law and the sources and character of income and tax credits. Changes in tax laws, regulations, agreements and treaties, foreign currency exchange restrictions or our level of operations or profitability in each taxing jurisdiction could have an impact on the amount of income taxes we provide during any given year.

A tax benefit from an uncertain tax position *may* be recognized when it is more likely than *not* that the position will be sustained upon examination, including any related appeals or litigation processes, on the basis of the technical merits. We adjust these liabilities when our judgment changes as a result of the evaluation of new information *not* previously available. Because of the complexity of some of these uncertainties, the ultimate resolution *may* result in a payment that is materially different from our current estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which the new information is available. We classify interest and penalties related to unrecognized tax positions as income taxes in our financial statements.

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**<u>Foreign Currency Translation and Transactions</u>:** The functional currency of our foreign operations is the applicable local currency. The cumulative effects of translating the balance sheet accounts from the functional currency into the U.S. dollar at current exchange rates are included in accumulated other comprehensive income. The balance sheet accounts (with the exception of stockholders' equity) are translated using current exchange rates as of the balance sheet date. Stockholders' equity is translated at historical exchange rates and revenue and expense accounts are translated using a weighted-average exchange rate during the year. Gains or losses resulting from foreign currency transactions are recognized in the consolidated statements of operations.

**<u>Equity-Based Compensation</u>:** Our equity-based compensation consists of restricted stock units, restricted stock awards, performance share unit awards and nonqualified stock options. The cost of employee services received in exchange for an award of an equity instrument is measured based on the grant-date fair value of the award. Equity-based compensation cost is measured at the grant-date fair value of the award and is recognized over the shorter of the vesting period or the remaining requisite service period. Restricted stock units and restricted stock awards are credited to equity as they are expensed over their vesting periods based on the grant date value of the shares vested. The fair value of nonqualified stock options is measured on the grant date of the related equity instrument using the Black-Scholes option-pricing model. A Monte Carlo simulation is completed to estimate the fair value of performance share unit awards with a stock price performance component.

**<u>Revenue Recognition</u>:** We recognize revenue when we transfer control of promised goods or services to our customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. We generally recognize our revenue when products are shipped or delivered to our customers, and payment is due from our customers at the time of billing with a majority of our customers having *30*-day terms. We estimate and record returns as a reduction of revenue. Amounts received in advance of shipment are deferred and recognized when the performance obligations are satisfied. Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and, therefore, we exclude these taxes from sales in the accompanying consolidated statements of operations. In some cases, particularly with *third* party pipe shipments, we consider shipping and handling costs to be separate performance obligations, and as such, we record the revenue and cost of sales when the performance obligation is fulfilled. Our contracts with customers ordinarily involve performance obligations that are *one* year or less. Therefore, we have applied the optional exemption that permits the omission of information about our unfulfilled performance obligations as of the balance sheet dates. While a small proportion of our sales, we occasionally recognize revenue under a bill and hold arrangement. Recognition of revenue on bill and hold arrangements occurs when control transfers to the customer provided that the reason for the bill and hold arrangement is substantive, the product is separately identified as belonging to the customer, ready for physical transfer and unavailable to be used or directed to another customer.

**<u>Cost of Sales</u>:** Cost of sales includes the cost of inventory sold and related items, such as vendor rebates, inventory allowances and reserves, shipping and handling costs associated with inbound and outbound freight, as well as depreciation and amortization and amortization of intangible assets. Certain purchasing costs and warehousing activities (including receiving, inspection and stocking costs), as well as general warehousing expenses, are included in selling, general and administrative expenses and *not* in cost of sales.

**<u>Earnings per Share</u>:** Basic earnings per share are computed based on the weighted-average number of common shares outstanding, excluding any dilutive effects of unexercised stock options, unvested restricted stock awards, unvested restricted stock unit awards, unvested performance share unit awards, and any outstanding shares of preferred stock. Diluted earnings per share are computed based on the weighted-average number of common shares outstanding including any dilutive effect of unexercised stock options, unvested restricted stock awards, unvested restricted stock unit awards, unvested performance share unit awards, and any outstanding shares of preferred stock. The dilutive effect of unexercised stock options is calculated under the treasury stock method. Equity awards and shares of preferred stock are disregarded in the calculations of diluted earnings per share if they are determined to be anti-dilutive.

**<u>Concentration of Credit Risk</u>:** In the normal course of business, we grant credit to customers in the form of trade accounts receivable. These receivables could potentially subject us to concentrations of credit risk; however, we minimize this risk by closely monitoring extensions of trade credit. We generally do *not* require collateral on trade receivables. We have a broad customer base doing business in many regions of the world. During the years ended *December 31, 2024*, *2023* and *2022*, *no* customer represented more than *10%* of the Company's total sales. At those respective year-ends, *no* individual customer balances exceeded *10%* of accounts receivable.

We have a broad supplier base, sourcing our products in most regions of the world. During the years ended *December 31, 2024*, *2023* and *2022*, we did *not* have purchases from any *one* vendor in excess of *10%* of our inventory purchases. At those respective year-ends, *no* individual vendor balance exceeded *10%* of accounts payable.

We maintain the majority of our cash and cash equivalents with several financial institutions. These financial institutions are located in many different geographical regions with varying economic characteristics and risks. Deposits held with banks *may* exceed insurance limits. We believe the risk of loss associated with our cash equivalents to be remote.

**<u>Recently Issued Accounting Standards</u>:** In *November 2024,* the Financial Accounting Standards Board ("FASB") issued ASU *2024*-*03,* Income Statement—Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic *220*-*40*): Disaggregation of Income Statement Expenses ("ASU *2024*-*03"*), which requires public entities to include more detailed disclosures about specific categories of expenses such as inventory purchases, employee compensation, depreciation, amortization and selling costs within the notes to the financial statements. This update will be effective for annual periods beginning after *December 15, 2026* and interim periods within fiscal years beginning after *December 15, 2027.* We are currently evaluating the impacts of the provisions of ASU *2024*-*03* on our consolidated financial statements.

In *December 2023,* the Financial Accounting Standards Board ("FASB") issued ASU *2023*-*09,* Income Taxes (Topic *740*) ("ASU *2023*-*09"*), which aims to enhance the transparency and decision usefulness of income tax disclosures through requiring improvements in those disclosures primarily related to the rate reconciliation and income taxes paid information. This update will be effective for annual periods beginning after *December 15, 2024.* We are currently evaluating the impacts of the provisions of ASU *2023*-*09* on our consolidated financial statements.

**<u>Adoption of New Accounting Standards</u>:** In *November 2023,* the FASB issued ASU *2023*-*07,* Segment Reporting (Topic *280*) ("ASU *2023*-*07"*), which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses regularly provided to the chief operating decision maker ("CODM"). This update will be effective for fiscal years beginning after *December 15, 2023,* and interim periods within fiscal years beginning after *December 15, 2024.* This accounting standard update, which we adopted as of *December 31, 2024,* did *not* have a material impact on our consolidated financial statements. Refer to Note *16* for further information on our segments.

------

**<u>NOTE</u> *<u>2—</u>*<u>DISCONTINUED OPERATIONS</u>**

On *December 13, 2024,* we entered into a definitive agreement to sell assets associated with our Canada operations to EMCO Corporation, and on *March 14, 2025,* we completed the sale. The historical results of the assets to be sold and the liabilities to be assumed (the "Disposal Group") have been reflected as discontinued operations in our audited consolidated financial statements for all periods prior to the definitive agreement. As a result of the sale, a pre-tax, non-cash loss on discontinued operations of approximately $22 million was recorded in the *fourth* quarter of *2024.* Assets and liabilities associated with the Disposal Group are classified as assets and liabilities of discontinued operations in our audited Consolidated Balance Sheets as of *December 31, 2024* and *2023.*

In connection with the agreement to sell the Disposal Group and effective *March 14, 2025,* the Company entered into a Transition Services Agreement ("TSA") under which the Company provides EMCO Corporation certain transition services related to operational systems, finance and accounting, human resources, information technology, treasury, data transfer services and licenses to use certain intellectual property rights. The time period in which the transition services are provided varies from at closing to a period *not* to exceed *one* year from closing.

Details of the "(Loss) income from discontinued operations, net of tax" are as follows (in millions):

---

| | | | |
|:---|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2023*** | ***2022*** |
|  Sales | $**111** | $146 | $166 |
|  Cost of sales | **97** | 126 | 140 |
|  Gross profit | **14** | 20 | 26 |
|  Selling, general and administrative expenses | **17** | 21 | 21 |
|  Operating (loss) income | **(3)** | (1) | 5 |
|  Other, net | **(2)** |  |  |
| (Loss) income from discontinued operations | **(5)** | (1) | 5 |
|  Pretax loss on classification as held for sale | **(22)** |  |  |
|  Total (loss) income from discontinued operations before income taxes | **(27)** | (1) | 5 |
|  Income tax benefit from discontinued operations | **(4)** |  |  |
| (Loss) income from discontinued operations, net of tax | $**(23)** | $(1) | $5 |

---

The following table summarizes the Disposal Group assets and liabilities classified as discontinued operations in the Company's Consolidated Balance Sheets (in millions):

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2024*** | ***2023*** |
|  **Assets** |  |  |
|  Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable, net | $**19** | $20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventories, net | **30** | 49 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property, plant and equipment, net | **1** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease assets | **8** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss recognized on classification as held for sale | **(22)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current assets of discontinued operations | $**36** | $69 |
|  Long-term assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease assets | **—** | 9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property, plant and equipment, net | **—** | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Noncurrent assets of discontinued operations | $**—** | $10 |
|  **Liabilities** |  |  |
|  Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade accounts payable | $**12** | $16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other current liabilities | **1** | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities | **8** | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current liabilities of discontinued operations | $**21** | $19 |
|  Long-term obligations: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities | $**—** | $7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Noncurrent liabilities of discontinued operations | $**—** | $7 |

---

------

**<u>NOTE</u> *<u>3—REVENUE</u>* <u>RECOGNITION</u>**

**<u>Contract Balances:</u>** Variations in the timing of revenue recognition, invoicing and receipt of payment result in categories of assets and liabilities that include invoiced accounts receivable, uninvoiced accounts receivable, contract assets and deferred revenue (contract liabilities) on the consolidated balance sheets.

Generally, revenue recognition and invoicing occur simultaneously as we transfer control of promised goods or services to our customers. We consider contract assets to be accounts receivable when we have an unconditional right to consideration and only the passage of time is required before payment is due. In certain cases, particularly those involving customer-specific documentation requirements, invoicing is delayed until we are able to meet the documentation requirements. In these cases, we recognize a contract asset separate from accounts receivable until those requirements are met, and we are able to invoice the customer. Our contract asset balance associated with these requirements, as of *December 31, 2024* and *December 31, 2023*, was $18 million and $8 million, respectively. These contract asset balances are included within accounts receivable in the accompanying consolidated balance sheets.

We record contract liabilities, or deferred revenue, when cash payments are received from customers in advance of our performance, including amounts which are refundable. The deferred revenue balance at *December 31, 2024* and *December 31, 2023* was $16 million and $7 million, respectively. During the year ended *December 31, 2024*, we recognized $7 million of the revenue that was deferred as of *December 31, 2023*. Deferred revenue balances are included within accrued expenses and other current liabilities in the accompanying consolidated balance sheets.

**<u>Disaggregated Revenue:</u>** Our disaggregated revenue represents our business of selling PVF to the energy sector across each of the Gas Utilities, DIET and PTI sectors in each of our reportable segments. Each of our end markets and geographical reportable segments are impacted and influenced by varying factors, including macroeconomic environment, commodity prices, maintenance and capital spending and exploration and production activity. As such, we believe that this information is important in depicting the nature, amount, timing and uncertainty of our contracts with customers.

The following table presents our revenue disaggregated by revenue source (in millions):

---

| | | | |
|:---|:---|:---|:---|
| ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***U.S.*** | ***International*** | ***Total*** |
|  **2024:** |  |  |  |
|  Gas Utilities | $**1097** | $**1** | $**1098** |
|  DIET | **703** | **267** | **970** |
|  PTI | **730** | **213** | **943** |
|  | $**2530** | $**481** | $**3011** |
|  **2023:** |  |  |  |
|  Gas Utilities | $1190 | $3 | $1193 |
|  DIET | 790 | 250 | 1040 |
|  PTI | 865 | 168 | 1033 |
|  | $2845 | $421 | $3266 |
|  **2022:** |  |  |  |
|  Gas Utilities | $1247 | $1 | $1248 |
|  DIET | 758 | 226 | 984 |
|  PTI | 818 | 147 | 965 |
|  | $2823 | $374 | $3197 |

---

**<u>NOTE</u> *<u>4—ACCOUNTS</u>* <u>RECEIVABLE</u>**

The roll forward of our allowance for credit losses is as follows (in millions):

---

| | | | |
|:---|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** | ***December 31,*** |
|  | ***2024*** | ***2023*** | ***2022*** |
|  Beginning balance | $**3** | $2 | $2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Provision | **—** | 2 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net charge-offs and other | **—** | (1) |  |
|  Ending balance | $**3** | $3 | $2 |

---

Our accounts receivable is also presented net of sales returns and allowances. Those allowances approximated $1 million at *December 31, 2024*, $1 million at *December 31, 2023* and less than $1 million at *December 31, 2022*.

------

**<u>NOTE</u> *<u>5—INVENTORIES</u>*<u> </u>**

The composition of our inventory is as follows (in millions):

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2024*** | ***2023*** |
|  Finished goods inventory at average cost: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valves, automation, measurement and instrumentation | $**206** | $254 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Carbon steel pipe, fittings and flanges | **135** | 171 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gas products | **265** | 266 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; All other products | **104** | 117 |
|  | **710** | 808 |
|  Less: Excess of weighted-average cost over LIFO cost (LIFO reserve) | **(280)** | (282) |
|  Less: Other inventory reserves | **(15)** | (15) |
|  | $**415** | $511 |

---

**<u>NOTE</u> *<u>6—PROPERTY,</u>* <u>PLANT AND EQUIPMENT</u>**

Property, plant and equipment consisted of the following (in millions):

---

| | | | |
|:---|:---|:---|:---|
|  | | ***December 31,*** | ***December 31,*** |
|  | ***Depreciable Life (in<br>years)*** | ***2024*** | ***2023*** |
|  Land and improvements |  | $**2** | $2 |
|  Building and building improvements | 40 | **43** | 44 |
|  Machinery and equipment | 3 to 10 | **121** | 125 |
|  Software | 10 | **71** | 71 |
|  Software in progress |  | **31** | 8 |
|  |  | **268** | 250 |
|  Less: accumulated depreciation and amortization |  | **(179)** | (173) |
|  |  | $**89** | $77 |

---

Building and building improvements include $8 million and $9 million of non-cash leasehold improvements representing lease incentives as of *December 31, 2024* and *December 31, 2023*, respectively.

**<u>NOTE</u> *<u>7—GOODWILL</u>* <u>AND OTHER INTANGIBLE ASSETS</u>**

The changes in the carrying amount of goodwill by segment for the years ended *December 31, 2024*, *2023* and *2022* are as follows (in millions):

---

| | | | |
|:---|:---|:---|:---|
|  | ***U.S.*** | ***International*** | ***Total*** |
|  Goodwill at December 31, 2022 (1) | $264 | $— | $264 |
|  Impairment |  |  |  |
|  Effect of foreign currency translation |  |  |  |
|  Goodwill at December 31, 2023 | 264 |  | 264 |
|  Impairment |  |  |  |
|  Effect of foreign currency translation |  |  |  |
|  Goodwill at December 31, 2024 | $**264** | $**—** | $**264** |

---

(*1*) Net of prior years' accumulated impairment losses of $527 million and $223 million in the U.S.
and International segments, respectively.

------

**<u>Other Intangible Assets</u>**

Other intangible assets by major classification consist of the following (in millions):

---

| | | | |
|:---|:---|:---|:---|
|  | | ***Accumulated*** | ***Net Book*** |
|  |<br>***Gross*** | ***Amortization*** | ***Value*** |
|  **December 31, 2024** |  |  |  |
|  Customer base (1) | $**370** | $**(334)** | $**36** |
|  Indefinite-lived trade name (2) | **107** | **—** | **107** |
|  | $**477** | $**(334)** | $**143** |
|  **December 31, 2023** |  |  |  |
|  Customer base (1) | $368 | $(312) | $56 |
|  Indefinite-lived trade name (2) | 107 |  | 107 |
|  | $475 | $(312) | $163 |

---

(*1*) Net of accumulated impairment losses of $42 million as of *December 31, 2024* and *2023*.

(*2*) Net of accumulated impairment losses of $229 million as of *December 31, 2024* and *2023*.

**<u>Impairment of Goodwill and Other Intangible Assets</u>**

In connection with our annual impairment test as of *October 1, 2024*, we performed a quantitative goodwill impairment test to assess whether the carrying value of the U.S. reporting unit exceeds the fair value. The Company estimated the fair value of the U.S. reporting unit utilizing the income approach, which required the use of estimates and assumptions related to growth rates, discount rates and the amount and timing of expected future cash flows. The cash flows employed by the discounted cash flow analysis for the U.S. reporting unit are based on the reporting unit's budget, long-term business plan and recent operating performance. The discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the U.S. reporting unit and market conditions. As of *October 1, 2024*, we performed a quantitative indefinite-lived tradename impairment test to assess if the carrying value of the asset was recoverable. Recoverability of indefinite-lived intangible assets is measured by comparing the carrying amount of the asset to its fair value. The Company estimated the fair value of the indefinite-lived tradename utilizing an income approach, the relief-from-royalty method, which required the use of estimates and assumptions related to growth rates, discount rates, and the amount and timing of expected future cash flows for MRC Global. The cash flows employed by the discounted cash flow analysis for MRC Global are based on the Company's budget, long-term business plan and recent operating performance. The discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the Company and market conditions. Based on the analysis performed, there were *no* indicators of impairment for the U.S. reporting unit or the indefinite-lived tradename asset. In connection with our annual impairment tests as of *October 1, 2023* and *2022*, we performed a qualitative assessment of the carrying value of the remaining goodwill for our U.S. reporting unit and our indefinite-lived tradename asset. Based on our assessment, the fair value exceeded its carrying value by over *100%* for both our goodwill and indefinite-lived trade name assets, and therefore, we concluded there was *no* impairment of our goodwill or our indefinite-lived trade name.

**<u>Amortization of Intangible Assets</u>**

Total amortization of intangible assets for each of the years ending *December 31, 2025* to *2029* is currently estimated as follows (in millions):

---

| | |
|:---|:---|
| 2025 | $18 |
| 2026 | 18 |
| 2027 | 1 |
| 2028 |  |
| 2029 |  |

---

------

**<u>NOTE</u> *<u>8––LEASES</u>*<u> </u>**

We lease certain distribution centers, warehouses, office space, land, automobiles and equipment. The majority of these leases are classified as operating leases. We recognize operating fixed lease expense and finance lease amortization expense on a straight-line basis over the lease term. Leases with an initial term of *12* months or less are *not* recorded on the balance sheet.

Many of our facility leases include *one* or more options to renew, with renewal terms that can extend the lease term from one year to 15 years with a maximum lease term of 30 years, including renewals. The exercise of lease renewal options is at our sole discretion; therefore, renewals to extend the terms of most leases are *not* included in our right of use ("ROU") assets and lease liabilities as they are *not* reasonably certain of exercise. In the case of our regional distribution centers and certain corporate offices, where the renewal is reasonably certain of exercise, we include the renewal period in our lease term. Leases with escalation adjustments based on an index, such as the consumer price index, are expensed based on current rates. Leases with specified escalation steps are expensed based on the total lease obligation ratably over the life of the lease. Leasehold improvements are depreciated over the expected lease term. Non-lease components, such as payment of real estate taxes, maintenance, insurance and other operating expenses, have been excluded from the determination of our lease liability.

As most of our leases do *not* provide an implicit rate, we use an incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments using a portfolio approach. Our lease agreements do *not* contain any material residual value guarantees or material restrictive covenants.

Our leases are presented in our consolidated balance sheets as follows:

---

| | | | |
|:---|:---|:---|:---|
|  |  | ***December 31,*** | ***December 31,*** |
|  | *Balance Sheet Classification* | ***2024*** | ***2023*** |
|  **Assets** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease assets | *Operating lease assets* | $**170** | $196 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Finance lease assets (1) | *Other assets* | **8** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *Total lease assets* | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *Total lease assets* | $**178** | $196 |
|  **Liabilities** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities | *Operating lease liabilities* | $**31** | $32 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Finance lease liabilities | *Accrued expenses and other current liabilities* | **1** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Long-term |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities | *Operating lease liabilities* | **153** | 179 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Finance lease liabilities | *Other liabilities* | **8** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *Total lease liabilities* | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *Total lease liabilities* | $**193** | $211 |

---

(*1*) Finance lease assets are recorded net of accumulated amortization of $2 million as of *December 31, 2024*.

Expense associated with our operating leases was $46 million and $41 million for the years ended *December 31, 2024* and *2023*, respectively, which is classified in selling, general and administrative expenses. During the year ended *December 31, 2024*, expense associated with our finance leases was $2 million related to the amortization of ROU Assets, which is classified in cost of sales, and $1 million related to the interest on finance lease liabilities, which is classified in interest expense. Cash paid for operating leases recognized as liabilities was $41 million and $40 million for the years ended *December 31, 2024* and *2023*. Cash paid for finance leases was $1 million for the year ended *December 31, 2024*.

The maturity of lease liabilities is as follows (in millions):

---

| | | |
|:---|:---|:---|
| ***Maturity of Lease Liabilities*** | ***Operating*** | ***Finance*** |
| 2025 | $**42** | $**2** |
| 2026 | **36** | **2** |
| 2027 | **30** | **2** |
| 2028 | **25** | **2** |
| 2029 | **20** | **2** |
|  After 2029 | **113** | **1** |
|  Total lease payments | **266** | **11** |
|  Less: Interest | **(82)** | **(2)** |
|  Present value of lease liabilities | $**184** | $**9** |

---

The term and discount rate associated with leases are as follows:

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
| **Lease Term and Discount Rate** | ***2024*** | ***2023*** |
|  Weighted-average remaining lease term (years) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating leases | **11** | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Finance leases | **5** |  |
|  Weighted-average discount rate |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating leases | **6.7%** | 6.5% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Finance leases | **6.7%** |  |

---

Amounts maturing after *2029* include expected renewals for leases of regional distribution centers and certain corporate offices through dates up to *2048.* Excluding optional renewals, our weighted-average remaining lease term for operating leases is 6 years and 7 years, respectively, for the years ended *December 31, 2024* and *2023*. Excluding optional renewals, our weighted average remaining lease term for finance leases is 5 years for the year ended *December 31, 2024*.

------

**<u>NOTE</u> *<u>9—</u>*<u>ADDITIONAL BALANCE SHEET INFORMATION</u>**

Certain balance sheet amounts are comprised of the following (in millions):

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2024*** | ***2023*** |
|  **Accrued expenses and other current liabilities** |  |  |
|  Accrued payroll and other related costs | $**93** | $78 |
|  Deferred revenue | **16** | 7 |
|  Taxes (non-income) | **10** | 5 |
|  Income tax payable | **4** | 7 |
|  Finance lease liabilities | **1** |  |
|  Dividends payable | **—** | 3 |
|  | $**124** | $100 |

---

**<u>NOTE</u> *<u>10—DEBT</u>*<u> </u>**

The components of our debt are as follows (in millions):

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2024*** | ***2023*** |
|  Senior Secured Term Loan B, due September 2024 (1) | $— | $292 |
|  Senior Secured Term Loan B, due October 2031 (2) | **344** |  |
|  Global ABL Facility | **43** | 9 |
|  | **387** | 301 |
|  Less: current portion | **3** | 292 |
|  | $**384** | $9 |

---

(*1*) The Senior Secured Term Loan B, due *September 2024,* is net of discount and issuance costs of
$1 million for the year ended *December 31, 2023.* 

(*2*) The Senior Secured Term Loan B, due *October 2031,* is net of discount and issuance costs of
$7 million for the year ended *December 31, 2024.* 

**<u>Prior Senior Secured Term Loan B</u>:** We had a senior secured term loan B (the "Prior Term Loan") with an original principal amount of $400 million, which amortized in equal quarterly installments of 1% per year with the balance payable in *September 2024,* when the facility matured. In *May 2024,* the Company repaid the Prior Term Loan in its entirety. The outstanding principal balance on the Prior Term Loan at the date of repayment was $292 million. The Company used $216 million of borrowings from our Global ABL Facility (defined below) and $76 million cash to repay the Prior Term Loan. The early repayment of the Prior Term Loan resulted in a loss on early extinguishment of debt of $0.2 million. All security securing the Prior Term Loan was released upon the repayment of the Prior Term Loan.

*Interest Rate.* The Prior Term Loan had an applicable interest rate margin of 300 basis points in the case of loans incurring interest based on LIBOR, and 200 basis points in the case of loans incurring interest based on the base rate. Beginning *July 1, 2023,* the LIBOR interest rate was calculated as the aggregate Chicago Mercantile Exchange ("CME") Term SOFR plus the International Swaps and Derivatives Association (ISDA) credit adjustment spread. "Term SOFR" is the forward looking, per annum secured overnight financing rate administered by CME Group Benchmark Administration Limited and published on the applicable Thompson Reuters Corporation website page for each *1*-month, *3*-month, and *6*-month maturities.

**<u>New Senior Secured Term Loan B</u>**: In *October 2024,* the Company entered into a new term loan "B" (the "Term Loan") with an original principal amount of $350 million, which amortizes in equal quarterly installments of 1% per year with the balance payable in *October 2031,* when the facility matures. The Term Loan was issued at an original issue discount of 99.5%. The Company used the proceeds from the Term Loan to repurchase all of its issued and outstanding shares of its Preferred Stock (defined below).

*Interest Rate*. The Term Loan accrues interest at a margin plus either Term SOFR or a base rate, depending on the Company's election at the time of a loan. For loans incurring interest based on Term SOFR, the margin is (a) 350 basis points if either or both of the ratings (i) by Moody's Investors Service, Inc. ("Moody's") is *B2,* or lower, or (ii) by Standard & Poor's Ratings Services ("S&P") is B, or lower, and (b) 325 basis points if either or both of the ratings (i) by Moody's is *B1,* or better, or (ii) by S&P is B+, or better. For loans incurring interest based on the base rate, the margin is (a) 250 basis points if either or both of the ratings (i) by Moody's is *B2,* or lower, or (ii) by S&P is B, or lower, and (b) 225 basis points if either or both of the ratings (i) by Moody's is *B1,* or better, or (ii) by S&P is B+, or better. The Term Loan provides certain provisions if ratings are unavailable.

*Facility Size Increases*. The Term Loan allows for incremental increases in facility size (subject to additional lender commitments) up to an aggregate amount equal to the greater of $225 million and 100% of Consolidated EBITDA for the most recent trailing *four* consecutive fiscal quarters then ended, plus an additional amount such that the Company's *first* lien leverage ratio (as defined under the Term Loan) would *not* exceed 3.75 to *1.00.*

*Security.* MRC Global (US) Inc. is the borrower under the Term Loan facility, which is guaranteed by MRC Global Inc. and certain of its wholly owned U.S. subsidiaries. The Term Loan is secured by a *second* lien on the assets of MRC Global Inc., MRC Global (US) Inc. and those U.S. subsidiaries guaranteeing the Term Loan facility (collectively, the "Term Loan Credit Parties") securing the Global ABL Facility (which includes accounts receivable and inventory). The Term Loan is secured by a *first* lien on substantially all of the other assets of the Term Loan Credit Parities. The Term Loan is further secured by a *first* lien pledge of all of the capital stock of certain of the direct domestic subsidiaries of Term Loan Credit Parties and 65% of the capital stock of certain of the direct, non-U.S. subsidiaries of the Term Loan Credit Parties.

------

*Prepayments.* We are required to repay the Term Loan with the proceeds from certain asset sales and certain insurance proceeds. In addition, on an annual basis, we are required to repay an amount equal to 50% of excess cash flow, as defined in the Term Loan, reducing to 25% if our *first* lien leverage ratio is *no* more than 3.25 to *1.00* but greater than 3.00 to *1.00. No* payment of excess cash flow is required if the *first* lien leverage ratio is less than or equal to 3.00 to *1.00.* The amount of cash used in the determination of the *first* lien secured leverage ratio is limited to $125 million.

*Restrictive Covenants.* The Term Loan does *not* include any financial maintenance covenants.

The Term Loan contains restrictive covenants (in each case, subject to exclusions) that limit, among other things, the ability of the Company and its restricted subsidiaries to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• make investments, including acquisitions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• prepay certain indebtedness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• grant liens;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• incur additional indebtedness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• sell assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• make fundamental changes to our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• enter into transactions with affiliates; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• pay dividends.

The Term Loan also contains other customary restrictive covenants. The covenants are subject to various baskets and materiality thresholds, with certain of the baskets permitted by the restrictions on the repayment of subordinated indebtedness, restricted payments and investments being available only when the various leverage ratio calculations of the Company and its restricted subsidiaries is less than 3.75 to *1.00* or 3.50 to *1.00,* as applicable.

The Term Loan provides that the Company and its restricted subsidiaries *may* incur any *first* lien indebtedness that is pari passu to the Term Loan so long as the pro forma *first* lien secured leverage ratio of the Company and its restricted subsidiaries is less than or equal to 3.75 to *1.00.* The Company and its restricted subsidiaries *may* incur any *second* lien indebtedness so long as the pro forma junior secured leverage ratio of the Company and its restricted subsidiaries is less than or equal to 4.50 to *1.00.* The Company and its restricted subsidiaries *may* incur any unsecured indebtedness so long as the total leverage ratio of the Company and its restricted subsidiaries is less than or equal to 4.75 to *1.00* or the pro forma consolidated interest coverage ratio of the Company and its restricted subsidiaries is greater than or equal to 2.00 to *1.00.* Additionally, under the Term Loan, the Company and its restricted subsidiaries *may* incur indebtedness under the Global ABL Facility (or any replacement facility) in an amount *not* to exceed the greater of $1.3 billion and the borrowing base under the Global ABL Facility at such time.

The Term Loan contains certain customary representations and warranties, affirmative covenants and events of default, including, among other things, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to certain indebtedness, certain events of bankruptcy, certain events under ERISA, judgment defaults, actual or asserted failure of any material guaranty or security documents supporting the Term Loan to be in full force and effect and change of control. If such an event of default occurs, the Agent under the Term Loan is entitled to take various actions, including the acceleration of amounts due under the Term Loan and all other actions that a secured creditor is permitted to take following a default.

**<u>Global ABL Credit Facility</u>:** In *November 2024,* the Company entered into a Fifth Amended and Restated Loan, Security and Guarantee Agreement (the "Global ABL Facility") by and among the Company, as a guarantor, certain subsidiaries of the Company, as borrowers and guarantors, lenders and Bank of America, N.A. as administrative agent, security trustee and collateral agent. As part of the amendment, the $750 million asset-based revolving credit facility maturity date was extended to *November 2029* from *September 2026.* The Global ABL Facility is comprised of $705 million in revolver commitments in the United States, which includes a $30 million sub-limit for Canada, $12 million in Norway, $10 million in Australia, $10.5 million in the Netherlands, $7.5 million in the United Kingdom and $5 million in Belgium. The Global ABL Facility contains an accordion feature that allows us to increase the principal amount of the facility by up to $250 million, subject to securing additional lender commitments.

*Guarantees*. Obligations of the U.S. Borrowers under the Global ABL Facility are guaranteed by the Company, each of the U.S. Borrowers, each of the Canadian Borrowers, certain of the wholly owned material U.S. subsidiaries of the U.S. Borrowers from time to time party to the ABL Agreement (the "U.S. Guarantors") and certain of the wholly owned Canadian subsidiaries of the Company from time to time party to the ABL Agreement (the "Canadian Guarantors"). The obligations of the Foreign Borrowers under the Global ABL Facility are guaranteed by the U.S. Borrowers, the U.S. Guarantors and, subject to certain limitations the ABL Agreement more particularly describes, the Foreign Borrowers (collectively, the "ABL Guarantors").

------

*Security.* Obligations under the U.S./Canadian Facility are primarily secured, subject to certain exceptions, by a *first*-priority security interest in the accounts receivable, inventory and related assets of the U.S. Borrowers, U.S. Guarantors, the Canadian Borrowers and the Canadian Guarantors. The obligations of any Foreign Borrower are primarily secured, subject to certain exceptions, by a *first*-priority security interest in the accounts receivable, inventory and related assets of the Foreign Borrowers and the ABL Guarantors and a *first*-priority pledge by the Foreign Borrower of the equity interests in its direct, wholly owned restricted subsidiaries incorporated in the relevant borrower jurisdictions and intercompany debt instruments the Foreign Borrower holds. *No* property of a Foreign Borrower or its subsidiaries (other than the Canadian Borrowers) secures the U.S./Canadian Facility. The security interest in accounts receivable, inventory and related assets of the U.S. Borrowers ranks prior to the security interest in this collateral which secures the Term Loan.

*Borrowing Bases.* Each Foreign Borrower has a separate stand-alone Borrowing Base that limits the Foreign Borrower's ability to borrow under its respective Facility, subject to an exception allowing the Foreign Borrowers to utilize excess availability under the U.S./Canadian Facility to borrow amounts in excess of their respective borrowing bases, which utilization will reduce excess availability under the U.S./Canadian Facility dollar for dollar.

*Interest Rates.* Prior to *December 1, 2024,* the applicable margin for borrowings under the Global ABL Facility will be set at Level II of the definition of "Applicable Margin" under the ABL Agreement as determined by a consolidated fixed charge ratio greater than 1.50 to *1.00* but less than or equal to 2.25 to *1.00,* which means that borrowings will bear interest at a rate equal to:

• in the case of U.S. dollar and euro advances,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Term SOFR plus 1.50%,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• EURIBOR plus 1.50%,

• for base rate advances in the U.S. or Canada, the U.S. Base Rate (or Canadian Base Rate if in Canada) plus 0.50%,
or

• for base rate advances outside the U.S. and Canada, an applicable Base Rate plus 1.50%;

• in the case of Norwegian Kroner advances, NIBOR plus 1.50% or the Norwegian Base Rate plus 1.50%;

• in the case of Canadian dollar advances, Term CORRA plus 1.50% or the Canadian Prime Rate or Canadian Base Rate
plus 0.50%;

• in the case of British pound sterling advances, SONIA plus 1.50%, or the UK Base Rate plus 1.50%; or

• in the case of Australian dollar advances, the Australian Bank Bill Rate plus 1.50% or the Australian Base Rate
plus 1.50%.

On and after *December 1, 2024* as of the end of the fiscal quarter that most recently ended, the applicable margins will be subject to a 0.25% step-down to Level III of the definition of "Applicable Margin" under the ABL Agreement as determined by a consolidated fixed charge ratio greater than 2.25 to *1.00* or a 0.25% step-up to Level I of the definition of "Applicable Margin" under the ABL Agreement as determined by a consolidated fixed charge ratio less than or equal to 1.50 to *1.00.*

In addition to paying interest on outstanding principal under the Global ABL Facility, the ABL Borrowers are required to pay a commitment fee in respect of unutilized commitments, which is equal to 0.375% per annum for each Facility (or 0.25% per annum if utilization of a Facility exceeds 35% of the aggregate commitments under the Facility).

*Excess Availability*. At *December 31, 2024*, availability under our revolving credit facilities was $460 million.

**<u>Interest on Borrowings</u>:** The interest rates on our borrowings outstanding at *December 31, 2024* and *2023*, including a floating to fixed interest rate swap and amortization of debt issuance costs, were as follows:

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2024*** | ***2023*** |
|  Senior Secured Term Loan B, due September 2024 | **—** | 9.08% |
|  Senior Secured Term Loan B, due October 2031 | **8.02%** |  |
|  Global ABL Facility | **5.95%** | 5.82% |
|  Weighted average interest rate | **7.79%** | 8.98% |

---

**<u>Maturities of Debt</u>:** At *December 31, 2024*, annual contractual maturities of debt during the next *five* years are as follows (in millions):

---

| | |
|:---|:---|
| 2025 | $**3** |
| 2026 | **4** |
| 2027 | **4** |
| 2028 | **4** |
| 2029 | **46** |
|  Thereafter | **326** |

---

------

**<u>NOTE</u> *<u>11—DERIVATIVE</u>* <u>FINANCIAL INSTRUMENTS</u>**

We use derivative financial instruments to help manage our exposure to interest rate risk and fluctuations in foreign currencies.

**<u>Interest Rate Swap</u>:** In *March 2018,* we entered into a five-year interest rate swap that became effective on *March 31, 2018,* with a notional amount of $250 million from which we receive payments at *1*-month LIBOR and make monthly payments at a fixed rate of 2.7145% with settlement and reset dates on or near the last business day of each month until maturity. The fair value of the swap at inception was zero. On *March 31, 2023,* the interest rate swap agreement expired and was *not* extended with any new agreements or amendments. An immaterial net gain recorded as a component of other comprehensive loss was reclassified to interest expense as of *December 31, 2023.* There were no balances associated with interest rate swaps as of *December 31, 2024* or *2023*.

**<u>Foreign Exchange Forward and Option Contracts</u>:** All of our foreign exchange derivative instruments are freestanding. We have *not* designated our foreign exchange derivatives as hedges and, accordingly, changes in their fair market value are recorded in earnings. Foreign exchange forward contracts are reported at fair value utilizing the Level *2* inputs, as the fair value is based on broker quotes for the same or similar derivative instruments. There were no outstanding forward foreign exchange contracts as of *December 31, 2024* or *2023*.

For the years ended *December 31, 2024*, *2023* and *2022*, the gain or loss recognized in our consolidated statements of operations related to our derivative instruments was *not* material.

**<u>NOTE</u> *<u>12—INCOME</u>* <u>TAXES</u>**

The components of our income (loss) from continuing operations before income taxes were (in millions):

---

| | | | |
|:---|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2023*** | ***2022*** |
|  United States | $**84** | $145 | $106 |
|  Foreign | **21** | 9 | (1) |
|  | $**105** | $154 | $105 |

---

Income taxes included in the consolidated statements of operations consist of (in millions):

---

| | | | |
|:---|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2023*** | ***2022*** |
|  Current: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal | $**26** | $34 | $30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State | **4** | 7 | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign | **5** | 5 | 6 |
|  | **35** | 46 | 42 |
|  Deferred: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal | **(6)** | (3) | (6) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State | **(1)** |  | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign | **(1)** | (4) |  |
|  | **(8)** | (7) | (7) |
|  Income tax expense | $**27** | $39 | $35 |

---

------

Our effective tax rate varied from the statutory federal income tax rate for the following reasons (in millions):

---

| | | | |
|:---|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2023*** | ***2022*** |
|  Federal tax expense at statutory rates | $**22** | $32 | $22 |
|  State taxes | **3** | 6 | 4 |
|  Nondeductible expenses and other | **3** | 3 | 4 |
|  Foreign operations taxed at different rates | **2** | 4 | 3 |
|  Credit carryforwards | **(26)** |  |  |
|  Change in valuation allowance | **23** | (6) | 2 |
|  Income tax expense | $**27** | $39 | $35 |
|  Effective tax rate | **26%** | 25% | 33% |

---

Significant components of our deferred tax assets and liabilities are as follows (in millions):

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2024*** | ***2023*** |
|  Deferred tax assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accruals and reserves | $**20** | $12 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net operating loss and tax credit carryforwards | **77** | 57 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities | **34** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | **5** | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subtotal | **136** | 72 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valuation allowance | **(81)** | (57) |
|  Total | **55** | 15 |
|  Deferred tax liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventory valuation | **(8)** | (12) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property, plant and equipment | **(5)** | (4) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease right-of-use assets | **(32)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible assets | **(36)** | (39) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | **(3)** |  |
|  Total | **(84)** | (55) |
|  Net deferred tax liability | $**(29)** | $(40) |

---

We record a valuation allowance when it is more likely than *not* that some portion or all of our deferred tax assets will *not* be realized. The ultimate realization of the deferred tax assets depends on the ability to generate sufficient taxable income of the appropriate character in the future and in the appropriate taxing jurisdictions. When we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the valuation allowance, which would reduce the provision for income taxes.

During *2024*, the holding structure of our Canadian subsidiary was realigned to preserve a built-in loss in the shares generating a capital loss of $110 million. The total capital loss carryforward is $111 million. Capital losses incurred in a taxable year are allowable to the extent of capital gains. A full valuation allowance provision was required as the Company does *not* typically generate capital gains.

In the U.S., we had approximately $111 million of U.S. capital loss ("CL") carryforwards as of *December 31, 2024*, which will expire in *2029,* $12 million of state net operating loss ("NOL") carryforwards which will expire in future years through *2032,* and $1 million of foreign tax credit ("FTC") carryforwards, which will expire in future years through *2027.* In certain non-U.S. jurisdictions, we had $180 million of NOL carryforwards, of which $131 million have *no* expiration, and $49 million will expire in future years through *2044.* We believe that it is more likely than *not* that the benefit from U.S. state NOL, capital loss carryforwards, FTC carryforwards and a significant portion of the non-U.S. jurisdiction NOL carryforwards will *not* be realized. As such, we have recorded a valuation allowance on the deferred tax assets related to the $111 capital loss carryforwards, $12 million state NOL carryforwards, $175 million non-U.S. jurisdictions NOL carryforwards and $1 million FTC carryforwards.

Dividends from the earnings of our foreign subsidiaries subsequent to *2017* are eligible for a *100%* dividend exclusion in determining our U.S. federal taxes. As such, we do *not* expect future dividends, if any, from the earnings of our foreign subsidiaries to result in U.S. federal income taxes. Deferred tax liabilities arising from the difference between the financial reporting and income tax bases inherent in these foreign subsidiaries, referred to as outside basis differences, have *not* been provided for U.S. income tax purposes because we do *not* intend to sell, liquidate or otherwise trigger the recognition of U.S. taxable income with regard to our investment in these foreign subsidiaries. Determining the amount of U.S. deferred tax liabilities associated with outside basis differences is *not* practicable at this time.

Our tax filings for various periods are subject to audit by the tax authorities in most jurisdictions where we conduct business. We are *no* longer subject to U.S. federal income tax examination for all years through 2020 and the statute of limitations at our international locations is generally *six* years or *seven* years.

At both *December 31, 2024* and *2023*, our unrecognized tax benefits totaled $1 million and $1 million, respectively.

The Organization for Economic Co-operation and Development has enacted model rules for a new global minimum tax framework, also known as Pillar Two, and continues to release additional guidance on how Pillar Two rules should be interpreted and applied by jurisdictions as they adopt Pillar Two. A number of countries have utilized the administrative guidance as a starting point for legislation that went into effect *January 1, 2024.* These rules did *not* have a material impact on our taxes as of *December 31, 2024.* 

------

**<u>NOTE</u> *<u>13—REDEEMABLE</u>* <u>PREFERRED STOCK</u>**

**<u>Preferred Stock Repurchase</u>**

In *June 2015,* we issued 363,000 shares of Series A Convertible Perpetual Preferred Stock (the "Preferred Stock") and received gross proceeds of $363 million. On *October 29, 2024,* the Company repurchased all of the outstanding shares of the Preferred Stock for $361 million plus $4 million in accrued dividends, and all of the Preferred Stock was retired on *October 30, 2024.* The Company used the proceeds from the Term Loan, cash on hand and drawings from its Global ABL Facility to fund the repurchase. Before its repurchase, the Preferred Stock ranked senior to our common stock with respect to dividend rights and rights on liquidation, winding-up and dissolution. The Preferred Stock had a stated value of $1,000 per share, and holders of Preferred Stock were entitled to cumulative dividends payable quarterly in cash at a rate of 6.50% per annum.

The Preferred Stock was convertible at the option of the holders into shares of common stock at an initial conversion rate of 55.9284 shares of common stock for each share of Preferred Stock, which represented an initial conversion price of $17.88 per share of common stock, subject to adjustment. The Company had the option to redeem, in whole but *not* in part, all the outstanding shares of Preferred Stock at par value, subject to certain redemption price adjustments. We had the election to convert the Preferred Stock, in whole but *not* in part, into the relevant number of shares of common stock if the last reported sale price of the common stock had been at least 150% of the conversion price then in effect for a specified period. The conversion rate was subject to customary anti-dilution and other adjustments.

Holders of the Preferred Stock could have at their option, required the Company to repurchase their shares in the event of a fundamental change, as defined in the agreement. The repurchase price was based on the original *$1,000* per share purchase price except in the case of a liquidation, in which case the holders would have received the greater of *$1,000* per share and the amount that would have been received if they held common stock converted at the conversion rate in effect at the time of the fundamental change. Because this feature could have required redemption as a result of the occurrence of an event *not* solely within the control of the Company, the Preferred Stock was classified as temporary equity on our balance sheet.

**<u>NOTE</u> *<u>14—STOCKHOLDERS'</u>* <u>EQUITY</u>**

**<u>Preferred Stock</u>**

We have authorized 100,000,000 shares of undesignated preferred stock. Our Board of Directors has the authority to issue shares of the preferred stock. As of *December 31, 2024* and *2023*, there were no shares and 363,000 shares of preferred stock, respectively, as described in Note *13* issued and outstanding.

**<u>Accumulated Other Comprehensive Loss</u>**

Accumulated other comprehensive loss in the accompanying consolidated balance sheets consists of the following (in millions):

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2024*** | ***2023*** |
|  Currency translation adjustments | $**(236)** | $(227) |
|  Hedge accounting adjustments | **—** |  |
|  Other adjustments | **(1)** | (1) |
|  Accumulated other comprehensive loss | $**(237)** | $(228) |

---

**<u>Earnings per Share</u>**

Earnings per share are calculated in the table below (in millions, except per share amounts):

---

| | | | |
|:---|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2023*** | ***2022*** |
|  **Numerator** |  |  |  |
|  Net income from continuing operations | $**78** | $115 | $70 |
|  Less: Dividends on Series A Preferred Stock | **20** | 24 | 24 |
|  Less: Loss on repurchase and retirement of preferred stock | **9** |  |  |
|  Net income from continuing operations attributable to common stockholders used in earnings per share | **49** | 91 | 46 |
| (Loss) income from discontinued operations, net of tax | **(23)** | (1) | 5 |
|  Net income attributable to common stockholders used in earnings per share | $**26** | $90 | $51 |
|  **Denominator** |  |  |  |
|  Average basic shares outstanding | **85.1** | 84.2 | 83.5 |
|  Effect of dilutive securities | **1.5** | 1.3 | 1.4 |
|  Average diluted shares outstanding | **86.6** | 85.5 | 84.9 |
|  Basic earnings (loss) per common share: |  |  |  |
|  Income from continued operations | $**0.58** | $1.08 | $0.55 |
| (Loss) income from discontinued operations | **(0.27)** | (0.01) | 0.06 |
|  Basic earnings per common share | $**0.31** | $1.07 | $0.61 |
|  Diluted earnings (loss) per common share: |  |  |  |
|  Income from continued operations | $**0.57** | $1.06 | $0.54 |
| (Loss) income from discontinued operations | **(0.27)** | (0.01) | 0.06 |
|  Diluted earnings per common share | $**0.30** | $1.05 | $0.60 |

---

Equity awards and shares of Preferred Stock are disregarded in this calculation if they are determined to be anti-dilutive. For the years ended *December 31, 2024*, *2023* and *2022* all of the shares of Preferred Stock were anti-dilutive. We had approximately less than 0.1 million, 1.2 million and 1.2 million anti-dilutive stock options, restricted stock units, and performance units for the years ended *December 31, 2024*, *2023*, and *2022*, respectively.

------

**<u>NOTE</u> *<u>15—EMPLOYEE</u>* <u>BENEFIT PLANS</u>**

**<u>Equity Compensation Plans</u>:** Our Omnibus Incentive Plan originally had 3,250,000 shares available for issuance pursuant to the plan. In each of *April 2015, April 2019* and *May 2022,* our shareholders approved an additional 4,250,000, 2,500,000 and 3,000,000 shares, respectively, for issuance under the plan. Shares that do *not* vest and are forfeited and shares that are surrendered for the payment of withholding taxes are returned to the pool of shares available for issuance pursuant to the plan. Certain shares that are *not* likely to be issued *may* also be available. The plan permits the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other stock-based and cash-based awards. Since the adoption of the plan, the Company's Board of Directors has periodically granted stock options, restricted stock awards, restricted stock units and performance share units to directors and employees, but *no* other types of awards have been granted under the plan. Options and stock appreciation rights *may not* be granted at prices less than their fair market value on the date of the grant, nor for a term exceeding ten years. For employees, vesting generally occurs over a three-year period (but *no* less than *one* year) on the anniversaries of the date specified in the employees' respective agreements, subject to accelerated vesting under certain circumstances set forth in the agreements. Vesting for directors generally occurs on the one-year anniversary of the grant date. In *2024*, 123,064 shares of restricted stock, 421,711 performance share units and 1,000,027 restricted stock units were granted to executive management, members of our Board of Directors and employees under this plan. A Black-Scholes option pricing model is used to estimate the fair value of the stock options. A Monte Carlo simulation is completed to estimate the fair value of performance share unit awards with a stock price performance component. We expense the fair value of all equity grants, including performance share unit awards, on a straight-line basis over the vesting period.

***Stock Options***

The following table summarizes outstanding stock options:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | | ***Weighted*** | |
|  |<br><br>***Options*** |<br>***Weighted***<br>***Average***<br>***Exercise***<br>***Price*** | ***Average***<br>***Remaining***<br>***Contractual***<br>***Term*** |<br>***Aggregate***<br>***Intrinsic***<br>***Value*** |
| *Stock Options* |  |  | *(years)* | *(millions)* |
|  Balance at December 31, 2023 | **289686** | $**29.30** | **0.1** | $**—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forfeited or expired | **(289686)** | **29.30** |  |  |
|  Balance at December 31, 2024 | **—** | $**—** | **—** | $**—** |
|  At December 31, 2024 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Options outstanding, vested and exercisable | **—** | $**—** | **—** | $**—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Options outstanding, vested and expected to vest | **—** | $**—** | **—** | $**—** |

---

***Restricted Stock Awards***

The following tables summarizes award activity for restricted stock awards:

---

| | | |
|:---|:---|:---|
|  | ***Shares*** | ***Weighted<br>Average<br>Grant-Date<br>Fair Value*** |
|  *Restricted Stock Awards* |  |  |
|  Nonvested at December 31, 2023 | **135019** | $**9.03** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Granted | **123064** | **11.64** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Vested | **(135019)** | **9.03** |
|  Nonvested at December 31, 2024 | **123064** | $**11.64** |

---

---

| | | | |
|:---|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2023*** | ***2022*** |
|  *Restricted Stock Awards* |  |  |  |
|  Weighted-average, grant-date fair value of awards granted | $**11.64** | $9.03 | $12.21 |
|  Total fair value of restricted stock vested | **1554069** | 873856 | 1409251 |

---

------

***Restricted Stock Unit Awards***

The following table summarizes award activity for restricted stock unit awards:

---

| | | |
|:---|:---|:---|
|  | ***Shares*** | ***Weighted<br>Average<br>Grant-Date<br>Fair Value*** |
|  *Restricted Stock Unit Awards* |  |  |
|  Nonvested at December 31, 2023 | **1693830** | $**10.33** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Granted | **1000027** | **10.60** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Vested | **(905450)** | **9.83** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forfeited | **(59702)** | **10.73** |
|  Nonvested at December 31, 2024 | **1728705** | $**10.74** |

---

---

| | | | |
|:---|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2023*** | ***2022*** |
|  *Restricted Stock Unit Awards* |  |  |  |
|  Weighted-average, grant-date fair value of awards granted | $**10.60** | $13.07 | $7.66 |
|  Total fair value of restricted stock units vested | **9906963** | 11307908 | 5950613 |

---

***Performance Share Unit Awards***

Performance share units have been granted to certain executive officers. The performance unit awards will be earned only to the extent that MRC Global attains specified performance goals over performance periods in a three-year period relating to MRC Global's total shareholder return compared to companies within the Philadelphia Oil Service Index (for *2022* grants) or the VanEck Oil Services Exchange-Traded Fund ("ETF") (for *2023* and *2024* grants) and DNOW Inc. plus iShares Russell *2000* ETF (taken as a whole rather than individual companies in the index). The number of shares awarded at the end of the *three*-year period could vary from zero, if performance goals are *not* met, to as much as 200% of target, if performance goals are exceeded.

The following tables summarizes award activity for performance share unit awards:

---

| | | |
|:---|:---|:---|
|  | ***Shares*** | ***Weighted<br>Average<br>Grant-Date<br>Fair Value*** |
|  *Performance Share Unit Awards* |  |  |
|  Nonvested at December 31, 2023 | **1149286** | $**12.34** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Granted | **421711** | **12.17** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Vested | **(372845)** | **10.68** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forfeited | **(71494)** | **19.40** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Performance Adjustment | **35427** | **11.86** |
|  Nonvested at December 31, 2024 | **1162085** | $**12.41** |

---

---

| | | | |
|:---|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2023*** | ***2022*** |
|  *Performance Share Unit Awards* |  |  |  |
|  Weighted-average, grant-date fair value of awards granted | $**12.17** | $16.86 | $8.96 |
|  Total fair value of performance share units vested | **4015541** |  |  |

---

------

Recognized compensation expense and related income tax benefits under our equity-based compensation plans are set forth in the table below (in millions):

---

| | | | |
|:---|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2023*** | ***2022*** |
|  Equity-based compensation expense: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Restricted stock awards | $**1** | $1 | $2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Restricted stock unit awards | **10** | 8 | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Performance share unit awards | **5** | 5 | 4 |
|  Total equity-based compensation expense | $**16** | $14 | $13 |
|  Income tax benefits related to equity-based compensation | $**3** | $2 | $2 |

---

In *2024*, we capitalized $1 million of equity-based compensation expense associated with the cost of developing internal-use software. In *2023* and *2022*, we had no equity-based compensation expense capitalized.

Unrecognized compensation expense under our equity-based compensation plans is set forth in the table below (in millions):

---

| | | |
|:---|:---|:---|
|  | ***Weighted-<br>Average Vesting<br>Period (in years)*** | ***December 31,<br>2024*** |
|  Unrecognized equity-based compensation expense: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Restricted stock awards | 0.3 | $**1** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Restricted stock unit awards | 0.8 | **8** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Performance share unit awards | 1.1 | **4** |
|  Total unrecognized equity-based compensation expense |  | $**13** |

---

**<u>Defined Contribution Employee Benefit Plans</u>**: We maintain defined contribution employee benefit plans in a number of countries in which we operate. These plans generally allow employees the option to defer a percentage of their compensation in accordance with local tax laws. In addition, we make contributions under these plans ranging from 0.15% to 31.5% of eligible compensation. In *June 2020,* the Company indefinitely suspended matching contributions for employees in the U.S. Beginning in *October 2021,* the Company partially reinstated contribution matching in the U.S. In *October 2022,* the Company fully reinstated contribution matching in the U.S. Expense under defined contribution plans were $9 million, $8 million and $6 million for the years ended *December 31, 2024*, *2023* and *2022*.

**<u>NOTE</u> *<u>16—SEGMENT,</u>* <u>GEOGRAPHIC AND PRODUCT LINE INFORMATION</u>**

Our business is comprised of two operating and reportable segments as of *December 31, 2024:* U.S. and International. Our International segment consists of our operations outside of the U.S. These segments represent our business of selling PVF to the energy sector across each of the following sectors:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Gas Utilities** (storage and distribution of natural gas),

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **DIET**: downstream, industrial and energy transition (crude oil refining, petrochemical processing, general
industrials and energy transition projects), and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **PTI**: production and transmission infrastructure (exploration, production, extraction, gathering,
processing and transmission of oil and gas).

The Company has identified its Chief Operating Decision Maker ("CODM") as our President and Chief Executive Officer. The CODM regularly reviews gross profit and operating income (loss) by reportable segment to make operating decisions, allocate resources and assess performance of the business.

On *December 13, 2024,* we entered into a definitive agreement to sell assets associated with our Canada operations, which was previously considered an operating and reportable segment of the business. The operating results and cash flows for the assets sold and liabilities assumed as part of the agreement have been classified as discontinued operations within the Consolidated Financial Statements for all periods presented. Additional disclosures regarding the sale of the assets associated with our Canada operations are provided in Note *2.*

------

The following table presents financial information for each segment (in millions):

---

| | | | |
|:---|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2023*** | ***2022*** |
|  **Sales** |  |  |  |
|  U.S. | $**2530** | $2845 | $2823 |
|  International | **481** | 421 | 374 |
|  Consolidated sales | $**3011** | $3266 | $3197 |
|  **Depreciation and amortization** |  |  |  |
|  U.S. | $**19** | $17 | $15 |
|  International | **2** | 2 | 3 |
|  Total depreciation and amortization expense | $**21** | $19 | $18 |
|  **Amortization of intangibles** |  |  |  |
|  U.S. | $**18** | $19 | $19 |
|  International | **1** | 2 | 2 |
|  Total amortization of intangibles expense | $**19** | $21 | $21 |
|  **Gross profit** |  |  |  |
|  U.S. | $**497** | $563 | $489 |
|  International | **123** | 107 | 95 |
|  Total gross profit | $**620** | $670 | $584 |
|  **Operating income (loss)** |  |  |  |
|  U.S. | $**108** | $174 | $127 |
|  International | **31** | 21 | 14 |
|  Corporate and other (1) | **(4)** | (7) | (6) |
|  Total operating income | $**135** | $188 | $135 |
|  **Interest expense** | **(26)** | (32) | (24) |
|  **Other expense** | **(4)** | (2) | (6) |
|  **Income from continuing operations before income taxes** | $**105** | $154 | $105 |

---

(*1*) The balances included in corporate and other represent the operating activity previously identified in our
Canada segment that do *not* meet the criteria for discontinued operations. Additional disclosures regarding the sale of the assets associated with our Canada operations are provided in Note *2.* 

Total assets by segment are as follows (in millions):

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2024*** | ***2023*** |
|  **Total assets** |  |  |
|  U.S. | $**1278** | $1499 |
|  International | **301** | 300 |
|  Corporate and other (1) | **9** | 8 |
|  Discontinued operations | **36** | 79 |
|  Total assets | $**1624** | $1886 |

---

(*1*) The balances included in corporate and other represent the assets previously identified in our Canada segment
that do *not* meet the criteria for discontinued operations. Additional disclosures regarding the sale of the assets associated with our Canada operations are provided in Note *2.* 

The percentages of our property, plant and equipment relating to the following geographic areas are as follows:

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2024*** | ***2023*** |
|  **Property, plant and equipment** |  |  |
|  U.S. | **94%** | 91% |
|  International | **6%** | 9% |
|  Total property, plant and equipment | **100%** | 100% |

---

------

Our net sales and percentage of total sales by product line are as follows (in millions):

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2024*** | ***2023*** | ***2023*** | ***2022*** | ***2022*** |
|  Line pipe | $**405** | **13%** | $532 | 16% | $550 | 17% |
|  Carbon steel fittings and flanges | **371** | **12%** | 424 | 13% | 406 | 13% |
|  Total carbon steel pipe, fittings and flanges | **776** | **25%** | 956 | 29% | 956 | 30% |
|  Valves, automation, measurement and instrumentation | **1086** | **36%** | 1129 | 35% | 1043 | 32% |
|  Gas products | **753** | **25%** | 780 | 24% | 776 | 24% |
|  Stainless steel alloy pipe and fittings | **169** | **6%** | 135 | 4% | 177 | 6% |
|  General products | **227** | **8%** | 266 | 8% | 245 | 8% |
|  | $**3011** |  | $3266 |  | $3197 |  |

---

**<u>NOTE</u> *<u>17—FAIR</u>* <u>VALUE MEASUREMENTS</u>**

With the exception of debt, the fair values of our financial instruments, including cash and cash equivalents, accounts receivable, trade accounts payable and accrued liabilities approximate carrying value. The carrying value of our debt was $387 million and $301 million at *December 31, 2024* and *2023*, respectively.

The fair value of our debt was $394 million and $302 million at *December 31, 2024* and *2023*, respectively. We estimated the fair value of amounts outstanding under the Term Loan using Level *2* inputs, or quoted market prices as of *December 31, 2024* and *2023*, respectively.

**<u>NOTE</u> *<u>18—COMMITMENTS</u>* <u>AND CONTINGENCIES</u>** 

***Legal Proceedings***

*Asbestos Claims.* We are *one* of many defendants in lawsuits that plaintiffs have brought seeking damages for personal injuries that exposure to asbestos allegedly caused. Plaintiffs and their family members have brought these lawsuits against a large volume of defendant entities as a result of the various defendants' manufacture, distribution, supply or other involvement with asbestos, asbestos-containing products or equipment or activities that allegedly caused plaintiffs to be exposed to asbestos. These plaintiffs typically assert exposure to asbestos as a consequence of *third*-party manufactured products that the Company's subsidiary, MRC Global (US) Inc., purportedly distributed. As of *December 31, 2024*, we are a named defendant in approximately 495 lawsuits involving approximately 1,060 claims. *No* asbestos lawsuit has resulted in a judgment against us to date, with the majority being settled, dismissed or otherwise resolved. Applicable *third*-party insurance has substantially covered these claims, and insurance should continue to cover a substantial majority of existing and anticipated future claims. Accordingly, we have recorded a liability for our estimate of the most likely settlement of asserted claims and a related receivable from insurers for our estimated recovery, to the extent we believe that the amounts of recovery are probable.

We annually conduct analyses of our asbestos-related litigation to estimate the adequacy of the reserve for pending and probable asbestos-related claims. Given these estimated reserves and existing insurance coverage that has been available to cover substantial portions of these claims, we believe that our current accruals and associated estimates relating to pending and probable asbestos-related litigation likely to be asserted in the future are currently adequate. This belief, however, relies on a number of assumptions, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• That our future settlement payments, disease mix and dismissal rates will be materially consistent with historic
experience;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• That future incidences of asbestos-related diseases in the U.S. will be materially consistent with current public
health estimates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• That the rates at which future asbestos-related mesothelioma incidences result in compensable claims filings
against us will be materially consistent with its historic experience;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• That insurance recoveries for settlement payments and defense costs will be materially consistent with historic
experience;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• That legal standards (and the interpretation of these standards) applicable to asbestos litigation will *not* change in material respects;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• That there are *no* materially negative developments in the claims pending against us; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• That key co-defendants in current and future claims remain solvent.

If any of these assumptions prove to be materially different in light of future developments, liabilities related to asbestos-related litigation *may* be materially different than amounts accrued or estimated. Further, while we anticipate that additional claims will be filed in the future, we are unable to predict with any certainty the number, timing and magnitude of such future claims. In addition, applicable insurance policies are subject to overall caps on limits, which coverage *may* exhaust the amount available from insurers under those limits. In those cases, the Company is seeking indemnity payments from responsive excess insurance policies, but other insurers *may not* be solvent or *may not* make payments under the policies without contesting their liability. In our opinion, there are *no* pending legal proceedings that are likely to have a material adverse effect on our consolidated financial statements.

------

*Other Legal Claims and Proceedings.* From time to time, we have been subject to various claims and involved in legal proceedings incidental to the nature of our businesses. We maintain insurance coverage to reduce financial risk associated with certain of these claims and proceedings. It is *not* possible to predict the outcome of these claims and proceedings. However, in our opinion, there are *no* pending legal proceedings that are likely to have a material adverse effect on our consolidated financial statements.

*Unclaimed Property Audit.* The Company is subject to state laws relating to abandoned and unclaimed property. States routinely audit the records of companies to assess compliance with such laws. The Company is currently undergoing a multi-state unclaimed property audit. The timing and outcome of the multi-state unclaimed property audit cannot be predicted. We have reserved all of our rights, claims, and defenses. Given the nature of these matters, we are unable to reasonably estimate the total possible loss or ranges of loss, if any. If the Company is found to be in noncompliance with applicable unclaimed property laws or the manner in which those laws are interpreted or applied, states *may* determine that they are entitled to the Company's remittance of unclaimed or abandoned property and further *may* seek to impose other costs on the Company, including penalties and interest. We intend to vigorously contest the above matter; however, an adverse decision in this matter could have an adverse impact on us, our financial condition, results of operations and cash flows.

*Product Claims.* From time to time, in the ordinary course of our business, our customers *may* claim that the products that we distribute are either defective or require repair or replacement under warranties that either we or the manufacturer *may* provide to the customer. These proceedings are, in the opinion of management, ordinary and routine matters incidental to our normal business. Our purchase orders with our suppliers generally require the manufacturer to indemnify us against any product liability claims, leaving the manufacturer ultimately responsible for these claims. In many cases, state, provincial or foreign law provides protection to distributors for these sorts of claims, shifting the responsibility to the manufacturer. In some cases, we could be required to repair or replace the products for the benefit of our customer and seek our recovery from the manufacturer for our expense. In our opinion, the likelihood that the ultimate disposition of any of these claims and legal proceedings will have a material adverse effect on our consolidated financial statements is remote.

*In Re: July 27 Chemical Release Litigation*. In *2019,* the Company's customer, Lyondell Chemical, a subsidiary of LyondellBassell Industries Holdings B.V. (collectively with its subsidiaries, "Lyondell"), entered into an order with the Company's subsidiary, MRC Global (US) Inc., for MRC Global (US) to facilitate a refurbishment of a Lyondell-owned valve by the valve manufacturer, Xomax Corporation, a subsidiary of Crane Co. (collectively with its subsidiaries, "Crane"), and thereafter for MRC Global (US) to affix a new bracket and actuator to the refurbished Crane Valve. When Crane completed the refurbishment, it shipped the valve to MRC Global (US), which, in turn, procured a bracket from a *third*-party fabricator and installed the bracket and an actuator on the valve and redelivered the valve back to Lyondell. Almost *two* years later, in *2021,* Lyondell contracted with *Turn2* Specialty Companies, LLC (*"Turn2"*) to remove the actuator as part of a maintenance and repair job that was being performed on a Lyondell pipe. While performing the actuator removal job, representatives of *Turn2* removed more than the necessary bolts required to remove the actuator, which caused a release from a "live", pressurized line of chemicals. Two fatalities occurred from the release along with injuries to others at or near the site. 59 plaintiffs, including the estates of the *two* fatalities, sued Lyondell, *Turn2* and others in Texas State Court pursuant to multiple lawsuits. These cases were consolidated into a multi-district litigation assigned to the *190th* Judicial Court of Harris County, Texas. Lyondell and *Turn2* have either settled with the plaintiffs or were dismissed based on payments that they made to plaintiffs for workers' compensation, thus, availing themselves of the workers' compensation bar.

On *July 24, 2023,* just days prior to the expiration of the statute of limitations, the plaintiffs added MRC Global (US), Crane and others to their lawsuits. Plaintiffs claimed that MRC Global (US) failed to warn *Turn2* of the dangers of removing the wrong bolts and failed to properly instruct Lyondell and *Turn2* on how to remove the actuator. The plaintiffs also alleged that MRC Global (US) was responsible as an assembler or seller of the final valve package distributed to Lyondell. MRC Global (US) disagrees that it had any liability and vigorously defended these claims. Plaintiffs asserted various claims for damages, including for bodily injury, past and future medical expenses, lost wages, mental anguish, pain and suffering and punitive damages.

As of *December 2024,* MRC Global and its insurers settled with all of the plaintiffs within MRC Global's insurance limits.

***Customer Contracts***

We have contracts and agreements with many of our customers that dictate certain terms of our sales arrangements (pricing, deliverables, *etc*.). While we make every effort to abide by the terms of these contracts, certain provisions are complex and *may* be subject to varying interpretations. Under the terms of these contracts, our customers have the right to audit our adherence to the contract terms. Historically, any settlements that have resulted from these customer audits have been immaterial to our consolidated financial statements.

***Letters of Credit***

Our letters of credit outstanding at *December 31, 2024* approximated $17 million.

------

***Bank Guarantees***

Certain of our international subsidiaries have trade guarantees that banks have issued on their behalf. The amount of these guarantees at *December 31, 2024* was approximately $13 million.

***Purchase Commitments***

We have purchase obligations consisting primarily of inventory purchases made in the normal course of business to meet operating needs. While our vendors often allow us to cancel these purchase orders without penalty, in certain cases, cancellations *may* subject us to cancellation fees or penalties depending on the terms of the contract.

***Warranty Claims***

We are involved from time to time in various warranty claims, which arise in the ordinary course of business. Historically, any settlements that have resulted from these warranty claims have been immaterial to our consolidated financial statements.

**<u>NOTE</u> *<u>19—</u>*<u>SUBSEQUENT EVENTS</u>**

In *January 2025,* the Company's Board of Directors authorized a new $125 million share repurchase program, which expires on *January 2, 2028.* Under the repurchase program, the Company *may* purchase its outstanding common shares through various means, including open market transactions, block purchases, privately negotiated transactions or otherwise in accordance with applicable federal securities laws, including Rule *10b*-*18* and Rule *10b5*-*1* of the Securities Exchange Act of *1934,* as amended. The program *may* be modified, discontinued or suspended at any time without prior notice.

In *March 2025,* the Company closed the sale of its assets associated with its Canada operations to EMCO Corporation. The Company received net proceeds from the sale of $16 million.

## Exhibit 99.2

**Exhibit 99.2**

**ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)** 

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

MRC GLOBAL INC.

*(in millions, except per share amounts)* 

---

| | | |
|:---|:---|:---|
|  | ***September 30,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
|  **Assets** |  |  |
|  Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash | $**59** | $63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable, net | **473** | 378 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventories, net | **523** | 415 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other current assets | **49** | 29 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current assets of discontinued operations | **1** | 36 |
|  Total current assets | **1105** | 921 |
|  Long-term assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease assets | **160** | 170 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property, plant and equipment, net | **100** | 89 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other assets | **36** | 37 |
|  Intangible assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Goodwill, net | **264** | 264 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other intangible assets, net | **130** | 143 |
|  Total assets | $**1795** | $1624 |
|  **Liabilities and stockholders' equity** |  |  |
|  Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade accounts payable | $**433** | $329 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other current liabilities | **119** | 124 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities | **31** | 31 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current portion of debt obligations | **4** | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current liabilities of discontinued operations | **1** | 21 |
|  Total current liabilities | **588** | 508 |
|  Long-term liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Long-term debt | **472** | 384 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities | **141** | 153 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred income taxes | **35** | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other liabilities | **28** | 28 |
|  Commitments and contingencies |  |  |
|  Stockholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock, $0.01 par value per share: 500 million shares authorized, 110,424,832 and 109,460,293 issued, respectively | **1** | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additional paid-in capital | **1785** | 1779 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retained deficit | **(670)** | (652) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: Treasury stock at cost: 25,433,286 and 24,216,330 shares, respectively | **(390)** | (375) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive loss | **(195)** | (237) |
|  Total stockholders' equity | **531** | 516 |
|  Total liabilities and stockholders' equity | $**1795** | $1624 |

---

*See notes to condensed consolidated financial statements.* 

------

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

MRC GLOBAL INC.

*(in millions, except per share amounts)* 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***Three Months Ended*** | ***Three Months Ended*** | ***Nine Months Ended*** | ***Nine Months Ended*** |
|  | ***September 30,*** | ***September 30,*** | ***September 30,*** | ***September 30,*** |
|  | ***2025*** | ***2024*** | ***2025*** | ***2024*** |
|  Sales | $**678** | $771 | $**2188** | $2347 |
|  Cost of sales | **553** | 614 | **1770** | 1862 |
|  Gross profit | **125** | 157 | **418** | 485 |
|  Selling, general and administrative expenses | **128** | 120 | **382** | 362 |
|  Operating (loss) income | **(3)** | 37 | **36** | 123 |
|  Other (expense) income: |  |  |  |  |
|  Interest expense | **(10)** | (4) | **(29)** | (19) |
|  Other, net | **—** | (1) | **7** | (2) |
| (Loss) income from continuing operations before income taxes | **(13)** | 32 | **14** | 102 |
|  Income tax (benefit) expense from continuing operations | **(4)** | 3 | **2** | 23 |
|  Net (loss) income from continuing operations | **(9)** | 29 | **12** | 79 |
|  Loss from discontinued operations, net of tax | **—** |  | **(30)** | (1) |
|  Net (loss) income | **(9)** | 29 | **(18)** | 78 |
|  Series A preferred stock dividends | **—** | 6 |  | 18 |
|  Net (loss) income attributable to common stockholders | $**(9)** | $23 | $**(18)** | $60 |
|  Basic (loss) earnings per common share: |  |  |  |  |
| (Loss) income from continued operations | $**(0.11)** | $0.27 | $**0.14** | $0.72 |
|  Loss from discontinued operations | **—** |  | **(0.35)** | (0.01) |
|  Basic (loss) earnings per common share | $**(0.11)** | $0.27 | $**(0.21)** | $0.71 |
|  Diluted (loss) earnings per common share: |  |  |  |  |
| (Loss) income from continued operations | $**(0.11)** | $0.27 | $**0.14** | $0.71 |
|  Loss from discontinued operations | **—** |  | **(0.35)** | (0.01) |
|  Diluted (loss) earnings per common share | $**(0.11)** | $0.27 | $**(0.21)** | $0.70 |
|  Weighted-average common shares, basic | **84.5** | 85.2 | **85.2** | 85.0 |
|  Weighted-average common shares, diluted | **84.5** | 86.2 | **85.2** | 86.2 |

---

*See notes to condensed consolidated financial statements.* 

------

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

MRC GLOBAL INC.

*(in millions)* 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***Three Months Ended*** | ***Three Months Ended*** | ***Nine Months Ended*** | ***Nine Months Ended*** |
|  | ***September 30,*** | ***September 30,*** | ***September 30,*** | ***September 30,*** |
|  | ***2025*** | ***2024*** | ***2025*** | ***2024*** |
|  Net (loss) income from continuing operations | $**(9)** | $29 | $**12** | $79 |
|  Loss from discontinued operations, net of tax | **—** |  | **(30)** | (1) |
|  Net (loss) income | $**(9)** | $29 | $**(18)** | $78 |
|  Other comprehensive income |  |  |  |  |
|  Foreign currency translation adjustments | **—** | 7 | $**14** | $3 |
|  Reclassification of foreign currency translation adjustments to net income as a result of the sale of Canada | **—** |  | **28** |  |
|  Total other comprehensive income, net of tax | **—** | 7 | **42** | 3 |
|  Comprehensive (loss) income | $**(9)** | $36 | $**24** | $81 |

---

*See notes to condensed consolidated financial statements.* 

------

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)

MRC GLOBAL INC.

*(in millions)* 

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | | | | | | | ***Accumulated*** | |
|  | ***Common Stock*** | ***Common Stock*** | | | ***Treasury Stock*** | ***Treasury Stock*** | | |
|  | ***Shares*** | ***Amount*** |<br>***Additional***<br>***Paid-in***<br>***Capital*** |<br>***Retained***<br>***Earnings***<br>***(Deficit)*** | ***Shares*** | ***Amount*** | ***Other***<br>***Comprehensive***<br>***Income (Loss)*** |<br>***Total***<br>***Stockholders'***<br>***Equity*** |
|  Balance at December 31, 2024 | 109 | $1 | $1779 | $(652) | (24) | $(375) | $(237) | $516 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loss | **—** | **—** | **—** | **(22)** | **—** | **—** | **—** | **(22)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign currency translation |  | **—** | **—** | **—** | **—** | **—** | **5** | **5** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reclassification of foreign currency translation adjustments to net income as a result of the sale of Canada | **—** | **—** | **—** | **—** | **—** | **—** | **28** | **28** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Vesting of restricted stock | 1 |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shares withheld for taxes | **—** | **—** | **(6)** |  |  |  |  | **(6)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity-based compensation expense | **—** |  | **4** | **—** | **—** | **—** | **—** | **4** |
|  Balance at March 31, 2025 | **110** | $**1** | $**1777** | $**(674)** | **(24)** | $**(375)** | $**(204)** | $**525** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income | **—** | **—** | **—** | **13** | **—** | **—** | **—** | **13** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock repurchased | **—** | **—** | **—** | **—** | **(1)** | **(15)** | **—** | **(15)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign currency translation | **—** | **—** | **—** | **—** | **—** | **—** | **9** | **9** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity-based compensation expense | **—** | **—** | **4** | **—** | **—** | **—** | **—** | **4** |
|  Balance at June 30, 2025 | **110** | $**1** | $**1781** | $**(661)** | **(25)** | $**(390)** | $**(195)** | $**536** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loss |  |  |  | **(9)** | **—** | **—** | **—** | **(9)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign currency translation |  |  |  | **—** | **—** | **—** | **—** | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity-based compensation expense |  |  | **4** | **—** | **—** | **—** | **—** | **4** |
|  Balance at September 30, 2025 | **110** | $**1** | $**1785** | $**(670)** | **(25)** | $**(390)** | $**(195)** | $**531** |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | | | | | | | ***Accumulated*** | |
|  | ***Common Stock*** | ***Common Stock*** | | | ***Treasury Stock*** | ***Treasury Stock*** | | |
|  | ***Shares*** | ***Amount*** |<br>***Additional***<br>***Paid-in***<br>***Capital*** |<br>***Retained***<br>***Earnings***<br>***(Deficit)*** | ***Shares*** | ***Amount*** | ***Other***<br>***Comprehensive***<br>***Loss*** |<br>***Total***<br>***Stockholders'***<br>***Equity*** |
|  Balance at December 31, 2023 | 109 | $1 | $1768 | $(678) | (24) | $(375) | $(228) | $488 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income |  |  |  | 19 |  |  |  | 19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign currency translation |  |  |  |  |  |  | (5) | (5) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shares withheld for taxes |  |  | (5) |  |  |  |  | (5) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity-based compensation expense |  |  | 4 |  |  |  |  | 4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends declared on preferred stock |  |  |  | (6) |  |  |  | (6) |
|  Balance at March 31, 2024 | 109 | $1 | $1767 | $(665) | (24) | $(375) | $(233) | $495 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income |  |  |  | 30 |  |  |  | 30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign currency translation |  |  |  |  |  |  | 1 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity-based compensation expense |  |  | 3 |  |  |  |  | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends declared on preferred stock |  |  |  | (6) |  |  |  | (6) |
|  Balance at June 30, 2024 | 109 | $1 | $1770 | $(641) | (24) | $(375) | $(232) | $523 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income |  |  |  | 29 |  |  |  | 29 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign currency translation |  |  |  |  |  |  | 7 | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity-based compensation expense |  |  | 4 |  |  |  |  | 4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividends declared on preferred stock |  |  |  | (6) |  |  |  | (6) |
|  Balance at September 30, 2024 | 109 | $1 | $1774 | $(618) | (24) | $(375) | $(225) | $557 |

---

*See notes to condensed consolidated financial statements.* 

------

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

MRC GLOBAL INC.

*(in millions)* 

---

| | | |
|:---|:---|:---|
|  | ***Nine Months Ended*** | ***Nine Months Ended*** |
|  | ***September 30,*** | ***September 30,*** |
|  | ***2025*** | ***2024*** |
|  **Operating activities** |  |  |
|  Net income | $**12** | $79 |
|  Adjustments to reconcile net income from continuing operations to net cash (used in) provided by continuing operations: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | **18** | 16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of intangibles | **13** | 15 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity-based compensation expense | **12** | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred income tax (benefit) | **(2)** | (6) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (decrease) in LIFO reserve | **24** | (4) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other non-cash items | **(1)** | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable | **(84)** | (41) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventories | **(129)** | 88 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other current assets | **(6)** | (3) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | **102** | 31 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other current liabilities | **(20)** | 1 |
|  Operating cash flows from continuing operations | **(61)** | 195 |
|  Operating cash flows from discontinued operations | **(6)** | 2 |
|  Net cash (used in) provided by operating activities | **(67)** | 197 |
|  **Investing activities** |  |  |
|  Purchases of property, plant and equipment | **(30)** | (23) |
|  Other investing activities | **5** | 1 |
|  Investing cash flows from continuing operations | **(25)** | (22) |
|  Investing cash flows from discontinued operations | **18** |  |
|  Net cash used in investing activities | **(7)** | (22) |
|  **Financing activities** |  |  |
|  Payments on revolving credit facilities | **(504)** | (276) |
|  Proceeds from revolving credit facilities | **595** | 352 |
|  Payments on debt obligations | **(2)** | (295) |
|  Debt issuance costs paid | **(1)** |  |
|  Dividends paid on preferred stock | **—** | (18) |
|  Repurchases of common stock | **(15)** |  |
|  Repurchases of shares to satisfy tax withholdings | **(7)** | (5) |
|  Other financing activities | **(1)** |  |
|  Financing cash flows from continuing operations | **65** | (242) |
|  Financing cash flows from discontinued operations | **—** |  |
|  Net cash provided by (used in) financing activities | **65** | (242) |
|  Decrease in cash | **(9)** | (67) |
|  Effect of foreign exchange rate on cash | **5** | (2) |
|  Cash — beginning of period | **63** | 131 |
|  Cash — end of period | $**59** | $62 |
|  **Supplemental disclosures of cash flow information:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash paid for interest, net of capitalized interest | $**31** | $17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash paid for income taxes | $**10** | $38 |
|  **Supplemental non-cash transactions:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in accrued purchases of property, plant and equipment | $**(1)** | $— |

---

*See notes to condensed consolidated financial statements.* 

------

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MRC GLOBAL INC.

**<u>NOTE</u> *<u>1</u>* <u>– BACKGROUND AND BASIS OF PRESENTATION</u>**

**<u>Business Operations</u>:** MRC Global Inc. ("MRC Global") is a holding company headquartered in Houston, Texas. Our wholly owned subsidiaries are global distributors of pipe, valves, fittings ("PVF") and infrastructure products and services across each of the following sectors:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Gas Utilities:** (storage and distribution of natural gas)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **DIET:** downstream, industrial and energy transition (crude oil refining, petrochemical and chemical
processing, general industrials and energy transition projects)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **PTI:** production and transmission infrastructure (exploration, production extraction, gathering, processing
and transmission of oil and gas)

We have service centers in industrial, chemical, gas distribution and hydrocarbon producing and refining areas throughout the United States, Europe, Asia, Australasia and the Middle East. We obtain products from a broad range of suppliers.

***Planned Merger with DNOW Inc.***

On *June 26, 2025,* MRC Global entered into an Agreement and Plan of Merger (the "Merger Agreement") with DNOW Inc., a Delaware Corporation ("DNOW"), Buck Merger Sub, Inc., a Delaware corporation and a wholly owned, direct subsidiary of DNOW ("Merger Sub") and Stag Merger Sub, LLC, a Delaware limited liability company and a wholly owned, direct subsidiary of DNOW ("LLC Sub"). The Merger Agreement provides that, among other things and subject to the terms and conditions of the Merger Agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(*1*) Merger Sub will be merged with and into MRC Global, with MRC Global continuing as the surviving corporation
(the "First Merger" and the time the First Merger becomes effective, the "Effective Time") and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(*2*) immediately following the First Merger, MRC Global will be merged with and into LLC Sub (the "Second
Merger" and, together with the First Merger, the "Mergers"), with LLC Sub continuing as the surviving company at the effective time of the Second Merger as a wholly owned, direct subsidiary of DNOW.

At the Effective Time, each share of common stock of MRC Global issued and outstanding (other than certain excluded shares) immediately prior to the Effective Time will be converted into the right to receive 0.9489 shares of common stock, $0.01 par value, of DNOW, subject to certain adjustments, with cash paid in lieu of the issuance of fractional shares, if any (collectively, the "Merger Consideration"). The Merger Agreement also specifies the treatment of outstanding MRC Global equity awards in connection with the Mergers. As of the date of this filing, the completion of the Mergers remain subject to customary mutual closing conditions.

On *September 9, 2025,* each of MRC Global and DNOW held a special meeting of stockholders at which their respective stockholders approved the Mergers and related matters. In addition, on *October 6, 2025,* the statutory waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of *1976,* as amended (the "HSR Act") expired. The required regulatory approvals were received on *November 3, 2025.* The Mergers, which remain subject to customary mutual closing conditions, are expected to be consummated during the *fourth* quarter of *2025.*

The Merger Agreement contains termination rights for each of MRC Global and DNOW, including, among others, if the consummation of the First Merger does *not* occur on or before *June 26, 2026.*

During the *three* and *nine* months ended *September 30, 2025*, we recorded *third* party legal and consulting costs of $6 million and $13 million, respectively, in connection with the Merger Agreement with DNOW. These costs are reflected in selling, general and administrative expenses within our condensed consolidated statement of operations.

**<u>Basis of Presentation</u>:** We have prepared our unaudited condensed consolidated financial statements in accordance with Rule *10*-*01* of Regulation S-*X* for interim financial statements. These statements do *not* include all information and footnotes that generally accepted accounting principles ("GAAP") require for complete annual financial statements. However, the information in these statements reflects all normal recurring adjustments that are, in our opinion, necessary for a fair presentation of the results for the interim periods. The results of operations for the *three* and *nine* months ended *September 30, 2025*, are *not* necessarily indicative of the results that will be realized for the fiscal year ending *December 31, 2025*. We have derived our condensed consolidated balance sheet as of *September 30, 2025*, from the audited consolidated financial statements for the year ended *December 31, 2024*. You should read these condensed consolidated financial statements in conjunction with the audited consolidated financial statements and notes thereto for the year ended *December 31, 2024*.

------

The condensed consolidated financial statements include the accounts of MRC Global Inc. and its wholly owned and majority owned subsidiaries (collectively referred to as the "Company" or by terms such as "we", "our" or "us"). The Company is a primary beneficiary of a variable interest entity, and the assets, liabilities and results of operations of the variable interest entity are included in the Company's condensed consolidated financial statements. All intercompany balances and transactions have been eliminated in consolidation.

On *December 13, 2024,* we entered into a definitive agreement to sell assets associated with our Canada operations to EMCO Corporation, and on *March 14, 2025,* we completed the sale. The historical results of the assets to be sold and the liabilities to be assumed (the "Disposal Group") have been reflected as discontinued operations in our condensed consolidated financial statements for all periods prior to the definitive agreement. Assets and liabilities associated with the Disposal Group are classified as assets and liabilities of discontinued operations in our condensed consolidated balance sheets as of *September 30, 2025* and *December 31, 2024*. Additional disclosures regarding the sale of assets and assumption of liabilities associated with our Canada operations are provided in Note *2.*

**<u>Recently Issued Accounting Standards</u>:** In *September 2025,* the Financial Accounting Standards Board ("FASB") issued ASU *2025*-*06,* Intangibles-Goodwill and Other-Internal-Use Software (Subtopic *350*-*40*): Targeted Improvements to the Accounting for Internal-Use Software ("ASU *2025*-*06"*), which is intended to modernize the accounting for internal-use software costs by removing the previous "development stage" model and introducing a model that aligns with current software development methods, such as the agile approach. Capitalization of eligible costs will begin when management has authorized and committed to funding the software project and it is probable the project will be completed and the software will be used for the function intended. This update will be effective for annual periods beginning after *December 15, 2027,* and interim reporting periods within those annual periods. Entities *may* apply the guidance using a prospective, retrospective or modified transition approach. Early adoption is permitted as of the beginning of an annual period. We are currently evaluating the impact of the provisions of ASU *2025*-*06* on our consolidated financial statements.

In *November 2024,* the Financial Accounting Standards Board ("FASB") issued ASU *2024*-*03,* Income Statement - Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic *220*-*40*): Disaggregation of Income Statement Expenses ("ASU *2024*-*03"*), which requires public entities to include more detailed disclosures about specific categories of expenses such as inventory purchases, employee compensation, depreciation, amortization and selling costs within the notes to the financial statements. This update will be effective for annual periods beginning after *December 15, 2026* and interim periods within fiscal years beginning after *December 15, 2027.* We are currently evaluating the impact of the provisions of ASU *2024*-*03* on our consolidated financial statements.

**<u>Adoption of New Accounting Standards:</u>** In *December 2023,* the FASB issued ASU *2023*-*09,* Income Taxes (Topic *740*) ("ASU *2023*-*09"*), which aims to enhance the transparency and decision usefulness of income tax disclosures through requiring improvements in those disclosures primarily related to the rate reconciliation and income taxes paid information. This update will be effective for annual periods beginning after *December 15, 2024.* We adopted ASU *2023*-*09* on *January 1, 2025.* We do *not* expect ASU *2023*-*09* to impact our consolidated financial statements, and we are currently evaluating the impact of new disclosure requirements beginning with the Form *10*-K for the year ended *December 31, 2025.*

**<u>NOTE</u> *<u>2</u>* <u>– DISCONTINUED OPERATIONS</u>**

On *December 13, 2024,* we entered into a definitive agreement to sell assets associated with our Canada operations to EMCO Corporation, and on *March 14, 2025,* we completed the sale. Net cash proceeds for the sale were $18 million. The historical results of the Disposal Group have been reflected as discontinued operations in our condensed consolidated financial statements for all periods prior to the definitive agreement. As a result of the executed sale agreement in *December* of *2024,* a pre-tax, non-cash loss on discontinued operations of approximately $22 million was recorded in the *fourth* quarter of *2024.* Upon completion of the sale in *March 2025,* the cumulative foreign currency translation adjustment of $28 million was released from accumulated other comprehensive income and recognized in the condensed consolidated statement of operations. The total amount was included in loss from discontinued operations, net of tax for the *nine* months ended *September 30, 2025*. Assets and liabilities associated with the Disposal Group are classified as assets and liabilities of discontinued operations in our condensed consolidated balance sheets as of *September 30, 2025* and *December 31, 2024.*

In connection with the agreement to sell the Disposal Group and effective *March 14, 2025,* the Company entered into a Transition Services Agreement ("TSA") under which the Company provides EMCO Corporation certain transition services related to operational systems, finance and accounting, human resources, information technology, treasury, data transfer services and licenses to use certain intellectual property rights. The time period in which the transition services are provided varies from closing to a period *not* to exceed *one* year from closing. For the *three* and *nine* months ended *September 30, 2025*, we recognized zero and $1 million from the provision of these services pursuant to the TSA, respectively. This income was included in other, net on the condensed consolidated statement of operations for the *three* and *nine* months ended *September 30, 2025*. Additionally, the Company has assigned certain operating lease agreements to EMCO corporation as part of the sale. Refer to Note *5* for additional disclosures regarding these lease assignments.

Details of the "Loss from discontinued operations, net of tax" are as follows (in millions):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***Three Months Ended*** | ***Three Months Ended*** | ***Nine Months Ended*** | ***Nine Months Ended*** |
|  | ***September 30,*** | ***September 30,*** | ***September 30,*** | ***September 30,*** |
|  | ***2025*** | ***2024*** | ***2025*** | ***2024*** |
|  Sales | $**—** | $26 | $**16** | $88 |
|  Cost of sales | **—** | 23 | **14** | 77 |
|  Gross profit | **—** | 3 | **2** | 11 |
|  Selling, general and administrative expenses | **—** | 3 | **5** | 12 |
|  Operating loss | **—** |  | **(3)** | (1) |
|  Reclassification of foreign currency translation adjustments to net income as a result of the sale of Canada | **—** |  | **(28)** |  |
|  Other, net | **—** |  | **—** |  |
|  Loss from discontinued operations | **—** |  | **(31)** | (1) |
|  Income tax benefit from discontinued operations | **—** |  | **(1)** |  |
|  Loss from discontinued operations, net of tax | $**—** | $— | $**(30)** | $(1) |

---

------

The following table summarizes the Disposal Group assets and liabilities classified as discontinued operations in the Company's Condensed Consolidated Balance Sheets (in millions):

---

| | | |
|:---|:---|:---|
|  | ***September 30,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
|  **Assets** |  |  |
|  Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash | $**1** | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable, net | **—** | 19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventories, net | **—** | 30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property, plant and equipment, net | **—** | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease assets | **—** | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss recognized on classification as held for sale | **—** | (22) |
|  Current assets of discontinued operations | $**1** | $36 |
|  **Liabilities** |  |  |
|  Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade accounts payable | $**—** | $12 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other current liabilities | **1** | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities |  | 8 |
|  Current liabilities of discontinued operations | $**1** | $21 |

---

**<u>NOTE</u> *<u>3</u>* <u>– REVENUE RECOGNITION</u>**

We recognize revenue when we transfer control of promised goods or services to our customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. We generally recognize our revenue when products are shipped or delivered to our customers, and payment is due from our customers at the time of billing with a majority of our customers having *30*-day terms. We estimate and record returns as a reduction of revenue. Amounts received in advance of shipment are deferred and recognized when the performance obligations are satisfied. Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and, therefore, we exclude these taxes from sales in the accompanying condensed consolidated statements of operations. In some cases, particularly with *third* party pipe shipments, we consider shipping and handling costs to be separate performance obligations, and as such, we record the revenue and cost of sales when the performance obligation is fulfilled. While a small proportion of our sales, we occasionally recognize revenue under a bill and hold arrangement. Recognition of revenue on bill and hold arrangements occurs when control transfers to the customer provided that the reason for the bill and hold arrangement is substantive, and the product is separately identified as belonging to the customer, ready for physical transfer and unavailable to be used or directed to another customer. Cost of sales includes the cost of inventory sold and related items, such as vendor rebates, inventory allowances and reserves and shipping and handling costs associated with inbound and outbound freight, as well as depreciation and amortization of intangible assets.

Our contracts with customers ordinarily involve performance obligations that are *one* year or less. Therefore, we have applied the optional exemption that permits the omission of information about our unfulfilled performance obligations as of the balance sheet dates.

**<u>Contract Balances</u>:** Variations in the timing of revenue recognition, invoicing and receipt of payment result in categories of assets and liabilities that include invoiced accounts receivable, uninvoiced accounts receivable, contract assets and deferred revenue (contract liabilities) on the condensed consolidated balance sheets.

Generally, revenue recognition and invoicing occur simultaneously as we transfer control of promised goods or services to our customers. We consider contract assets to be accounts receivable when we have an unconditional right to consideration, and only the passage of time is required before payment is due. In certain cases, particularly those involving customer-specific documentation requirements, invoicing is delayed until we are able to meet the documentation requirements. In these cases, we recognize a contract asset separate from accounts receivable until those requirements are met, and we are able to invoice the customer. Our contract asset balance associated with these requirements as of *September 30, 2025* and *December 31, 2024* was $63 million and $18 million, respectively. These contract asset balances are included within accounts receivable in the accompanying condensed consolidated balance sheets.

We record contract liabilities, or deferred revenue, when cash payments are received from customers in advance of our performance, including amounts which are refundable. The deferred revenue balance at *September 30, 2025* and *December 31, 2024* was $20 million and $16 million, respectively. During the *three* and *nine* months ended *September 30, 2025*, we recognized $1 million and $15 million, respectively, of the revenue that was deferred as of *December 31, 2024*. During the *three* and *nine* months ended *September 30, 2024*, we recognized less than $1 million and $6 million, respectively, of the revenue that was deferred as of *December 31, 2023*. Deferred revenue balances are included within accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheets.

**<u>Disaggregated Revenue</u>:** Our disaggregated revenue represents our business of selling PVF to energy and industrial end users across each of the Gas Utilities, DIET, and PTI sectors in each of our reportable segments. Each of our end markets and geographical reportable segments are impacted and influenced by varying factors, including macroeconomic environment, commodity prices, maintenance and capital spending and exploration and production activity. As such, we believe that this information is important in depicting the nature, amount, timing and uncertainty of our revenue from contracts with customers.

------

The following table presents our revenue disaggregated by revenue source (in millions):

---

| | | | |
|:---|:---|:---|:---|
| ***Three Months Ended*** | ***Three Months Ended*** | ***Three Months Ended*** | ***Three Months Ended*** |
| ***September 30,*** | ***September 30,*** | ***September 30,*** | ***September 30,*** |
|  | ***U.S.*** | ***International*** | ***Total*** |
|  **2025:** |  |  |  |
|  Gas Utilities | $**292** | $**—** | $**292** |
|  DIET | **131** | **68** | **199** |
|  PTI | **127** | **60** | **187** |
|  | $**550** | $**128** | $**678** |
|  **2024:** |  |  |  |
|  Gas Utilities | $293 | $— | $293 |
|  DIET | 170 | 69 | 239 |
|  PTI | 181 | 58 | 239 |
|  | $644 | $127 | $771 |

---

---

| | | | |
|:---|:---|:---|:---|
| ***Nine Months Ended*** | ***Nine Months Ended*** | ***Nine Months Ended*** | ***Nine Months Ended*** |
| ***September 30,*** | ***September 30,*** | ***September 30,*** | ***September 30,*** |
|  | ***U.S.*** | ***International*** | ***Total*** |
|  **2025:** |  |  |  |
|  Gas Utilities | $**864** | $**—** | $**864** |
|  DIET | **455** | **187** | **642** |
|  PTI | **480** | **202** | **682** |
|  | $**1799** | $**389** | $**2188** |
|  **2024:** |  |  |  |
|  Gas Utilities | $845 | $— | $845 |
|  DIET | 560 | 202 | 762 |
|  PTI | 583 | 157 | 740 |
|  | $1988 | $359 | $2347 |

---

**<u>Allowance for</u>**  **<u>Credit Losses</u>:** We estimate the adequacy of the allowance for credit losses on receivables based upon periodic evaluation of accounts that *may* have a higher credit risk using information available about the customer, current economic conditions, volume, growth and composition of the account, and other factors such as financial statements, news reports and published credit ratings. The amount of the allowance for the remainder of the trade balance is *not* evaluated individually but is based upon historical loss experience. As of *September 30, 2025* and *December 31, 2024*, the allowance for credit losses totaled $3 million and $3 million, respectively.

**<u>NOTE</u> *<u>4</u>* <u>– INVENTORIES</u>**

The composition of our inventory is as follows (in millions):

---

| | | |
|:---|:---|:---|
|  | ***September 30,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
|  Finished goods inventory at average cost: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valves, automation, measurement and instrumentation | $**273** | $206 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Carbon steel pipe, fittings and flanges | **183** | 135 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gas products | **295** | 265 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; All other products | **93** | 104 |
|  | **844** | 710 |
|  Less: Excess of weighted-average cost over LIFO cost (LIFO reserve) | **(304)** | (280) |
|  Less: Other inventory reserves | **(17)** | (15) |
|  | $**523** | $415 |

---

The Company uses the last-in, *first*-out ("LIFO") method of valuing U.S. inventories. The use of the LIFO method has the effect of reducing net income during periods of rising inventory costs (inflationary periods) and increasing net income during periods of falling inventory costs (deflationary periods). Valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, we base interim LIFO calculations using current month end perpetual inventory balances, except in those instances where better information regarding projected year-end balances is available.

------

**<u>NOTE</u> *<u>5</u>* <u>– LEASES</u>**

We lease certain distribution centers, warehouses, office space, land, automobiles and equipment. The majority of these leases are classified as operating leases. We recognize operating fixed lease expense and finance lease amortization expense on a straight-line basis over the lease term. Leases with an initial term of *12* months or less are *not* recorded on the balance sheet.

Many of our facility leases include *one* or more options to renew, with renewal terms that can extend the lease term from one year to 15 years with a maximum lease term of 30 years, including renewals. The exercise of lease renewal options is at our sole discretion; therefore, renewals to extend the terms of most leases are *not* included in our right of use ("ROU") assets and lease liabilities as they are *not* reasonably certain of exercise. In the case of certain regional distribution centers and certain corporate offices, where the renewal is reasonably certain of exercise, we include the renewal period in our lease term. Leases with escalation adjustments based on an index, such as the consumer price index, are expensed based on current rates. Leases with specified escalation steps are expensed based on the total lease obligation ratably over the life of the lease. Leasehold improvements are depreciated over the expected lease term. Non-lease components, such as payment of real estate taxes, maintenance, insurance and other operating expenses, have been excluded from the determination of our lease liability.

As most of our leases do *not* provide an implicit rate, we use an incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments using a portfolio approach. Our lease agreements do *not* contain any material residual value guarantees or material restrictive covenants.

Our leases are presented in our condensed consolidated balance sheets as follows:

---

| | | | |
|:---|:---|:---|:---|
|  |  | ***September 30,*** | ***December 31,*** |
|  | ***Balance Sheet Classification*** | ***2025*** | ***2024*** |
|  **Assets** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease assets | *Operating lease assets* | $**160** | $170 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Finance lease assets (1) | *Other assets* | **9** | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *Total lease assets* | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *Total lease assets* | $**169** | $178 |
|  **Liabilities** |  |  |  |
|  Current |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities | *Operating lease liabilities* | $**31** | $31 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Finance lease liabilities | *Accrued expenses and other current liabilities* | **2** | 1 |
|  Long-term |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities | *Operating lease liabilities* | **141** | 153 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Finance lease liabilities | *Other liabilities* | **8** | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *Total lease liabilities* | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *Total lease liabilities* | $**182** | $193 |

---

(*1*) Finance lease assets are recorded net of accumulated amortization of $4 million
and $2 million as of *September 30, 2025* and *December 31, 2024*, respectively.

Expense associated with our operating leases was $11 million and $34 million for the *three* and *nine* months ended *September 30, 2025*, respectively, and $12 million and $34 million for the *three* and *nine* months ended *September 30, 2024*, respectively, which we have classified in selling, general and administrative expenses. For the *three* and *nine* months ended *September 30, 2025*, expense associated with our finance leases was less than $1 million and $2 million, respectively, related to the amortization of ROU Assets, which we have classified in cost of sales, and $1 million related to the interest on finance lease liabilities, which we have classified in interest expense. For the *three* and *nine* months ended *September 30, 2024*, expense associated with our finance leases was $2 million related to the amortization of ROU Assets, which we have classified in cost of sales, and less than $1 million related to the interest on finance lease liabilities, which we have classified in interest expense. Cash paid for operating leases recognized as liabilities was $9 million and $30 million for the *three* and *nine* months ended *September 30, 2025*, respectively, and $9 million and $29 million for the *three* and *nine* months ended *September 30, 2024*, respectively. Cash paid for finance leases was less than $1 million and $2 million for the *three* and *nine* months ended *September 30, 2025*, respectively, and $1 million for the *three* and *nine* months ended *September 30, 2024*.

The maturity of lease liabilities is as follows (in millions):

---

| | | |
|:---|:---|:---|
| **Maturity of Lease Liabilities** | ***Operating*** | ***Finance*** |
|  Remainder of 2025 | $**11** | $**1** |
| 2026 | **40** | **3** |
| 2027 | **34** | **2** |
| 2028 | **27** | **2** |
| 2029 | **21** | **2** |
|  After 2029 | **114** | **2** |
|  Total lease payments | **247** | **12** |
|  Less: Interest | **(75)** | **(2)** |
|  Present value of lease liabilities | $**172** | $**10** |

---

------

The term and discount rate associated with leases are as follows:

---

| | | |
|:---|:---|:---|
|  | ***September 30,*** | ***September 30,*** |
| **Lease Term and Discount Rate** | ***2025*** | ***2024*** |
|  Weighted-average remaining lease term (years) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating leases | **10** | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Finance leases | **5** | 6 |
|  Weighted-average discount rate |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating leases | **6.8%** | 6.7% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Finance leases | **6.8%** | 6.6% |

---

Amounts maturing after *2029* include expected renewals for leases of certain regional distribution centers and certain corporate offices through dates up to *2048.* Excluding these optional renewals, our weighted-average remaining lease term for operating leases is 5 years and 6 years for the periods ended *September 30, 2025* and *2024*, respectively. Excluding optional renewals, our weighted average remaining lease term for finance leases is 5 years and 6 years for the periods ended *September 30, 2025* and *2024*, respectively.

***Canada Lease Agreements***

In connection with the sale of the Canada business, three operating lease commitments were assigned to the buyers where the Company has *not* been released from the covenants, liabilities and responsibilities under the lease agreements. The Company is obligated to perform under these agreements if the buyers fail to perform at any time during the remainder of the lease, which are set to expire on or before *December 31, 2030*. At the close date of the sale and as of *September 30, 2025*, the undiscounted remaining lease payments under the agreement totaled $8 million and $7 million, respectively. The Company has *not* recorded a liability with respect to the obligations as of *September 30, 2025*, as the Company concluded the provisions of these lease assignments were *not* probable.

**<u>NOTE</u> *<u>6</u>* <u>– DEBT</u>**

The components of our debt are as follows (in millions):

---

| | | |
|:---|:---|:---|
|  | ***September 30,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
|  Senior Secured Term Loan B (1) | $**342** | $344 |
|  Global ABL Facility | **134** | 43 |
|  | **476** | 387 |
|  Less: current portion | **4** | 3 |
|  | $**472** | $384 |

---

(*1*) The Senior Secured Term Loan B is net of discount and issuance costs of $6 million
and $7 million as of *September 30, 2025* and *December 31, 2024*, respectively.

**<u>Senior Secured Term Loan B</u>:** The Company has a Senior Secured Term Loan "B" (the "Term Loan") with an original principal amount of $350 million, which amortizes in equal quarterly installments of 1% per year with the balance payable in *October 2031,* when the facility matures. The Term Loan was issued at an original issue discount of 99.5%. The Company used the proceeds from the Term Loan to repurchase all of its issued and outstanding shares of its Preferred Stock as discussed in Note *8.* Pursuant to the Merger Agreement, the Company will deliver, at the option of DNOW, a payoff letter with respect to the Term Loan for payment in full of the Term Loan at the closing of the Mergers, or an amendment, or a consent from the requisite holders, of the Term Loan, permitting the transactions contemplated by the Merger Agreement.

*Interest Rate.* The Term Loan accrues interest at a margin plus either Term SOFR or a base rate, depending on the Company's election at the time of a loan. For loans incurring interest based on Term SOFR, the margin is (a) 350 basis points if either or both of the ratings (i) by Moody's Investors Service, Inc. ("Moody's") is *B2,* or lower, or (ii) by Standard & Poor's Ratings Services ("S&P") is B, or lower, and (b) 325 basis points if either or both of the ratings (i) by Moody's is *B1,* or better, or (ii) by S&P is B+, or better. For loans incurring interest based on the base rate, the margin is (a) 250 basis points if either or both of the ratings (i) by Moody's is *B2,* or lower, or (ii) by S&P is B, or lower, and (b) 225 basis points if either or both of the ratings (i) by Moody's is *B1,* or better, or (ii) by S&P is B+, or better. The Term Loan provides certain provisions if ratings are unavailable.

*Facility Size Increases.* The Term Loan allows for incremental increases in facility size (subject to additional lender commitments) up to an aggregate amount equal to the greater of $225 million and 100% of Consolidated EBITDA for the most recent trailing *four* consecutive fiscal quarters then ended, plus an additional amount such that the Company's *first* lien leverage ratio (as defined under the Term Loan) would *not* exceed 3.75 to *1.00.* MRC Global (US) Inc. is the borrower under the Term Loan facility, which is guaranteed by MRC Global Inc. and certain of its wholly owned U.S. subsidiaries.

*Security.* The Term Loan is secured by a *second* lien on the assets of MRC Global Inc., MRC Global (US) Inc. and those U.S. subsidiaries guaranteeing the Term Loan facility (collectively, the "Term Loan Credit Parties") securing the Global ABL Facility (defined below), which includes accounts receivable and inventory. The Term Loan is secured by a *first* lien on substantially all of the other assets of the Term Loan Credit Parities. The Term Loan is further secured by a *first* lien pledge of all of the capital stock of certain of the direct domestic subsidiaries of Term Loan Credit Parties and 65% of the capital stock of certain of the direct, non-U.S. subsidiaries of the Term Loan Credit Parties.

------

*Prepayments.* We are required to repay the Term Loan with the proceeds from certain asset sales and certain insurance proceeds. In addition, on an annual basis, we are required to repay an amount equal to 50% of excess cash flow, as defined in the Term Loan, reducing to 25% if our *first* lien leverage ratio is *no* more than 3.25 to *1.00* but greater than 3.00 to *1.00. No* payment of excess cash flow is required if the *first* lien leverage ratio is less than or equal to 3.00 to *1.00.* The amount of cash used in the determination of the *first* lien secured leverage ratio is limited to $125 million.

*Restrictive Covenants.* The Term Loan does *not* include any financial maintenance covenants. The Term Loan contains restrictive covenants (in each case, subject to exclusions) that limit, among other things, the ability of the Company and its restricted subsidiaries to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• make investments, including acquisitions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• prepay certain indebtedness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• grant liens;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• incur additional indebtedness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• sell assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• make fundamental changes to our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• enter into transactions with affiliates; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• pay dividends.

The Term Loan also contains other customary restrictive covenants. The covenants are subject to various baskets and materiality thresholds, with certain of the baskets permitted by the restrictions on the repayment of subordinated indebtedness, restricted payments and investments being available only when the various leverage ratio calculations of the Company and its restricted subsidiaries is less than 3.75 to *1.00* or 3.50 to *1.00,* as applicable.

The Term Loan provides that the Company and its restricted subsidiaries *may* incur any *first* lien indebtedness that is pari passu to the Term Loan so long as the pro forma *first* lien secured leverage ratio of the Company and its restricted subsidiaries is less than or equal to 3.75 to *1.00.* The Company and its restricted subsidiaries *may* incur any *second* lien indebtedness so long as the pro forma junior secured leverage ratio of the Company and its restricted subsidiaries is less than or equal to 4.50 to *1.00.* The Company and its restricted subsidiaries *may* incur any unsecured indebtedness so long as the total leverage ratio of the Company and its restricted subsidiaries is less than or equal to 4.75 to *1.00* or the pro forma consolidated interest coverage ratio of the Company and its restricted subsidiaries is greater than or equal to 2.00 to *1.00.* Additionally, under the Term Loan, the Company and its restricted subsidiaries *may* incur indebtedness under the Global ABL Facility (or any replacement facility) in an amount *not* to exceed the greater of $1.3 billion and the borrowing base under the Global ABL Facility at such time.

The Term Loan contains certain customary representations and warranties, affirmative covenants and events of default, including, among other things, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to certain indebtedness, certain events of bankruptcy, certain events under ERISA, judgment defaults, actual or asserted failure of any material guaranty or security documents supporting the Term Loan to be in full force and effect and change of control. If such an event of default occurs, the Agent under the Term Loan is entitled to take various actions, including the acceleration of amounts due under the Term Loan and all other actions that a secured creditor is permitted to take following a default.

**<u>Global ABL Facility</u>:** The Company is a party to a multi-currency, global asset-based lending facility (the "Global ABL Facility"), including certain of its subsidiaries, its lenders and Bank of America, N.A. as administrative agent, security trustee and collateral agent. The Global ABL Facility is a revolving credit facility of $750 million, which matures in *November 2029.* The Global ABL Facility is comprised of $705 million in revolver commitments in the United States, which includes a $30 million sub-limit for Canada, $12 million in Norway, $10 million in Australia, $10.5 million in the Netherlands, $7.5 million in the United Kingdom and $5 million in Belgium. The Global ABL Facility contains an accordion feature that allows us to increase the principal amount of the facility by up to $250 million, subject to securing additional lender commitments. Upon closing of the Mergers, the combined company must pay the Global ABL Facility in full, discharge and terminate it or amend the Global ABL Facility to avoid an event of default precipitated by the change in control of the Company. DNOW has obtained a debt commitment letter and has represented that it will have sufficient liquidity to pay off and discharge the Global ABL Facility at closing out of available funds, other sources and from the debt financing that the debt commitment letter outlines.

*Guarantees.* Obligations of the U.S. Borrowers under the Global ABL Facility are guaranteed by the Company, each of the U.S. Borrowers, each of the Canadian Borrowers, certain of the wholly owned material U.S. subsidiaries of the U.S. Borrowers from time to time party to the ABL Agreement (the "U.S. Guarantors") and certain of the wholly owned Canadian subsidiaries of the Company from time to time party to the ABL Agreement (the "Canadian Guarantors"). The obligations of the Foreign Borrowers under the Global ABL Facility are guaranteed by the U.S. Borrowers, the U.S. Guarantors and, subject to certain limitations the ABL Agreement more particularly describes, the Foreign Borrowers (collectively, the "ABL Guarantors").

*Security.* Obligations under the U.S./Canadian Facility are primarily secured, subject to certain exceptions, by a *first*-priority security interest in the accounts receivable, inventory and related assets of the U.S. Borrowers, U.S. Guarantors, the Canadian Borrowers and the Canadian Guarantors. In connection with the Company's sale of its Canadian operations, the security interests in the Company's Canadian accounts receivable and inventory that were sold were released, and as these Canadian operations were sold, the Company does *not* expect the Canadian Borrowers to actively utilize the facility for borrowings. The obligations of any Foreign Borrower are primarily secured, subject to certain exceptions, by a *first*-priority security interest in the accounts receivable, inventory and related assets of the Foreign Borrowers and the ABL Guarantors and a *first*-priority pledge by the Foreign Borrower of the equity interests in its direct, wholly owned restricted subsidiaries incorporated in the relevant borrower jurisdictions and intercompany debt instruments the Foreign Borrower holds. *No* property of a Foreign Borrower or its subsidiaries (other than the Canadian Borrowers) secures the U.S./Canadian Facility. The security interest in accounts receivable, inventory and related assets of the U.S. Borrowers ranks prior to the security interest in this collateral which secures the Term Loan.

------

*Borrowing Bases.* Each Foreign Borrower has a separate stand-alone Borrowing Base that limits the Foreign Borrower's ability to borrow under its respective Facility, subject to an exception allowing the Foreign Borrowers to utilize excess availability under the U.S./Canadian Facility to borrow amounts in excess of their respective borrowing bases, which utilization will reduce excess availability under the U.S./Canadian Facility dollar for dollar.

*Interest Rates.* Prior to *December 1, 2024,* the applicable margin for borrowings under the Global ABL Facility will be set at Level II of the definition of "Applicable Margin" under the ABL Agreement as determined by a consolidated fixed charge ratio greater than 1.50 to *1.00* but less than or equal to 2.25 to *1.00,* which means that borrowings will bear interest at a rate equal to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in the case of U.S. dollar and euro advances,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Term SOFR plus 1.50%,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• EURIBOR plus 1.50%,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• for base rate advances in the U.S. or Canada, the U.S. Base Rate (or Canadian Base Rate if in Canada)
plus 0.50%, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• for base rate advances outside the U.S. and Canada, an applicable Base Rate plus 1.50%;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in the case of Norwegian Kroner advances, NIBOR plus 1.50% or the Norwegian Base Rate plus 1.50%;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in the case of Canadian dollar advances, Term CORRA plus 1.50% or the Canadian Prime Rate or Canadian Base
Rate plus 0.50%;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in the case of British pound sterling advances, SONIA plus 1.50%, or the UK Base Rate
plus 1.50%; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in the case of Australian dollar advances, the Australian Bank Bill Rate plus 1.50% or the Australian Base
Rate plus 1.50%.

On and after *December 1, 2024* as of the end of the fiscal quarter that most recently ended, the applicable margins will be subject to a 0.25% step-down to Level III of the definition of "Applicable Margin" under the ABL Agreement as determined by a consolidated fixed charge ratio greater than 2.25 to *1.00* or a 0.25% step-up to Level I of the definition of "Applicable Margin" under the ABL Agreement as determined by a consolidated fixed charge ratio less than or equal to 1.50 to *1.00.*

In addition to paying interest on outstanding principal under the Global ABL Facility, the ABL Borrowers are required to pay a commitment fee in respect of unutilized commitments, which is equal to 0.375% per annum for each Facility (or 0.25% per annum if utilization of a Facility exceeds 35% of the aggregate commitments under the Facility).

*Excess Availability.* At *September 30, 2025*, availability under our Global ABL Facility was $477 million.

**<u>Interest on Borrowings</u>**: The interest rates on our outstanding borrowings at *September 30, 2025* and *December 31, 2024*, including amortization of debt issuance costs, were as follows:

---

| | | |
|:---|:---|:---|
|  | ***September 30,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
|  Senior Secured Term Loan B | **7.44%** | 8.02% |
|  Global ABL Facility | **6.07%** | 5.95% |
|  Weighted average interest rate | **7.05%** | 7.79% |

---

**<u>NOTE</u> *<u>7</u>* <u>– INCOME TAXES</u>**

For the *three* and *nine* months ended *September 30, 2025* we generated a $13 million loss and $14 million of income, respectively, from continuing operations before taxes and recorded a provision for income taxes of $4 million benefit and $2 million expense, respectively, resulting in an effective tax rate of 31% and 14%, respectively. Our rates generally differ from the U.S. federal statutory rates of 21% as a result of state income taxes, non-deductible expenses and differing foreign income tax rates. The tax rates for *three* and *nine* months ended *September 30, 2025* were impacted by discrete tax benefits including unamortized research and development costs. The effective tax rate for the *three* months ended *September 30, 2025* was unfavorably impacted due to discrete tax benefits against low pretax loss, while the effective tax rate for the *nine* months ended *September 30, 2025* was favorably impacted due to discrete tax benefits against low pretax profit.

For the *three* and *nine* months ended *September 30, 2024*, we generated $32 million and $102 million, respectively, of income from continuing operations before taxes and recorded a provision for income taxes of $3 million and $23 million, respectively, resulting in an effective tax rate of 9% and 23%, respectively. Our rates generally differ from the U.S. federal statutory rates of 21% as a result of state income taxes, non-deductible expenses and differing foreign income tax rates. The effective tax rate for the *three* months ended *September 30, 2024* was lower than the U.S. federal statutory rate due to a net reduction in the valuation allowance provision, partially offset by foreign losses with *no* tax benefit due to valuation allowances. The effective tax rate for the *nine* months ended *September 30, 2024* was higher than the U.S. federal statutory rate due to a net reduction in the valuation allowance provision, partially offset by foreign losses with *no* tax benefit due to valuation allowances.

On *July 4, 2025,* the One Big Beautiful Bill Act was enacted which included provisions related to bonus depreciation, research and development, foreign derived intangible income and modifications to the calculation for excess business interest expense limitation under *§163*(j) to the current tax estimate. The Company's effective tax rate for the *nine* months ended *September 30, 2025* was favorably impacted by changes related to research and development costs. The Company will continue to evaluate the impact of these policies in future periods, and the Company does *not* expect a material impact to the financial statements.

------

**<u>NOTE</u> *<u>8</u>* <u>– REDEEMABLE PREFERRED STOCK</u>**

**<u>Preferred Stock Repurchase</u>**

In *June 2015,* we issued 363,000 shares of Series A Convertible Perpetual Preferred Stock (the "Preferred Stock") and received gross proceeds of $363 million. On *October 29, 2024,* the Company repurchased all of the outstanding shares of the Preferred Stock for $361 million plus $4 million in accrued dividends, and all of the Preferred Stock was retired on *October 30, 2024.* The Company used the proceeds from the Term Loan, cash on hand and drawings from its Global ABL Facility to fund the repurchase. Before its repurchase, the Preferred Stock ranked senior to our common stock with respect to dividend rights and rights on liquidation, winding-up and dissolution. The Preferred Stock had a stated value of $1,000 per share, and holders of Preferred Stock were entitled to cumulative dividends payable quarterly in cash at a rate of 6.50% per annum.

The Preferred Stock was convertible at the option of the holders into shares of common stock at an initial conversion rate of 55.9284 shares of common stock for each share of Preferred Stock, which represented an initial conversion price of $17.88 per share of common stock, subject to adjustment. The Company had the option to redeem, in whole but *not* in part, all the outstanding shares of Preferred Stock at par value, subject to certain redemption price adjustments. We had the election to convert the Preferred Stock, in whole but *not* in part, into the relevant number of shares of common stock if the last reported sale price of the common stock had been at least 150% of the conversion price then in effect for a specified period. The conversion rate was subject to customary anti-dilution and other adjustments.

Holders of the Preferred Stock could have at their option, required the Company to repurchase their shares in the event of a fundamental change, as defined in the agreement. The repurchase price was based on the original *$1,000* per share purchase price except in the case of a liquidation, in which case the holders would have received the greater of *$1,000* per share and the amount that would have been received if they held common stock converted at the conversion rate in effect at the time of the fundamental change. Because this feature could have required redemption as a result of the occurrence of an event *not* solely within the control of the Company, the Preferred Stock was classified as temporary equity on our balance sheet.

**<u>NOTE</u> *<u>9</u>* <u>– STOCKHOLDERS' EQUITY</u>**

**<u>Share Repurchase Program</u>**

In *January 2025,* the Company's board of directors authorized a share repurchase program for common stock up to $125 million. The program is scheduled to expire *January 2, 2028.* The shares *may* be repurchased at management's discretion in the open market. The amount and timing of any repurchase will depend on several factors, including share price, general business and market conditions, and alternative investment opportunities. The share repurchase program does *not* obligate the Company to repurchase shares and *may* be modified, discontinued, or suspended at any time at the Company's discretion. Share repurchases made are subject to a 1% excise tax. The impact of this 1% excise tax was less than $1 million for the *three* and *nine* months ended *September 30, 2025.*

During the *nine* months ended *September 30, 2025*, we repurchased 1,216,956 shares at an average price per share of $12.35 for a total cost of $15 million, which excludes the 1% excise tax on share repurchases. As of *September 30, 2025*, we had 84,991,546 shares of common stock outstanding. Pursuant to the Merger Agreement, the Company agreed *not* to repurchase any more shares of its common stock between signing on *June 26, 2025* and the earlier of the closing or termination of the Merger Agreement.

**<u>Equity Compensation Plans</u>**

The Company's Omnibus Incentive Plan permits the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other stock-based and cash-based awards. Since the adoption of the plan, the Company's Board of Directors has periodically granted stock options, restricted stock awards, restricted stock units and performance share units to directors and employees, but *no* other types of awards have been granted under the plan. Options and stock appreciation rights *may not* be granted at prices less than the fair market value of our common stock on the date of the grant, nor for a term exceeding ten years. For employees, vesting generally occurs over a three-year period on the anniversaries of the date specified in the employees' respective agreements, subject to accelerated vesting under certain circumstances set forth in the agreements, and in any event, *no* less than *one* year. Vesting for directors generally occurs on the one-year anniversary of the grant date. A Black-Scholes option-pricing model is used to estimate the fair value of the stock options. A Monte Carlo simulation is completed to estimate the fair value of performance share unit awards with a stock price performance component. We expense the fair value of all equity grants, including performance share unit awards, on a straight-line basis over the vesting period. In *2025*, 294,607 performance share unit awards, 95,979 restricted stock awards and 665,474 shares of restricted stock units have been granted to executive management, members of our Board of Directors and employees. Additional performance share unit awards of 101,107 and 35,427 were granted during the *first nine* months of *2025* and *2024,* respectively, based on performance above the specified target of achievement for performance share unit awards granted in *2021* and *2020,* respectively.

**<u>Accumulated Other Comprehensive Loss</u>**

Accumulated other comprehensive loss in the accompanying condensed consolidated balance sheets consists of the following (in millions):

---

| | | |
|:---|:---|:---|
|  | ***September 30,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
|  Currency translation adjustments | $**(194)** | $(236) |
|  Other adjustments | **(1)** | (1) |
|  Accumulated other comprehensive loss | $**(195)** | $(237) |

---

------

**<u>Earnings per Share</u>**

Earnings per share are calculated in the table below (in millions, except per share amounts):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***Three Months Ended*** | ***Three Months Ended*** | ***Nine Months Ended*** | ***Nine Months Ended*** |
|  | ***September 30,*** | ***September 30,*** | ***September 30,*** | ***September 30,*** |
|  | ***2025*** | ***2024*** | ***2025*** | ***2024*** |
|  **Numerator** |  |  |  |  |
|  Net (loss) income from continuing operations | $**(9)** | $29 | $**12** | $79 |
|  Less: Dividends on Series A Preferred Stock | **—** | 6 |  | 18 |
|  Net (loss) income from continuing operations attributable to common stockholders used in earnings per share | **(9)** | 23 | **12** | 61 |
|  Loss from discontinued operations, net of tax | **—** |  | **(30)** | (1) |
|  Net (loss) income attributable to common stockholders | $**(9)** | $23 | $**(18)** | $60 |
|  **Denominator** |  |  |  |  |
|  Average basic shares outstanding | **84.5** | 85.2 | **85.2** | 85 |
|  Effect of dilutive securities | **—** | 1 | **—** | 1.2 |
|  Average diluted shares outstanding | **84.5** | 86.2 | **85.2** | 86.2 |
|  Basic (loss) earnings per common share: |  |  |  |  |
| (Loss) income from continued operations | $**(0.11)** | $0.27 | $**0.14** | $0.72 |
|  Loss from discontinued operations | **—** |  | **(0.35)** | (0.01) |
|  Basic (loss) earnings per common share | $**(0.11)** | $0.27 | $**(0.21)** | $0.71 |
|  Diluted (loss) earnings per common share: |  |  |  |  |
| (Loss) income from continued operations | $**(0.11)** | $0.27 | $**0.14** | $0.71 |
|  Loss from discontinued operations | **—** |  | **(0.35)** | (0.01) |
|  Diluted (loss) earnings per common share | $**(0.11)** | $0.27 | $**(0.21)** | $0.70 |

---

Equity awards and shares of Preferred Stock are disregarded in the calculation of diluted earnings per share if they are determined to be anti-dilutive. For the *three* and *nine* months ended *September 30, 2025*, we had 1.6 million and 1.4 million anti-dilutive restricted stock units and performance share units, respectively. For the *three* and *nine* months ended *September 30, 2024*, we had less than 0.1 million and 0.1 million anti-dilutive stock options, restricted stock units and performance share units, respectively. For the *three* and *nine* months ended *September 30, 2024*, the shares of Preferred Stock were anti-dilutive.

**<u>NOTE</u> *<u>10</u>* <u>– SEGMENT INFORMATION</u>**

Our business is comprised of two operating and reportable segments as of *September 30, 2025*: U.S. and International. Our International segment consists of our operations outside of the U.S. These segments represent our business of selling PVF to the energy sector across each of the following sectors:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Gas Utilities**: (storage and distribution of natural gas),

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **DIET**: downstream, industrial and energy transition (crude oil refining, petrochemical processing, general
industrials and energy transition projects), and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **PTI**: production and transmission infrastructure (exploration, production, extraction, gathering,
processing and transmission of oil and gas).

The Company has identified its Chief Operating Decisions Maker ("CODM") as our President and Chief Executive Officer. The CODM regularly reviews gross profit and operating income (loss) by reportable segment to make operating decisions, allocate resources and assess performance of the business. Gross profit is sales less total cost of sales, which includes depreciation and amortization expense and amortization of intangibles expense. Operating income (loss) is gross profit less selling, general and administrative expenses and impairment and other charges. The CODM is provided with consolidated information on cost of sales, selling, general and administrative expenses, interest expense and income tax expense. There are *no* other significant expense categories regularly provided to the CODM beyond those disclosed in the condensed consolidated statements of operations. The CODM manages the business using consolidated expense information, as well as regularly provided budgeted or forecasted revenue, cost of sales and operating expenses information on a consolidated basis.

On *December 13, 2024,* we entered into a definitive agreement to sell assets associated with our Canada operations, which was previously considered an operating and reportable segment of the business. The operating results and cash flows for the assets sold and liabilities assumed as part of the agreement have been classified as discontinued operations within the condensed consolidated financial statements for all periods presented. Additional disclosures regarding the sale of the assets associated with our Canada operations are provided in Note *2.*

------

The following table presents financial information for each segment (in millions):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***Three Months Ended*** | ***Three Months Ended*** | ***Nine Months Ended*** | ***Nine Months Ended*** |
|  | ***September 30,*** | ***September 30,*** | ***September 30,*** | ***September 30,*** |
|  | ***2025*** | ***2024*** | ***2025*** | ***2024*** |
|  **Sales** |  |  |  |  |
|  U.S. | $**550** | $644 | $**1799** | $1988 |
|  International | **128** | 127 | **389** | 359 |
|  Total consolidated sales | $**678** | $771 | $**2188** | $2347 |
|  **Cost of Sales** |  |  |  |  |
|  U.S. | $**449** | $507 | $**1452** | $1567 |
|  International | **94** | 96 | **287** | 264 |
|  Total cost of sales | $**543** | $603 | $**1739** | $1831 |
|  **Depreciation and amortization (1)** |  |  |  |  |
|  U.S. | $**5** | $6 | $**16** | $15 |
|  International | **1** |  | **2** | 1 |
|  Total depreciation and amortization expense | $**6** | $6 | $**18** | $16 |
|  **Amortization of intangibles (1)** |  |  |  |  |
|  U.S. | $**4** | $5 | $**13** | $14 |
|  International | **—** |  | **—** | 1 |
|  Total amortization of intangibles expense | $**4** | $5 | $**13** | $15 |
|  **Gross Profit** |  |  |  |  |
|  U.S. | $**92** | $126 | $**318** | $392 |
|  International | **33** | 31 | **100** | 93 |
|  Total gross profit | $**125** | $157 | $**418** | $485 |
|  **Selling, general and administrative expenses** |  |  |  |  |
|  U.S. | $**106** | $96 | $**316** | $290 |
|  International | **22** | 22 | **66** | 68 |
|  Corporate and other (2) | **—** | 2 | **—** | 4 |
|  Total selling, general and administrative expenses | $**128** | $120 | $**382** | $362 |
|  **Operating (loss) income** |  |  |  |  |
|  U.S. | $**(14)** | $30 | $**2** | $102 |
|  International | **11** | 9 | **34** | 25 |
|  Corporate and other (2) | **—** | (2) |  | (4) |
|  Total operating (loss) income | $**(3)** | $37 | $**36** | $123 |
|  **Interest expense** | **(10)** | (4) | $**(29)** | $(19) |
|  **Other, net** | **—** | (1) | **7** | (2) |
| **(Loss) income from continuing operations before income taxes** | $**(13)** | $32 | $**14** | $102 |

---

(*1*) The balances for depreciation and amortization and amortization of intangibles are included within total cost
of sales on the condensed consolidated statements of operations.

(*2*) The balances included in corporate and other represent the operating activity previously identified in our
Canada segment that do *not* meet the criteria for discontinued operations. Additional disclosures regarding the sale of assets associated with our Canada operations are provided in Note *2.* 

------

Total assets by segment are as follows (in millions):

---

| | | |
|:---|:---|:---|
|  | ***September 30,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
|  **Total assets** |  |  |
|  U.S. | $**1471** | $1278 |
|  International | **315** | 301 |
|  Corporate and other (1) | **8** | 9 |
|  Discontinued operations | **1** | 36 |
|  Total assets | $**1795** | $1624 |

---

(*1*) The balances included in corporate and other represent the operating activity previously identified in our
Canada segment that do *not* meet the criteria for discontinued operations. Additional disclosures regarding the sale of assets associated with our Canada operations are provided in Note *2.* 

The percentages of our property, plant and equipment relating to the following geographic areas are as follows:

---

| | | |
|:---|:---|:---|
|  | ***September 30,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
|  **Property, plant and equipment** |  |  |
|  U.S. | **96%** | 94% |
|  International | **4%** | 6% |
|  Total property, plant and equipment | **100%** | 100% |

---

Our sales by product line are as follows (in millions):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***Three Months Ended*** | ***Three Months Ended*** | ***Nine Months Ended*** | ***Nine Months Ended*** |
|  | ***September 30,*** | ***September 30,*** | ***September 30,*** | ***September 30,*** |
|  | ***2025*** | ***2024*** | ***2025*** | ***2024*** |
|  **Type** |  |  |  |  |
|  Line Pipe | $**79** | $99 | $**245** | $337 |
|  Carbon Fittings and Flanges | **80** | 96 | **276** | 294 |
|  Total Carbon Pipe, Fittings and Flanges | **159** | 195 | **521** | 631 |
|  Valves, Automation, Measurement and Instrumentation | **252** | 275 | **823** | 838 |
|  Gas Products | **198** | 193 | **594** | 573 |
|  Stainless Steel and Alloy Pipe and Fittings | **26** | 51 | **100** | 124 |
|  General Products | **43** | 57 | **150** | 181 |
|  | $**678** | $771 | $**2188** | $2347 |

---

**<u>NOTE</u> *<u>11</u>* <u>– FAIR VALUE MEASUREMENTS</u>**

With the exception of long-term debt, the fair values of our financial instruments, including cash and cash equivalents, accounts receivable, trade accounts payable and accrued liabilities, approximate carrying value. The carrying value of our debt was $476 million and $387 million at *September 30, 2025* and *December 31, 2024*, respectively. The fair value of our debt was $486 million and $394 million at *September 30, 2025* and *December 31, 2024*, respectively. We estimate the fair value of our debt using Level *2* inputs or quoted market prices.

------

**<u>NOTE</u> *<u>12</u>* <u>– COMMITMENTS AND CONTINGENCIES</u>**

***Litigation***

*Asbestos Claims.* We are *one* of many defendants in lawsuits that plaintiffs have brought seeking damages for personal injuries that exposure to asbestos allegedly caused. Plaintiffs and their family members have brought these lawsuits against a large volume of defendant entities as a result of the defendants' manufacture, distribution, supply or other involvement with asbestos, asbestos containing-products or equipment or activities that allegedly caused plaintiffs to be exposed to asbestos. These plaintiffs typically assert exposure to asbestos as a consequence of *third*-party manufactured products that our MRC Global (US) Inc. subsidiary purportedly distributed. As of *September 30, 2025*, we are named a defendant in approximately 478 lawsuits involving approximately 1,043 claims. *No* asbestos lawsuit has resulted in a judgment against us to date, with a majority being settled, dismissed or otherwise resolved. Applicable *third*-party insurance has substantially covered these claims, and insurance should continue to cover a substantial majority of existing and anticipated future claims. Accordingly, we have recorded a liability for our estimate of the most likely settlement of asserted claims and a related receivable from insurers for our estimated recovery, to the extent we believe that the amounts of recovery are probable. It is *not* possible to predict the outcome of these claims and proceedings. However, in our opinion, the likelihood that the ultimate disposition of any of these claims and legal proceedings will have a material adverse effect on our condensed consolidated financial statements is remote.

*Other Legal Claims and Proceedings.* From time to time, we have been subject to various claims and involved in legal proceedings incidental to the nature of our businesses. We maintain insurance coverage to reduce financial risk associated with certain of these claims and proceedings. It is *not* possible to predict the outcome of these claims and proceedings. However, in our opinion, the likelihood that the ultimate disposition of any of these claims and legal proceedings will have a material adverse effect on our condensed consolidated financial statements is remote.

*Unclaimed Property Audit.* The Company is subject to state laws relating to abandoned and unclaimed property. States routinely audit the records of companies to assess compliance with such laws. The Company is currently undergoing a multi-state unclaimed property audit. The timing and outcome of the multi-state unclaimed property audit cannot be predicted. We have reserved all of our rights, claims, and defenses. Given the nature of these matters, we are unable to reasonably estimate the total possible loss or ranges of loss, if any. If the Company is found to be in noncompliance with applicable unclaimed property laws or the manner in which those laws are interpreted or applied, states *may* determine that they are entitled to the Company's remittance of unclaimed or abandoned property and further *may* seek to impose other costs on the Company, including penalties and interest. We intend to vigorously contest the above matter; however, an adverse decision in this matter could have an adverse impact on us, our financial condition, results of operations and cash flows.

*Product Claims.* From time to time, in the ordinary course of our business, our customers *may* claim that the products that we distribute are either defective or require repair or replacement under warranties that either we or the manufacturer *may* provide to the customer. These proceedings are, in the opinion of management, ordinary and routine matters incidental to our normal business. Our purchase orders with our suppliers generally require the manufacturer to indemnify us against any product liability claims, leaving the manufacturer ultimately responsible for these claims. In many cases, state, provincial or foreign law provides protection to distributors for these sorts of claims, shifting the responsibility to the manufacturer. In some cases, we could be required to repair or replace the products for the benefit of our customer and seek our recovery from the manufacturer for our expense. In our opinion, the likelihood that the ultimate disposition of any of these claims and legal proceedings will have a material adverse effect on our condensed consolidated financial statements is remote.

***Customer Contracts***

We have contracts and agreements with many of our customers that dictate certain terms of our sales arrangements (pricing, deliverables, etc.). While we make every effort to abide by the terms of these contracts, certain provisions are complex and often subject to varying interpretations. Under the terms of these contracts, our customers have the right to audit our adherence to the contract terms. Historically, any settlements that have resulted from these customer audits have *not* been material to our condensed consolidated financial statements.

***Purchase Commitments***

We have purchase obligations consisting primarily of inventory purchases made in the normal course of business to meet operating needs. While our vendors often allow us to cancel these purchase orders without penalty, in certain cases, cancellations *may* subject us to cancellation fees or penalties depending on the terms of the contract.

**<u>NOTE</u> *<u>13</u>* <u>– SUBSEQUENT EVENTS</u>**

On *June 26, 2025,* MRC Global entered into the Merger Agreement with DNOW, Merger Sub and LLC sub. Pursuant to the Merger Agreement, the Mergers are conditioned on, among other things, the expiration or early termination of the statutory waiting period under the HSR Act and other required regulatory approvals. The statutory waiting period under the HSR Act expired on *October 6, 2025.* The required regulatory approvals were received on *November 3, 2025.* The Mergers, which remain subject to customary mutual closing conditions, are expected to be consummated during the *fourth* quarter of *2025.*

## Exhibit 99.3

**Exhibit 99.3** 

**UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS** 

The accompanying unaudited pro forma combined financial data (the "Pro Forma Financial Statements") are provided to aid DNOW Inc. ("DNOW") stockholders in their analysis of the financial aspects of the mergers. The Pro Forma Financial Statements combine the historical consolidated financial position and results of operations of MRC Global Inc. ("MRC Global") after giving effect to the mergers as further described in *Note 1 — Description of the Mergers* and the pro forma effects of certain assumptions and adjustments described in "*Notes to the Unaudited Pro Forma Combined Financial Statements"* below. The Pro Forma Financial Statements have been prepared to give effect to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Application of the acquisition method of accounting under the provisions of the Financial Accounting Standards
Board ("FASB") Accounting Standards Codification ("ASC") 805, Business Combinations ("ASC 805") where the assets acquired and liabilities assumed of MRC Global was recorded by DNOW at their respective fair values
as of the closing date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Preliminary adjustments to conform the financial statement presentation of MRC Global to those of DNOW; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Adjustments to reflect estimated post-combination impacts, including transaction costs of the mergers, (as
defined below in *Note 1 — Description of the Mergers* below).

The Pro Forma Financial Statements of DNOW also give effect to acquisitions that have already occurred and are considered material transactions separate from the mergers:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• For the year ended December 31, 2024, DNOW completed the acquisitions of Whitco Supply, LLC and Trojan
Rentals, LLC (collectively, the "Other Acquisitions"). DNOW has included the financial results of the Other Acquisitions in its consolidated financial statements from the date of the Other Acquisitions. The unaudited combined pro forma
data has been presented as if the Other Acquisitions occurred on January 1, 2024. This information is based on historical results of operations, adjusted to give effect to pro forma events that are directly attributable to the Other
Acquisitions and factually supportable. The pro forma data is for informational purposes only and is not indicative of the results of operations that would have been achieved had the Other Acquisitions occurred at the beginning of fiscal year 2024.

The following Pro Forma Financial Statements and related notes are based on and should be read in conjunction with:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The historical audited consolidated financial statements of DNOW and the related notes included in DNOW's
Annual Report on Form 10-K as of and for the year ended December 31, 2024;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The historical audited consolidated financial statements of MRC Global and the related notes included in MRC
Global's Annual Report on Form 10-K as of and for the year ended December 31, 2024;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The historical unaudited interim consolidated financial statements of DNOW and the related notes included in
DNOW's Quarterly Report on Form 10-Q as of and for the nine months ended September 30, 2025; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The historical unaudited interim condensed consolidated financial statements of MRC Global and the related notes
included in MRC Global's Quarterly Report on Form 10-Q as of and for the nine months ended September 30, 2025.

The unaudited pro forma combined balance sheet as of September 30, 2025, gives pro forma effect to the mergers as if they had occurred on September 30, 2025. The unaudited pro forma combined statements of operations for the nine months ended September 30, 2025, and for the year ended December 31, 2024, give pro forma effect to the mergers as if they had occurred on January 1, 2024.

The Pro Forma Financial Statements are provided for informational purposes only. The Pro Forma Financial Statements are not necessarily, and should not be assumed to be, an indication of the actual results that would have been achieved had the mergers been completed as of the dates indicated or that may be achieved in the future. The Pro Forma Financial Statements have been prepared in accordance with Article 11 of Regulation S-X promulgated by the SEC, as amended by the final rule, Release No. 33-10786 *Amendments to Financial Disclosures about Acquired and Disposed Businesses,* using the assumptions set forth in the notes to the Pro Forma Financial Statements. Further, there may be additional charges related to any potential restructuring or other integration activities resulting from the mergers, the timing, nature and amount of which management cannot identify or calculate as of the date of this joint proxy statement/prospectus, and thus, these charges are not reflected in the Pro Forma Financial Statements.

------

**UNAUDITED PRO FORMA COMBINED BALANCE SHEET** 

**AS OF SEPTEMBER 30, 2025** 

*(in millions)* 

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Historical** | **Historical** | | | **Pro Forma Adjustments** | **Pro Forma Adjustments** | **Pro Forma Adjustments** | **Pro Forma Adjustments** |  | |
|  | **DNOW<br>Inc.** | **MRC<br>Global Inc.** |<br>**MRC<br>Global Inc.<br>Discontinued<br>Operations** |<br>**MRC<br>Global Inc.<br>Proforma** | **Reclassification<br>Adjustments** | (Note) | **Merger<br>Adjustments** | (Note) |  |<br>**Pro Forma<br>Combined** |
|  | | | (Note 2) | | (Note 4) | | (Note 5) | |  | |
|  **Assets** |  |  |  |  |  |  |  |  |  |  |
|  Current assets: |  |  |  |  |  |  |  |  |  |  |
|  Cash and cash equivalents | $266 | $— | $— | $— | $59 | 4 (a) | $(244) | 5 | (g)(h) | $81 |
|  Cash |  | 59 |  | 59 | (59) | 4 (a) |  |  |  |  |
|  Receivables, net | 429 |  |  |  | 473 | 4 (b) |  |  |  | 902 |
|  Accounts receivable, net |  | 473 |  | 473 | (473) | 4 (b) |  |  |  |  |
|  Inventories, net | 377 | 523 |  | 523 |  |  | 8 | 5 | (a) | 908 |
|  Prepaid and other current assets | 24 |  |  |  | 49 | 4 (c) |  |  |  | 73 |
|  Other current assets |  | 49 |  | 49 | (49) | 4 (c) |  |  |  |  |
|  Current assets of discontinued operations |  | 1 | (1) |  |  |  |  |  |  |  |
|  Total current assets | 1096 | 1105 | (1) | 1104 |  |  | (236) |  |  | 1964 |
|  Property, plant and equipment, net | 149 | 100 |  | 100 | 9 | 4 (d) | 2 | 5 | (a)(d) | 260 |
|  Operating lease assets |  | 160 |  | 160 | 37 | 4 (e) | 12 | 5 | (d) | 209 |
|  Deferred income taxes | 76 |  |  |  |  |  |  |  |  | 76 |
|  Goodwill | 235 |  |  |  | 264 | 4 (f) | 404 | 5 | (a)-(g)(i) | 903 |
|  Goodwill, net |  | 264 |  | 264 | (264) | 4 (f) |  |  |  |  |
|  Intangibles, net | 60 |  |  |  | 130 | 4 (g) | 289 | 5 | (c) | 479 |
|  Other intangible assets, net |  | 130 |  | 130 | (130) | 4 (g) |  |  |  |  |
|  Other assets | 44 | 36 |  | 36 | (46) | 4 (d)(e) | 27 | 5 | (f) | 61 |
|  Total assets | $1660 | $1795 | $(1) | $1794 | $— |  | $498 |  |  | $3952 |

---

------

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Historical** | **Historical** | | | **Pro Forma Adjustments** | **Pro Forma Adjustments** | **Pro Forma Adjustments** | **Pro Forma Adjustments** | |
|  | **DNOW<br>Inc.** | **MRC<br>Global Inc.** |<br>**MRC<br>Global Inc.<br>Discontinued<br>Operations** |<br>**MRC<br>Global Inc.<br>Proforma** | **Reclassification<br>Adjustments** | (Note) | **Merger<br>Adjustments** | (Note) |<br>**Pro Forma<br>Combined** |
|  | | | (Note 2) | | (Note 4) | | (Note 5) | | |
|  Liabilities & Stockholders' Equity |  |  |  |  |  |  |  |  |  |
|  Current liabilities: |  |  |  |  |  |  |  |  |  |
|  Accounts payable | 305 |  |  |  | 433 | 4 (h) |  |  | 738 |
|  Trade accounts payable |  | 433 |  | 433 | (433) | 4 (h) |  |  |  |
|  Accrued liabilities | 118 |  |  |  | 101 | 4 (i)(k) | (1) | 5 (g)(h) | 218 |
|  Accrued expenses and other current liabilities |  | 119 |  | 119 | (119) | 4 (i)(j) |  |  |  |
|  Operating lease liabilities |  | 31 |  | 31 | 13 | 4 (k) |  |  | 44 |
|  Current portion of debt obligations |  | 4 |  | 4 |  |  | 49 | 5 (g) | 53 |
|  Other current liabilities | 12 |  |  |  | 5 | 4 (j) |  |  | 17 |
|  Current liabilities of discontinued operations |  | 1 | (1) |  |  |  |  |  |  |
|  Total current liabilities | 435 | 588 | (1) | 587 |  |  | 48 |  | 1070 |
|  Long-term operating lease liabilities | 25 | 141 |  | 141 |  |  |  |  | 166 |
|  Long-term debt |  | 472 |  | 472 |  |  | (260) | 5 (g) | 212 |
|  Deferred income taxes |  | 35 |  | 35 |  |  | 76 | 5 (e) | 110 |
|  Other long-term liabilities | 15 |  |  |  | 28 | 4 (l) |  |  | 43 |
|  Other liabilities |  | 28 |  | 28 | (28) | 4 (l) |  |  |  |
|  Total liabilities | 475 | 1264 | (1) | 1263 |  |  | (136) |  | 1602 |
|  Stockholders' equity: |  |  |  |  |  |  |  |  |  |
|  Preferred stock |  |  |  |  |  |  |  |  |  |
|  Common stock | 1 | 1 |  | 1 |  |  |  |  | 2 |
|  Treasury stock |  | (390) |  | (390) |  |  | 390 | 5 (i) |  |
|  Additional paid-in capital | 2001 | 1785 |  | 1785 |  |  | (589) | 5 (b)(g)(i) | 3197 |
|  Accumulated deficit | (675) |  |  |  | (670) | 4 (m) | 638 | 5 (h)(i) | (707) |
|  Retained deficit |  | (670) |  | (670) | 670 | 4 (m) |  |  |  |
|  Accumulated other comprehensive loss | (145) | (195) |  | (195) |  |  | 195 | 5 (i) | (145) |
|  Noncontrolling interest | 3 |  |  |  |  |  |  |  | 3 |
|  Total stockholders' equity | 1185 | 531 |  | 531 |  |  | 634 |  | 2350 |
|  Total liabilities and stockholders' equity | $1660 | $1795 | $(1) | $1794 | $— |  | $498 |  | $3952 |

---

------

**UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS** 

**FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025** 

*(in millions, except share and per share data)* 

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Historical** | **Historical** | | | **Pro Forma Adjustments** | **Pro Forma Adjustments** | **Pro Forma Adjustments** | **Pro Forma Adjustments** | | |
|  | **DNOW Inc.** | **MRC<br>Global Inc.** |<br>**MRC<br>Global Inc.<br>Discontinued<br>Operations** |<br>**MRC<br>Global Inc.<br>Pro Forma** | **Reclassification<br>Adjustments** | (Note) | **Merger<br>Adjustments** | (Note) |<br>**Pro Forma<br>Combined** | (Note) |
|  | | | (Note 2) | | (Note 4) | | (Note 6) | | | |
|  Revenue | $1861 | $— | $— | $— | $2188 | 4 (o) | $— |  | $4049 |  |
|  Sales |  | 2188 |  | 2188 | (2188) | 4 (o) |  |  |  |  |
|  Operating expenses: |  |  |  |  |  |  |  |  |  |  |
|  Cost of products | 1433 |  |  |  | 1752 | 4 (p) | 8 | 6 (b) | 3193 |  |
|  Cost of sales |  | 1770 |  | 1770 | (1770) | 4 (p)(q) |  |  |  |  |
|  Warehousing, selling and administrative | 333 |  |  |  | 400 | 4 (q)(r) | (15) | 6 (c)(d) | 718 |  |
|  Selling, general and administrative expenses |  | 382 |  | 382 | (382) | 4 (r) |  |  |  |  |
|  Operating profit | 95 | 36 |  | 36 |  |  | 7 |  | 138 |  |
|  Other income (expense) | (1) |  |  |  | (22) | 4 (s)(t) | 19 | 6 (f)(g) | (4) |  |
|  Interest expense |  | (29) |  | (29) | 29 | 4 (s) |  |  |  |  |
|  Other, net missing |  | 7 |  | 7 | (7) | 4 (t) |  |  |  |  |
|  Income before income taxes | 94 | 14 |  | 14 |  |  | 26 |  | 134 |  |
|  Income tax provision | 21 |  |  |  | 2 | 4 (u) | 7 | 6 (i) | 30 |  |
|  Income tax expense from continuing operations |  | 2 |  | 2 | (2) | 4 (u) |  |  |  |  |
|  Loss from discontinued operations, net of tax |  | (30) | 30 |  |  |  |  |  |  |  |
|  Net income (loss) | 73 | (18) | (30) | 12 |  |  | 19 |  | 104 |  |
|  Less: Net income attributable to a noncontrolling interest | 1 |  |  |  |  |  |  |  | 1 |  |
|  Net income (loss) attributable to DNOW Inc. | $72 | $(18) | $(30) | $12 | $— |  | $19 |  | $103 |  |
|  Earnings per share attributable to DNOW Inc. stockholders: |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Basic | $0.66 |  |  |  |  |  |  |  | $0.55 | 6 (l) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Diluted | $0.66 |  |  |  |  |  |  |  | $0.54 | 6 (l) |
|  Weighted-average common shares outstanding, basic | 105 |  |  |  |  |  |  |  | 187 | 6 (l) |
|  Weighted-average common shares outstanding, diluted | 106 |  |  |  |  |  |  |  | 187 | 6 (l) |

---

------

**UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS** 

**FOR THE YEAR ENDED DECEMBER 31, 2024** 

*(in millions, except share and per share data)* 

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Historical** | **Historical** | | | **Pro Forma Adjustments** | **Pro Forma Adjustments** | **Pro Forma Adjustments** | **Pro Forma Adjustments** | **Pro Forma Adjustments** | **Pro Forma Adjustments** | | |
|  | **DNOW<br>Inc.** | **MRC<br>Global<br>Inc.** |<br>**MRC<br>Global Inc.<br>Discontinued<br>Operations** |<br>**MRC<br>Global Inc.<br>Pro Forma** | **Reclassification<br>Adjustments** | (Note) | **Merger<br>Adjustments** | (Note) | **Other<br>Acquisition<br>Adjustments** | (Note) |<br>**Pro Forma<br>Combined** | (Note) |
|  | | | (Note 2) | | (Note 4) | | (Note 6) | | (Note 6) | | | |
|  Revenue | $2373 | $— | $— | $— | $3011 | 4 (o) | $— |  | $172 | 6 (h) | $5556 |  |
|  Sales |  | 3011 |  | 3011 | (3011) | 4 (o) |  |  |  |  |  |  |
|  Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |
|  Cost of products | 1838 |  |  |  | 2370 | 4 (p) | 17 | 6 (a)(b) | 106 | 6 (h) | 4331 |  |
|  Cost of sales |  | 2391 |  | 2391 | (2391) | 4 (p)(q) |  |  |  |  |  |  |
|  Warehousing, selling and administrative | 416 |  |  |  | 506 | 4 (q)(r) | 49 | 6 (c)(d)(e)(j) | 39 | 6 (h) | 1010 |  |
|  Selling, general and administrative expenses |  | 485 |  | 485 | (485) | 4 (r) |  |  |  |  |  |  |
|  Impairment and other charges | 6 |  |  |  |  |  |  |  |  |  | 6 |  |
|  Operating profit | 113 | 135 |  | 135 |  |  | (66) |  | 27 |  | 209 |  |
|  Other income (expense) | 1 |  |  |  | (30) | 4 (s)(t) | 10 | 6 (f)(g) |  |  | (19) |  |
|  Interest expense |  | (26) |  | (26) | 26 | 4 (s) |  |  |  |  |  |  |
|  Other, net |  | (4) |  | (4) | 4 | 4 (t) |  |  |  |  |  |  |
|  Income before income taxes | 114 | 105 |  | 105 |  |  | (56) |  | 27 |  | 190 |  |
|  Income tax provision | 32 |  |  |  | 27 | 4 (u) | (14) | 6 (i) | 6 | 6 (h) | 51 |  |
|  Income tax expense from continuing operations |  | 27 |  | 27 | (27) | 4 (u) |  |  |  |  |  |  |
|  Loss from discontinued operations, net of tax |  | (23) | 23 |  |  |  |  |  |  |  |  |  |
|  Net income (loss) | 82 | 55 | (23) | 78 |  |  | (42) |  | 21 |  | 139 |  |
|  Series A preferred stock dividends |  | 20 |  | 20 |  |  | (20) | 6 (k) |  |  |  |  |
|  Loss on repurchase and retirement of preferred stock |  | 9 |  | 9 |  |  | (9) | 6 (k) |  |  |  |  |
|  Less: Net income attributable to a noncontrolling interest | 1 |  |  |  |  |  |  |  |  |  | 1 |  |
|  Net income (loss) attributable to DNOW Inc. | $81 | $26 | $(23) | $49 | $— |  | $(13) |  | $21 |  | $138 |  |
|  Earnings per share attributable to DNOW Inc. stockholders: |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Basic | $0.75 |  |  |  |  |  |  |  |  |  | $0.72 | 6 (l) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Diluted | $0.74 |  |  |  |  |  |  |  |  |  | $0.72 | 6 (l) |
|  Weighted-average common shares outstanding, basic | 106 |  |  |  |  |  |  |  |  |  | 188 | 6 (l) |
|  Weighted-average common shares outstanding, diluted | 107 |  |  |  |  |  |  |  |  |  | 189 | 6 (l) |

---

------

**NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS** 

**Note 1. Description of the Mergers** 

***Acquisition of MRC Global***

On November 6, 2025 (the "Closing Date"), DNOW completed its previously announced acquisition of MRC Global and its subsidiaries. DNOW entered into an Agreement and Plan of Merger (the "Merger Agreement") on June 26, 2025 with MRC Global, Buck Merger Sub, Inc., a Delaware corporation and a wholly-owned, direct subsidiary of DNOW ("Merger Sub"), and Stag Merger Sub, LLC, a Delaware limited liability company and a wholly-owned, direct subsidiary of DNOW ("LLC Sub"), pursuant to which, upon the terms and subject to the conditions of the Merger Agreement, (1) Merger Sub was merged with and into MRC Global (the "First Merger" and the time that the First Merger became effective, the "First Merger Effective Time"), with MRC Global continuing as the surviving corporation in the First Merger, and (2) immediately following the First Merger, MRC Global was merged with and into LLC Sub (the "Second Merger" and, together with the First Merger, the "Mergers"), with LLC Sub continuing as the surviving company at the effective time of the Second Merger as a wholly-owned, direct subsidiary of DNOW. The events described took place in connection with the completion of the Mergers on the Closing Date.

At the First Merger Effective Time, each issued and outstanding share of common stock of MRC Global, par value of $0.01 per share (the "MRC Global common stock"), was converted into the right to receive 0.9489 shares of common stock of DNOW, par value of $0.01 per share (the "DNOW common stock") with cash paid in lieu of the issuance of fractional shares, if any (the "Merger Consideration").

Each share of restricted MRC Global common stock issued under the MRC Global Inc. Omnibus Incentive Plan (as amended, the "MRC Global equity plan") that vests solely on the basis of time (a "MRC Global restricted share") that was outstanding immediately prior to the First Merger Effective Time automatically, by virtue of the occurrence of the closing of the Mergers, vested in full immediately prior to the First Merger Effective Time and was canceled and converted into the right to receive the Merger Consideration with respect to each MRC Global restricted share, with cash paid in lieu of fractional shares of DNOW common stock in accordance with the Merger Agreement and an amount in cash equal to the accrued but unpaid dividends with respect to each MRC Global restricted share.

Each restricted stock unit (each, an "MRC Global RSU") granted pursuant to the MRC Global equity plan that was granted prior to February 2024 and was outstanding immediately prior to the Effective Time immediately vested with respect to 100% of the shares of MRC Global common stock subject to such MRC Global RSU, which shares of MRC Global common stock then converted into the right to receive the Merger Consideration with respect to each share of MRC Global common stock and an amount in cash equal to the accrued but unpaid dividend equivalents with respect to such MRC Global RSU.

Each outstanding MRC Global RSU that was granted in February 2024 or later was canceled and converted into an award of restricted stock units representing the right to receive DNOW common stock (each, a "DNOW RSU") in respect of that number of shares of DNOW common stock (rounded to the nearest whole share) equal to the product of the total number of shares of DNOW common stock subject to such award of MRC Global RSUs immediately prior to the Effective Time multiplied by 0.9489. Such DNOW RSUs will vest and be payable on the same terms and conditions as are set forth in the corresponding award agreement (except that such award will be payable in DNOW common stock).

Each restricted stock unit granted pursuant to the MRC Global equity plan that is subject to performance-based vesting (each, an "MRC Global PSU") that was granted prior to February 2024 was canceled, and the holder became entitled to receive the number of shares of MRC Global common stock (rounded to the nearest share) subject to the MRC Global PSU, which shares of MRC Global common stock were converted into the right to receive (A) the Merger Consideration with respect to each share of MRC Global common stock subject to such MRC Global PSU that vest based on the determination of performance set forth in the applicable award agreement and (B) an amount in cash equal to the accrued but unpaid dividend equivalents with respect to such MRC Global PSU, if any.

Each outstanding MRC Global PSU that was granted in or subsequent to February 2024 was canceled and converted into a DNOW RSU in respect of that number of shares of DNOW common stock (rounded to the nearest whole share) equal to the product of the number of shares of MRC Global common stock subject to such MRC Global PSU immediately prior to the Effective Time that vest based on the determination of performance set forth in the applicable award agreement multiplied by 0.9489. Such DNOW RSU will vest and be payable on the same terms and conditions as are set forth in the corresponding award agreement (except that such award will be payable in DNOW common stock and such award will no longer be subject to performance metrics). The number of shares of MRC Global common stock subject to such MRC Global PSU was deemed to be the number of shares subject to the MRC Global PSU with performance deemed achieved, except as previously disclosed to DNOW, in accordance with the terms and conditions of the applicable award agreement governing such MRC Global PSU immediately prior to the First Merger Effective Time.

***Note 2. Basis of Pro Forma Presentation***

***Basis of Presentation***

The unaudited pro forma combined balance sheet as of September 30, 2025, combines the historical consolidated balance sheets of DNOW and MRC Global, giving effect to the Mergers as if they had occurred on September 30, 2025. The unaudited pro forma combined statements of operations for the nine months ended September 30, 2025, and for the year ended December 31, 2024, combines the historical consolidated statements of operations of DNOW and MRC Global, giving effect to the Mergers as if they had occurred on January 1, 2024.

The Pro Forma Financial Statements and explanatory notes have been prepared using the acquisition method of accounting with DNOW as the accounting acquirer of MRC Global. Under the acquisition method of accounting, the assets and liabilities of MRC Global, as of closing, were recorded by DNOW at their estimated fair values and any excess of the Merger Consideration over the fair value of MRC Global's net assets was allocated to goodwill, if applicable. The pro forma allocation of the Merger Consideration reflected in the Pro Forma Financial Statements is subject to adjustment and may vary materially from the actual allocation that was recorded as of the close date.

The Pro Forma Financial Statements have been presented for illustrative purposes only and are not necessarily indicative of the financial condition or results of operations that would have been realized had the Mergers occurred as of the dates indicated, nor are they meant to be indicative of any anticipated future financial condition or results of operations of DNOW and its consolidated subsidiaries after giving effect to the Mergers (the "combined company"), nor does it reflect adjustments for any anticipated synergies, operating efficiencies, tax savings or cost savings. Actual financial condition and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

The unaudited pro forma adjustments represent management's estimates based on currently available information and certain assumptions and methodologies that management believes are reasonable under the circumstances and are subject to change as additional information becomes available and analyses are performed. Assumptions and estimates underlying the unaudited pro forma adjustments set forth in the unaudited Pro Forma Financial Statements are described in the accompanying notes.

***Discontinued Operations Adjustments***

On December 13, 2024, MRC Global entered into a definitive agreement to sell assets associated with its Canada operations ("MRC Global Canada") to EMCO Corporation, and on March 14, 2025, MRC Global completed the sale.

MRC Global presented the operations of MRC Global Canada as discontinued operations for the year ended December 31, 2024 and for the nine months ended September 30, 2025. Therefore, the Pro Forma Financial Statements exclude the results of operations of MRC Global Canada because those businesses will not be considered part of the acquiring entity's continuing operations.

------

**Note 3. Preliminary Purchase Price Allocation** 

Management performed a preliminary estimation of fair values of the MRC Global assets acquired and liabilities assumed as of September 30, 2025. The preliminary purchase accounting was based on a benchmarking analysis of similar transactions in the industry to identify value allocations of acquisition consideration to assets acquired and liabilities assumed. As such, the preliminary fair value estimates are subject to change based on the final valuations, and these changes could be material.

The estimated preliminary fair values of the MRC Global assets and liabilities are based on discussions with MRC Global's management, preliminary valuation studies, the transaction due diligence and information presented in MRC Global's public filings. The final purchase price and purchase price allocation may be different than the information that is presented herein, and these differences could be material.

***Preliminary Estimated Purchase Price***

The total preliminary Merger Consideration is calculated as follows (in millions, except exchange ratio, shares, and per share price):

---

| | |
|:---|:---|
|  MRC Global common stock as of November 6, 2025 | 84992662 |
|  MRC Global RSAs, MRC Global RSUs and MRC Global PSUs to be vested in connection with the Mergers | 764262 |
|  Exchange ratio | 0.9489 |
|  Shares of DNOW common stock issued at closing | 81374745 |
|  Price per share of DNOW common stock<sup>(1)</sup> | $14.56 |
|  Equity consideration for the conversion of MRC Global common stock outstanding | $1185 |
|  Fair value of replacement MRC Global RSUs and MRC |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Global PSUs attributable to the purchase price | $12 |
|  Estimated repayment of certain existing indebtedness of MRC Global<sup>(2)</sup> | $477 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Preliminary Merger Consideration** | $**1674** |

---

<sup>(1)</sup> The equity consideration is based on the closing price of the shares of DNOW common stock on November 5, 2025.

<sup>(2)</sup> The balance of existing indebtedness of MRC Global is based on the outstanding balance as of September 30, 2025, including accrued interest. The actual repayment amount may be different to reflect the outstanding indebtedness on the Closing Date. 

***Preliminary Estimated Purchase Price Allocation***

The following table summarizes allocation of the preliminary estimate of the purchase price to the assets acquired and liabilities assumed (in millions):

---

| | |
|:---|:---|
|  | **September 30,<br>2025** |
|  Cash | $59 |
|  Accounts receivable, net | 473 |
|  Inventories, net | 531 |
|  Other current assets | 49 |
|  Operating lease assets | 172 |
|  Property, plant and equipment, net | 102 |
|  Other assets | 63 |
|  Other intangible assets, net | 419 |
|  Total identifiable assets acquired | 1868 |
|  Trade accounts payable | (433) |
|  Accrued expenses and other current liabilities | (118) |
|  Operating lease liabilities | (31) |
|  Long-term operating lease liabilities | (141) |
|  Deferred income taxes | (111) |
|  Other liabilities | (28) |
|  Total identifiable liabilities assumed | (862) |
|  Goodwill | 668 |
|  **Total consideration effectively transferred** | $**1674** |

---

All adjustments from the application of the purchase price allocation are within the adjustments described in Note 5 below.

**Note 4. Significant Accounting Policies and Reclassification Adjustments** 

During the preparation of the Pro Forma Financial Statements, DNOW performed a preliminary analysis of MRC Global's historical financial data to identify differences in accounting policies and financial statement presentation as compared to those of DNOW. Management is currently evaluating for significant accounting policy differences between the two entities. DNOW is in the process of performing a comprehensive review of the accounting policies and may identify differences in accounting policies between the two entities which, when conformed, could be material.

Certain reclassifications are reflected in the unaudited pro forma combined balance sheet and unaudited pro forma combined statement of operations to conform with presentation between DNOW and MRC Global. These reclassifications have no effect on previously reported total assets, total liabilities and stockholders' equity, or net income (loss) of DNOW or MRC Global. The Pro Forma Financial Statements may not reflect all reclassifications necessary to conform MRC Global's presentation to that of DNOW due to limitations on the availability of information as of the date of this joint proxy statement/prospectus. Additional reclassification adjustments may be identified as more information becomes available.

The following reclassification adjustments were made to conform with balance sheet presentation between MRC Global and DNOW:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Represents a reclassification of MRC Global "Cash" to Cash and cash equivalents".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Represents a reclassification of MRC Global "Accounts receivables, net" to "Receivables,
net".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Represents a reclassification of MRC Global "Other current assets" to "Prepaid and other
current assets".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Represents a reclassification of MRC Global finance lease right-of-use assets balance recorded in "Other assets" to "Property, plant and equipment, net".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Represents a reclassification of DNOW operating lease right-of-use assets balance from "Other assets" to "Operating lease assets", as the balance is individually significant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Represents a reclassification of MRC Global "Goodwill, net" to "Goodwill".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Represents a reclassification of MRC Global "Other intangible assets, net" to "Intangibles,
net".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Represents a reclassification of MRC Global "Trade accounts payable" to "Accounts
payable".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Represents a reclassification of MRC Global contract liabilities and taxes (non-income) in the amount of $114 million in "Accrued expenses and other current liabilities" to "Accrued liabilities".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) Represents a reclassification of MRC Global income tax payable in "Accrued expenses and other current
liabilities" to "Other current liabilities".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) Represents a reclassification of DNOW operating lease liabilities balance in "Accrued liabilities"
to "Operating lease liabilities", as the balance is individually significant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) Represents a reclassification of MRC Global "Other liabilities" to "Other long-term
liabilities".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) Represents a reclassification of MRC Global "Retained deficit" to "Accumulated
deficit".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) [Reserved]

The following reclassification adjustments were made to conform with statement of operations presentation of MRC Global and DNOW:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) Represents a reclassification of MRC Global "Sales" to "Revenue".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) Represents a reclassification of MRC Global "Cost of sales" to "Cost of products",
excluding the depreciation expense which is adjusted in 4(q) below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) Represents a reclassification of MRC Global depreciation expense in the amount of $18 million and
$21 million, for the nine months ended September 30, 2025 and the year ended December 31, 2024, respectively, from "Cost of sales" to "Warehousing, selling and administrative".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) Represents a reclassification of MRC Global "Selling, general and administrative expenses" to
"Warehousing, selling and administrative".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) Represents a reclassification of MRC Global "Interest expense" to "Other income
(expense)".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) Represents a reclassification of MRC Global "Other, net" to "Other income (expense)".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) Represents a reclassification of MRC Global "Income tax expense from continuing operations" to
"Income tax provision".

------

**Note 5. Adjustments to Unaudited Pro Forma Combined Balance Sheet** 

Merger adjustments include the following adjustments related to the unaudited pro forma combined balance sheet as of September 30, 2025, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Represents the adjustments to the carrying value of inventories and property, plant and equipment were recorded
to the estimated fair value. The calculated value is preliminary and subject to change and could vary materially from the final purchase price assignment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Represents a net adjustment to goodwill to reflect the balance that would have been recorded if the Mergers
occurred on September 30, 2025. The preliminary purchase price to the net tangible and intangible assets based upon their estimated fair values at the closing date of the Mergers. The excess of the purchase price over the estimated fair values
of the net assets acquired has been recorded to goodwill as of September 30, 2025. The calculated value is preliminary, subject to change and could vary materially from the final purchase price assignment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Represents a net adjustment of $289 million to the carrying value of "Intangibles, net" to
recognize the estimated fair value of intangible assets acquired. The calculated value is preliminary and subject to change and could vary materially from the final purchase price assignment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Represents a net adjustment of $12 million for the remeasurement of operating and finance lease right-of-use assets. The calculated value is preliminary and subject to change and could vary materially from the final purchase price assignment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Represents the identified tax basis differences between the fair value and historical carrying value of the
assets acquired, which has been tax effected using a blended statutory tax rate of 25%. This rate may vary from the effective tax rate of the historical and combined businesses. The estimate of deferred tax balances is preliminary and is subject to
change based upon certain factors including final determination of the fair value of assets acquired and liabilities assumed and deductible non-recurring items by taxing jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Represents a net adjustment of $27 million to increase other assets to recognize the estimated fair value
from the purchase price allocation. The calculated value is preliminary and subject to change and could vary materially from the final purchase price assignment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Represents the repayment of existing indebtedness of MRC Global with an outstanding balance of approximately
$477 million as of September 30, 2025, including the net of discount and issuance costs of approximately $6 million and accrued interest of approximately $1 million. There is no penalty associated with prepayment of MRC
Global's existing indebtedness.

DNOW intends to use $212 million of cash on hand and the proceeds from a draw of $265 million from its existing senior secured asset-based credit facility (which was amended on the closing date to, among other things, provide for an $850 million revolving credit facility), to pay off MRC Global's outstanding credit facility and term loan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Represents the settlement of the estimated transaction costs to be incurred by DNOW in connection with the
Mergers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The changes to equity associated with the Mergers as of September 30, 2025 are as follows:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **(Amounts in millions)** | **Common<br>stock** | **Treasury<br>stock** | **Additional<br>paid-in<br>capital** | **Accumulated<br>deficit** | **Accumulated<br>other<br>comprehensive<br>loss** | **Pro forma<br>net<br>adjustment<br>to equity** |
|  Elimination of MRC Global's Historical Equity<sup>(1)</sup> | $(1) | $390 | $(1998) | $670 | $195 | $(744) |
|  Issuance of DNOW common stock<sup>(2)</sup> | 1 |  | 1196 |  |  | 1197 |
|  Settlement of the accrued and additional estimated DNOW<sup>(3)</sup> transaction costs associated with the Mergers |  |  |  | (32) |  | (32) |
|  Estimated repayment of certain existing indebtedness of MRC Global<sup>(4)</sup> |  |  | 477 |  |  | 477 |
|  Elimination of MRC Global's Historical Goodwill<sup>(5)</sup> |  |  | (264) |  |  | (264) |
|  | $**—** | $**390** | $**(589)** | $**638** | $**195** | $**634** |

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<sup>(1)</sup> Represents the elimination of MRC Global's historical equity balances as of September 30, 2025.

<sup>(2)</sup> Represents the issuance of 81,374,745 shares of DNOW common stock based on the closing price of $14.56 per share on November 5, 2025, and the fair value of assumed MRC Global awards attributable to pre-combination services. 

<sup>(3)</sup> Represents the adjustment to accumulated deficit for the settlement of the estimated transaction costs to be incurred by DNOW in connection with the Mergers.

<sup>(4)</sup> Represents the repayment of existing indebtedness of MRC Global with an outstanding balance of approximately $477 million as of September 30, 2025, including accrued interest, that is not being legally assumed in the Mergers. 

<sup>(5)</sup> Represents the elimination of MRC Global's historical goodwill balance as of September 30, 2025.

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**Note 6. Adjustments to the Unaudited Pro Forma Combined Statements of Operations** 

Merger adjustments include the following adjustments related to the unaudited pro forma combined statements of operations for the nine months ended September 30, 2025, and for the year ended December 31, 2024, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Represents the increase to cost of products by the amount related to the inventory fair value step up, which
was described in Note 5(a) and expected to be sold within one year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Represents a net adjustment of $8 million and $9 million for the nine months ended September 30,
2025, and the year ended December 31, 2024, respectively, to (1) reflect the removal of historical amortization expense related to cost of products and (2) recognize amortization expense related to intangible assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Represents a net adjustment of ($10) million and ($11) million for the nine months ended September 30,
2025, and the year ended December 31, 2024, respectively, to (1) reflect the removal of historical depreciation expense related to warehousing, selling and administrative and (2) recognize depreciation related to tangible assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Represents the recognition of new stock-based compensation expense for the post-combination portion of the
cancelled and exchanged MRC Global equity awards.

As the 2022 and 2023 MRC Global RSUs and MRC Global PSUs, if any, were settled at closing with no future service required, the value of these awards was recognized as part of Merger Consideration.

It is being assumed that MRC Global RSAs and certain of the awards of the 2024 and 2025 MRC Global RSUs, and MRC Global PSUs have a contractual provision that effected the accelerated vesting of those awards resulting in the entire post-combination portion of these awards being recognized as compensation expense immediately after the closing of the Mergers.

The remaining 2024 and 2025 MRC Global RSUs and MRC Global PSUs are considered cancelled and exchanged for DNOW RSUs with the incremental value of the awards being recorded post-combination due to services to be performed after the closing of the Mergers.

The following table illustrates the stock-based compensation adjustments made to "Warehouse, selling and administrative expense":

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| | | |
|:---|:---|:---|
| **(Amounts in millions)** | **For the nine<br>months ended<br>September 30, 2025** | **For the year ended<br>December 31, 2024** |
|  Compensation expense for the post-combination portion of the cancelled and converted MRC Global RSUs<sup>(1)</sup> | $1 | $3 |
|  Compensation expense for the post-combination portion of to the cancelled and converted MRC Global PSUs<sup>(2)</sup> |  | 1 |
|  Removal of historical stock-based compensation expense related to the cancelled and converted MRC Global RSUs and PSUs | (6) | (8) |
|  **Net adjustment to warehouse, selling and administrative expense** | $**(5)** | $**(4)** |

---

<sup>(1)</sup> Represents the recognition of new stock-based compensation expense for the post-combination portion of the cancelled and converted MRC Global RSUs.

<sup>(2)</sup> Represents the recognition of new stock-based compensation expense for the post-combination portion of the cancelled and converted MRC Global PSUs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Represents the one-time direct and incremental transaction costs in the
amount of $37 million anticipated to be incurred by DNOW prior to, or concurrent with, the Mergers and are reflected in the unaudited pro forma condensed consolidated balance sheet as a direct reduction to the combined entity's
accumulated deficit and are assumed to be cash settled.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Represents the interest expense, in the amount of $9 million and $15 million for the nine months
ended September 30, 2025 and the year ended December 31, 2024, respectively, associated with DNOW's $265 million drawing from its existing senior secured revolving credit facility to pay off MRC Global's existing
indebtedness. Interest expense is calculated using an effective interest rate. The effective interest rate for the senior secured revolving credit facility hereby was 6.3%.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Represents the removal of interest expense associated with MRC Global's existing indebtedness.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Represents the pro forma effects of the transaction of the Other Acquisitions that were completed during the
year ended December 31, 2024. The pro forma is presented as if the acquisitions occurred on January 1, 2024. The tax rate is based on the average blended federal and state rate for the period. The actual tax effect of the 2024 acquisitions
will differ from the pro forma adjustments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Represents an adjustment of $7 million and ($14) million for the nine months ended September 30,
2025, and year ended December 31, 2024, respectively, to reflect the tax effect of the adjustments above at a blended statutory income tax rate of approximately 25%. The effective tax rate of the combined company could be significantly
different (either higher or lower) depending on activities following the consummation of the Mergers, including cash needs, the geographical mix of income, and changes in tax law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) Represents the severance pay in the amount of $27 million to record (1) stock-based compensation
expense related to MRC Global PSUs and MRC Global RSUs for which the service-based and performance-based vesting conditions are expected to be satisfied in connection with the Mergers, and (2) certain severance to be paid to executives
terminated upon change-in-control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) This represents the elimination of MRC Global's historical income impact from the settlement of preferred
shares that are not part of the Mergers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) Pro forma basic earnings per share attributable to holders of DNOW common stock (the "DNOW
stockholders") is calculated using the historical basic weighted average shares of DNOW common stock outstanding, adjusted for the additional shares to be issued to holders of MRC Global common stock and holders of MRC Global equity awards.
Pro forma diluted earnings per share attributable to DNOW stockholders is calculated using the historical diluted weighted average shares of DNOW common stock outstanding, adjusted for the additional shares to be issued to holders of MRC Global
common stock excluding the DNOW assumed MRC Global RSUs and PSUs as those are not participating securities.

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---

| | |
|:---|:---|
|  | **For the**<br>**Nine Months Ended<br>September 30, 2025** |
|  | (in millions, except share data) |
|  **Numerator:** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income attributable to DNOW | $103 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income attributable to participating securities | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income attributable to DNOW stockholders | $102 |
|  **Denominator:** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Historical weighted average shares of DNOW common stock outstanding (basic) | 105478443 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shares of DNOW common stock to be issued to MRC Global stockholders pursuant to the Merger Agreement<sup>(1)</sup> Pro forma weighted average shares (basic) | 81374745 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Historical weighted average shares of DNOW common stock outstanding (diluted) | 186853188 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DNOW common stock to be issued to MRC Global stockholders pursuant to the Merger Agreement<sup>(1)</sup>  | 106115255 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pro forma weighted average shares (diluted) | 81374745 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pro forma earnings per share of DNOW common stock attributable to DNOW stockholders: | 187490000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Basic | $0.55 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Diluted | $0.54 |

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(1) Includes the cancellation and exchange of all 85,756,924 issued and outstanding shares of MRC Global common
stock (including 764,262 shares underlying MRC Global RSAs, MRC Global RSUs and MRC Global PSUs subjected to accelerated vesting upon change in control) as of November 6, 2025, into an aggregate of 81,374,745 shares of DNOW common stock.

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| | |
|:---|:---|
|  | **For the**<br>**Twelve Months Ended<br>December 31, 2024** |
|  | (in millions, except share data) |
|  **Numerator:** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pro forma net income attributable to DNOW | $138 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net income attributable to participating securities | (2) |
|  Net income attributable to DNOW stockholders | $136 |
|  **Denominator:** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Historical weighted average shares of DNOW common stock outstanding (basic) | 106354586 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DNOW common stock to be issued to MRC Global stockholders pursuant to the Merger Agreement<sup>(1)</sup>  | 81374745 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pro forma weighted average shares (basic) | 187729331 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Historical weighted average shares of DNOW common stock outstanding (diluted) | 107148410 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DNOW common stock to be issued to MRC Global stockholders pursuant to the Merger Agreement<sup>(1)</sup>  | 81374745 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pro forma weighted average shares (diluted) | 188523155 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pro forma earnings per share attributable to DNOW stockholders: |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Basic | $0.72 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Diluted | $0.72 |

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(1) Includes the cancellation and exchange of all 85,756,924 issued and outstanding shares of MRC Global common
stock (including 764,262 shares underlying MRC Global RSAs, MRC Global RSUs and MRC Global PSUs subjected to accelerated vesting upon change in control) as of November 6, 2025, into an aggregate of 81,374,745 shares of DNOW common stock.