DNOW (DNOW) risk factors, FY2024 10-K

Risks Relating to Our Business

1. 01Decreased capital and other expenditures in the energy industry, which can result from decreased oil and natural gas prices, among other things, can adversely impact our customers’ demand for our products and our revenue
2. 02environmental regulations
3. 03Volatile oil and gas prices affect demand for our products
4. 04General economic and geopolitical conditions may adversely affect our business
5. 05If our product costs became subject to significant future inflationary pressures, then we may not be able to fully offset these higher costs through price increases
6. 06We may be unable to compete successfully with other companies in our industry
7. 07improvements in availability and delivery
8. 08Demand for our sales of the products we distribute could decrease if the manufacturers of those products were to instead sell a substantial amount of goods directly to our customers in the sectors we serve
9. 09We may need additional capital in the future, and it may not be available on acceptable terms, or at all
10. 10respond to potential strategic opportunities, such as investments, acquisitions and international expansion
11. 11Changes in our customer and product mix could cause our product margin to fluctuate or affect our competitive position
12. 12Customer credit risks could result in losses
13. 13We may be unable to successfully execute or effectively integrate acquisitions
14. 14We are a holding company and depend upon our subsidiaries for our cash flow
15. 15The ability of our subsidiaries to make any payments to us will depend on their earnings, the terms of their current and future indebtedness, tax considerations and legal and contractual restrictions on the ability to make distributions
16. 16If we lose any of our key personnel, we may be unable to effectively manage our business or continue our growth
17. 17Interruptions in the proper functioning of our information systems could disrupt operations and cause increases in costs or decreases in revenues
18. 18The loss of third-party transportation providers upon whom we depend, or conditions negatively affecting the transportation industry, could increase our costs or cause a disruption in our operations
19. 19Adverse weather events or natural disasters could negatively affect local economies and disrupt operations
20. 20The occurrence of cyber incidents, or a deficiency in our cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information or damage to our Company’s image, all of which could negatively impact our financial results
21. 21Privacy concerns relating to our personal and business information being potentially breached could damage our reputation and deter current and potential users or customers from using our products and services
22. 22We have goodwill recorded on our balance sheet. If our goodwill becomes impaired, we may be required to recognize charges that would reduce our income

Risks Relating to Our Supply Chain and International Trade Policies

1. 23We may experience unexpected supply shortages
2. 24We may experience cost increases from suppliers, which we may be unable to pass on to our customers
3. 25Changes in our credit profile may affect our relationship with our suppliers, which could have a material adverse effect on our liquidity
4. 26A substantial decrease in the price of steel could significantly lower our product margin or cash flow
5. 27If steel prices rise, we may be unable to pass along the cost increases to our customers
6. 28If existing tariffs and duties on imports of line pipe or certain of the other products that we sell are lifted, the U.S. market could see an increased supply of less expensive products, which could adversely affect our business and results of operations
7. 29Changes in trade policies, including the imposition or elimination of additional tariffs and duties, could negatively impact our business, financial condition and results of operations

Risks Relating to Legal and Regulatory Matters

1. 30We are subject to strict environmental, health and safety laws and regulations that may lead to significant liabilities and have a material adverse effect on our business, financial condition and results of operations
2. 31We may not have adequate insurance for potential liabilities, including liabilities arising from litigation
3. 32the dollar amount of any liabilities may exceed our policy limits
4. 33Due to our position as a distributor, we are subject to personal injury, product liability and environmental claims involving allegedly defective products
5. 34We face risks associated with conducting business in markets outside of the U.S. and Canada
6. 35If we begin doing business in a foreign country in which we do not presently operate, we may also face difficulties in operations and diversion of management time in connection with establishing our business there
7. 36Compliance with and changes in laws and regulations in the countries in which we operate could have a significant financial impact and effect how and where we conduct our operations

Risks Relating to Our Common Stock

1. 37The market price of our shares may fluctuate widely
2. 38the other factors described in these “Risk Factors” and elsewhere in this Form 10-K
3. 39Your percentage ownership in us may be diluted in the future
4. 40We cannot assure you that we will pay dividends on our common stock
5. 41Certain provisions in our corporate documents and Delaware law may prevent or delay an acquisition of our company, even if that change may be considered beneficial by some of our stockholders
6. 42establishing advance notice requirements for nominations of candidates for election to our Board of Directors or for stockholder proposals