Welcome to the NOW Inc. Q4 2022 Earnings Conference Call. My name is Adam, and I'll be the operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. I will now turn the call over to Vice President of Digital Strategy and Investor Relations, Brad Wise. Mr. Wise, you may begin. Thank you, Adam, and good morning, and welcome to NOW Inc.'s Q4 and Full Year 2022 Earnings Conference Call. We appreciate you joining us, and thank you for your interest in NOW Inc. With me today is David Cherechinsky, President and Chief Executive Officer, and Mark Johnson, Senior Vice President and Chief Financial Officer. We operate primarily under the DistributionNOW and DNOW brands, and you'll hear us refer to Distribution NOW and DNOW, which is our New York Stock Exchange ticker symbol, during our conversation this morning. Please note that some of the statements we make during this call, including the responses to your questions, may contain forecasts, projections, and estimates, including, but not limited to, comments about our outlook for the company's business. These are forward-looking statements within the meaning of the U.S. federal securities laws based on limited information as of February 16, 2023, which is subject to change. They are subject to risks and uncertainties. Actual results may differ materially. No one should assume that these forward-looking statements remain valid later in the quarter or later in the year. We do not undertake any obligation to publicly update or revise any forward-looking statements for any reason. In addition, this conference call contains time-sensitive information that reflects management's best judgment at the time of the live call. I refer you to our latest Forms 10-K and 10-Q that NOW Inc. has on file with the U.S. Securities and Exchange Commission for a more detailed discussion of the major risk factors affecting our business. Further information as well as supplemental financial and operating information may be found within our earnings release on our website at ir.dnow.com or in our filings with the SEC. In an effort to provide investors with additional information relative to our results as determined by US GAAP, you'll note that we also disclose various non-GAAP financial measures, including EBITDA excluding other costs, sometimes referred to as EBITDA, net income attributable to NOW Inc. excluding other costs and diluted earnings per share attributable to NOW Inc. excluding other costs. Each excludes the impact of certain other costs and therefore have not been calculated in accordance with GAAP. Please refer to a reconciliation of each of these non-GAAP financial measures to its most comparable GAAP financial measure and the supplemental information available at the end of our earnings release. As of this morning, the investor relations section of our website contains a presentation covering our results and key takeaways for the Q4 and Full Year 2022. A replay of today's call will be available on our site for the next 30 days. We plan to file our 2022 Form 10-K today, and it will also be available on our website. Let me turn the call over to Dave. Thanks, Brad. Good morning, everyone. 2 years ago this week, Mark, Brad, and I were shivering in this office on our earnings call, running on limited backup power during the Great Texas Freeze Winter Storm Uri. That storm brought the coldest temperatures in over 7 decades to Texas in a cold snap that impacted millions of people from Texas to the Canadian border. We had no power, and more chilling, had no earnings in the year just ended, 2020. The roads were impassable, the path to the future uncertain. Misery pervaded the whole economy. There were some things at that time I was certain about how a new DNOW could transform itself and thrive. One, we knew that the single most important factor in successfully implementing a strategy, path, be fully committed, be disciplined, and to purposefully reject the temptation by those marginal distractions which would dilute our strengths. Simply put, build on and get better at what we're good at, equip our people, allocate talent and time where our customers see value, and let the other guys deal in distractions. Two, we messaged exhaustively about deliberately high-grading our business. By that we mean focusing on higher-margin manufacturers, businesses, product lines, locations, and activities to deliver strong gross margins, irrespective of inevitable commodity price gravity. Be selective, manage mix, and maximize margins. We pick partners as suppliers, expect partnership reciprocity, commit purchases, purchase volumes to them, honor our commitments, promote their brands, and deliberately promote value. Three, our primary operational objective was to increase customer intimacy, improve product availability, manage projects, and deploy ample inventory stocks regionally, ultimately redesigning our PVF distribution business by deploying a more efficient fulfillment model, moving from a highly autonomous branch model to a more cohesive regional super center posture. This transformation was a predicate to improving product availability and value for our customers, providing better support to our suppliers, enabling higher levels of productivity while better managing downside risk. Our operations strategy places a premium on order accuracy, adherence to customer specifications, and on-time delivery, and our customers are rewarding us for doing so. Lastly, number four, we said we'd win the market through the careful cultivation of a world-class sales team. We would provide unmatched customer attention with a bias towards solutions and value without relying on price as a lure. Our sales teams place a premium on returning value to our customers by truly understanding their challenges in articulating DNOW's proprietary solutions. The competitive spirit of our sales professionals has helped create a true culture of winning within DNOW, and the technical acumen and supply chain expertise they provide to customers has proven to be of vital importance in an era of supply chain disruption and capital discipline. Although every one of our employees brought about this DNOW renaissance, I want to directly thank and cheer our top sales leadership for enduring the corporate pivot, for promoting changes internally into the market, for leading with confidence and attitude, and delivering a much more profitable enterprise, which, without them, would otherwise be impossible. I'll hit some of the financial highlights. Q4 revenue was $547 million, lower sequentially by 5%, at the better end of our guide provided on the last call. For the Full Year 2022, revenues were $2.136 billion. In Q4 2022, overall gross margin was unchanged at 24.1%. Our Full Year 2022 gross margin was 23.7%, up 180 basis points from the Full Year 2021 levels, where 2021 was itself a record gross margin year in its own right. For the Q4, EBITDA was $47 million or 8.6% of revenue. Strong performance, especially in a period with seasonal and holiday headwinds. For the Full Year 2022, EBITDA was $175 million or 8.2% of revenue, a consequential turning point for the company, setting the stage for a significantly improved earnings power and cash flows into the future. During the H2 of 2022, we generated $48 million in free cash flow. On a full year basis, in a year where we increased revenue over $500 million, added over $130 million in inventory for our customers, and $9 million in infrastructure and rental equipment, we had zero consumption of cash from operations and only consumed $9 million in free cash flow in 2022. Additionally, to fortify our U.S. Process Solutions business, we completed two acquisitions in December of 2022, building on DNOW's pump and engineered process equipment capabilities. These acquisitions strengthen DNOW's value to customers and open up additional opportunities in energy evolution. One of the patented solutions we acquired provides customers with dual value proposition of improved gas recovery, as well as emissions reductions within traditional oil and gas, and the elimination of flaring. It also expands our reach into the renewable natural gas or RNG market. Our second December acquisition grows our market-leading pump position in the Permian area by expanding our customer relationships, customer base, and our capabilities on aftermarket service and pump repair. Some comments on a regional basis. In the U.S., revenue was $414 million, $21 million lower sequentially, down 5% due to predicted seasonal impacts. Product margins declined slightly as non-pipe product lines partially offset some margin compression on steel-lined pipe, which we expected to happen and mentioned on the last few calls. Gross margins were flat as vendor consideration in the Q4 grew due to achieving higher purchase volumes. During the quarter, we began operations for our newest super center, or mega center, as I mentioned on the previous call, located in Williston, North Dakota, strategically positioned right in the heart of the Bakken play. This new facility afforded us the opportunity to optimize our regional footprint by consolidating several of our standalone businesses. Not only does our Williston mega center house our U.S. energy pipe, valves, and fittings regional operations, but it also includes other DNOW product lines, such as TS&M Supply Fiberglass and FlexFlow. We experienced a number of market share wins in the Q4 as customers realized the benefits in our ability to lower their operating costs by partnering with DNOW in customized supply chain solutions. We also delivered several large pipe orders during the Q4 for a utilities company in the Southeast and an operator in the Gulf of Mexico, totaling more than $12 million, which drove our strong Q4 revenue beat. Those $12 million in orders are not expected to recur in the Q1 of 2023. In the midstream sector, we continue to supply steel and fiberglass pipe, actuated valves, and fittings for our natural gas transmission customers. Notable projects include new compressor stations, compressor upgrades to existing stations, and pipeline expansion products across the U.S. In the downstream sector, customer spending during the quarter remained strong as several of our refining and chemical customers pulled in PVF and consumable deliveries before year-end to prepare for Q1 2023 turnarounds. In our U.S. Process Solutions business, we saw demand for our fabricated equipment packages increase as orders continue to be placed heading into 2023. We experienced demand for vessels for tank battery construction, as well as LACT units, meter skids, launcher receivers, and water transfer units as midstream activity picked up in response to the steady increase in drilling and completion activity over the past few quarters. Outside of oil and gas, we provided air compressor packages and vertical turbine pump from mine operations for rare earth minerals extraction. For our pump distribution businesses, we experienced steady demand for pump packages for oil and gas, tank battery construction, SWD construction, and midstream projects. We look to continue to diversify our end markets and drive incremental revenue gains from projects that are upgrading or expanding municipal water districts. In our FlexFlow product line, demand for our trailer-mounted horizontal rental pumps is picking up steam as drilling and completion activity and SWD permitting drives demand to transfer and dispose of increased quantities of produced water. We are currently making investments by upgrading some of our mobile fleet in response to increased market demand as extended delivery times for permanent SWD units persist. In Canada, revenue was $75 million for the quarter, a 13% decrease sequentially, primarily due to a seasonal impacts as expected, and revenue was up 4% year-over-year. Overall, we delivered impressive results, yielding a Full Year Canadian operating profit of 9.5%, a record for our Canadian segment. During the quarter, we invested in our Canadian operations as we begin initial work in upgrading to a new supercenter location in Alberta, with the work scheduled to be completed in the H1 of 2023. It will house multiple business units under the same roof line, maximizing the synergies and value we can deliver for our customers while fostering more collaboration and promote a higher level of teamwork. The workspace will be more modern and will reduce our environmental impact as we adopt the use of a solar integration system and other lighting energy efficiencies. Furthermore, the new facility will help offset rising facility and tax operating expenses when compared to our older facilities. For international, revenue is $58 million, increasing sequentially by $2 million. Market conditions are steadily improving in most of the areas we serve as numerous countries seek to balance their investments in energy security, affordability, and sustainability. In the UK, we have seen a return to growth as market activity is increasing both offshore and onshore, where we see higher order inquiries for cable, valves, safety, and bulk electrical products from our MacLean Distribution brand. Activity for West Africa increased as we supply major IOCs with gas detection sensors, power cable, and electrical bulks through our export model based in the UK. In Norway, we are seeing activity increase as joint contractor and service company OEMs ramp up development of subsea and related surface projects. In the Middle East, we are seeing opportunities pick up as rig activations increase, drilling and well servicing ramps up, and EPC projects materialize from NOCs across the GCC countries. During the Q4, we supplied a variety of pipe to an NOC in the Middle East, and towards the end of the Q4, invested in future revenue as we increased our local pipe inventory investments by over $5 million. We also experienced an increase in orders for drilling products to support rig count growth and activations in the regions. We remain upbeat about our international segment, where we see activity increasing and market conditions becoming more favorable. Now I'd like to make a few comments related to energy security and the energy evolution. In the Q4, we, with an IOC operator in the Permian, we worked directly with their greenhouse gas capture project team to provide PVF, instrument air packages, and flare retrofit products that reduced their greenhouse gas emissions, and we expect more projects like this to continue into 2023. We provided PVF products in support of a turnaround for a renewable diesel project at an oil refinery. In the midstream space, we supplied PVF to an operator for a transmission line used to transmit CO2 for enhanced oil recovery. Finally, we provide products for an expansion project in the Gulf Coast for a carbon capture facility. Moving on to our digital initiatives, our digital revenue as a percent of total SAP revenue for the quarter increased to 46% as we continue to leverage technology, automate processes, and work with customers to integrate our systems and leverage digital technologies to streamline the procure-to-pay process. A big focus of ours has been on integrating PunchOut catalogs for customers who want to leverage our digital catalogs to transact electronically by populating the requisitions and purchase orders digitally, providing a fast and efficient means to order processing. We continue to provide meaningful data to our supply chain program customers, which helps them better understand and analyze how their day-to-day processes impact their supply chain, and thus provides a framework for collaboration by optimizing and improving workflow processes. We are leveraging our AccessNOW technology to provide 24/7 secured access and inventory control to products that are on-site location at a major refinery in the Gulf Coast. Finally, I'm excited about OptiWatch, a digital monitoring service offering from our FlexFlow business, targeting customers who own and operate permanent horizontal pumping units operating on a permitted saltwater disposal site. Our service monitors the health and operating performance of horizontal pumps by using the data collected to predict future maintenance events that could lead to unplanned maintenance, significantly improving the runtime or reducing the downtime on operating units. Furthermore, our service identifies inefficiencies that may cause excessive power draw. Using our performance-based algorithms, we can adjust the pump operating performance, resulting in improved operating efficiencies, yielding a net benefit, and lowering the customer's operating expenses. As an added benefit, it also helps to lower customers' CO2 equivalent consumption values, thus potentially improving their respective ESG scores. With that, let me hand it over to Mark. Thank you, Dave. Good morning, everyone. Total Q4 2022 revenue was $547 million, down 5% or $30 million from the Q3. On a year-over-year basis, the 2022 Q4 revenue was up $115 million or 27%. On a full year basis, total 2022 revenue was $2.1 billion, up more than $500 million from 2021 or an increase of 31%. EBITDA, excluding other costs or EBITDA for the Q4, was $47 million or 8.6% of revenue, nearly tripling the EBITDA dollars delivered one year ago. On a full year basis, total 2022 EBITDA reached 8.2% of revenue or $175 million, nearly 4x the EBITDA dollars delivered in 2021. This marks the Q3 in a row that our quarterly EBITDA dollars surpassed the EBITDA produced for the Full Year of 2021. EBITDA to revenue flow-throughs were 20% sequentially and 26% year-over-year as a result of our team's execution and strategic focus. The U.S. revenue for the Q4 was $414 million, down $21 million or 5% sequentially, driven by seasonal impacts of the holidays and fewer working days. 2022 U.S. revenue totaled $1.591 billion for the full year, up 37% or $428 million from 2021. Our U.S. energy centers contributed approximately 76% of total U.S. revenues for the Q4, with our U.S. Process Solutions group contributing the other 24%. On a full year basis, US energy centers contributed approximately 78% of total US revenues in 2022, with U.S. Process Solutions contributing 22%. Turning to Canada for the Q4, revenue was $75 million, down $11 million or 13% from the Q3 of 2022, on fewer rigs and the primary result of customer projects delivered in the Q3, as we discussed on our last call, and a 4% negative impact of foreign currency due to a stronger US dollar. On a full year basis, Canada revenue totaled $315 million, an increase of $66 million or 27% when compared to 2021, despite a negative foreign currency impact of 4% or approximately $12 million year-over-year. International revenue for the Q4 of 2022 was $58 million, up $2 million sequentially. On a full year basis, international revenue totaled $230 million, an increase of $10 million or 5% when compared to 2021, largely impacted by 7% negative foreign currency impact, approximately $16 million. Our Q4 gross margins remained flat from the Q3 at 24.1%, buoyed by increased vendor consideration levels, which we do not expect to repeat and will be lower in the Q1 of 2023 as purchase volume thresholds reset and helped offset a modest decline in product margins due to product and project mix. On a full year basis, gross margin for 2022 was 23.7% compared to 21.9% in 2021. The 180 basis point improvement was driven by a combination of factors, including the intentional action of selectively prioritizing resources to accretive business and our product margins benefited from product inflation in the period, which has started to moderate, especially on line pipe. Warehousing, selling, and administrative expense, or WSA, for the quarter was $97 million, up $2 million sequentially and up $6 million year-over-year. The majority of the increase in WSA in 2022 compared to last year was driven by higher variable compensation expense from the increase in revenue and performance. Looking back one year ago to Q4 of 2021, we expanded quarterly revenue by $115 million, yet only added $6 million in quarterly WSA, or about 5% of the increase in revenue, demonstrating improved efficiencies in our ability to leverage our cost base. Moving to operating profit by our geographic segments. In the Q4, the US delivered $26 million in operating profit or 6.3% of revenue, and Canada delivered $7 million in operating profit or 9.3% of revenue. The international segment reported $2 million in operating profit or 3.4% of revenue in the Q4 of 2022. Moving to income taxes on a GAAP basis, the effective tax rates for the 3 and 12 months ended December 31, 2022 were 5.9% and 7.2% respectively. I remind you this is the effective tax rate as calculated from the face of the income statement and is below the typically expected tax rate at these earnings levels, as our tax provision includes a favorable tax benefit impact from changes in the tax valuation allowance on our deferred tax assets. As such, this is why when imputing our non-GAAP tax rate, we exclude such tax benefit. For modeling purposes, the non-GAAP effective tax rate was approximately 26% for 2022, and 26%-28% is a reasonable proxy for the effective tax rate for the go-forward quarter and year when excluding other costs. Net income attributable to NOW Inc. for the Q4 was $32 million, or $0.28 per fully diluted share. On a non-GAAP basis, Q4 2022 net income attributable to NOW Inc., excluding other costs, was $29 million, or $0.25 per fully diluted share. Moving to the balance sheet, at the end of the year, we had 0 debt and a cash position of $212 million. Cash decreased $55 million in the Q4, primarily related to the successful completion of two acquisitions totaling $59 million in the quarter. In the Q4, we reported $5 million of depreciation and amortization and $19 million for the Full Year 2022. In the Q1 of 2023, we expect quarterly depreciation and amortization expense to increase to $6 million as a result of our Q4 acquisitions. We ended the year with total liquidity of $564 million, which comprises our net cash position and $352 million in additional credit facility availability. Accounts receivable was $398 million, a decrease of 2% or $8 million from the Q3. Inventory was $381 million at year-end, and we invested $20 million in additional inventory in the Q4 that caused a slight drag to quarterly inventory turn rates that equaled 4.4x. I will highlight a portion of our Q4 inventory investment was specifically procured to support several customers in our international segment with growth forecasted in 2023. Accounts payable was $304 million, a decrease of $35 million from the Q3. For the Q4 of 2022, working capital excluding cash as a percentage of our Q4 annualized revenue was approximately 16.7%. Cash flow provided by operations was $6 million in the quarter, which drove positive free cash flow of $4 million in the Q4 after considering the $2 million in capital expenditures. Capital expenditures for Full Year 2022 was $9 million as we invested in operating equipment and facilities to enhance efficiencies and increase service levels to our customers. Looking back at 2022, it was a story of two halves as working capital investments in the H1 of 2022 contributed to a net consumption of $51 million in cash from operations. Compared to the last two quarters of 2022, when we generated $51 million in cash from operations in the H2 of the year on a lower build in working capital and improved earnings, thus bringing Full Year 2022 cash from operations to 0. When taking into account our $9 million of capital expenditures in 2022, the Full Year 2022 free cash flow was a use of $9 million. This year marks a significant milestone for our business and one with important implications about our cash flow generation potential. In 2022, we demonstrated our ability to expand our business 31% without consuming cash from operations, a remarkable feat for a distribution business that traditionally generates countercyclical cash flows. This shows how our actions over the past few years have positioned DNOW to generate cash through the cycles, which bodes well for our future aspirations and capital allocation plans. In the Q4, we continued to execute on our share repurchase program with additional repurchases of $3 million at an average share price of $11.50. As of December 31, 2022, we repurchased $7 million of our $80 million authorized share repurchase program at an average share price of $10.82. Our commitment to growing the company through acquisitions and organic growth remains a top priority, while also having the ability to repurchase shares opportunistically as we use the tools in our broadened capital allocation framework to generate attractive shareholder returns without deviating from our disciplined approach to balance sheet management. We continue to be debt-free, have no interest payments, and remain meticulous with our disciplined capital allocation strategy. Delivery on cash flow generation is a priority, effective working capital management, and maintaining our strong liquidity and financial position. With that, let me turn the call back to Dave. Thank you, Mark. It's our intention to play a bigger, more active role in the energy evolution. We see a growing number of opportunities where DNOW can collaborate with our customers to reduce their Scope 1, 2, and 3 emissions with the products we provide, combined with our supply chain services and digital offerings. We are helping our customers work towards meeting their greenhouse gas emission reduction goals, working closely with their corporate-focused ESG teams to identify and eliminate greenhouse gas emissions by upgrading their aging oil and gas PVF infrastructure, replacing gas pneumatic systems with compressed air systems, and partnering with our supply chain management teams in areas that lead to emission reductions tied to improved supply chain efficiencies related to materials management and logistics to support their production. I'm proud of the positive impact our DNOW employees are having on our industry, not only reflecting on our own ESG journey, but positioning DNOW as a more important contributor to our customers. We have seen many of our customers set goals to reduce or eliminate flaring. I point out ExxonMobil's recent announcement to end flaring in Permian and earmarking some $17 billion on reducing its emissions by 2027, according to a January Reuters report. In an effort to tap into this demand and expand on the contribution we are making in lowering our customers' emissions, I'm happy to announce that in December 2022, DNOW further expanded our set of energy evolution and ESG solutions by completing the acquisition of EcoVapor Recovery Systems. EcoVapor has a unique position in the oil and gas sector. Its patented process technology addresses the venting and flaring of gas from oil and water tank batteries, allowing operators to reduce emissions while generating revenue from the sale of the additional gas. Oxygen contamination in storage tanks is common due to low tank operating pressure, resulting in a captured gas product that exceeds the allowable percentage of volume, and therefore, cannot be sold to local gas gatherers and midstream facilities. Operators have had little recourse other than flaring this gas, a waste of energy, and a source of carbon and nitrous oxide emissions. EcoVapor's patented ZerO2 product, short for Zero Oxygen, addresses this common problem and is highly effective in reducing oxygen content to meet pipeline specifications. The value is simple. The ZerO2 treats what was a source of emissions and allows the captured gas to be sold for additional revenue. There is abundant evidence that tank batteries are one of the principal sources of emissions in the upstream production inventory industry. EcoVapor is a leading environmental solution and now operates in most major oil-producing basins in the Lower 48. EcoVapor's technology and service platform is poised for growth given the increasing focus on emissions and energy security as our products focus on the elimination of the waste of natural gas from production operations. I'm optimistic about EcoVapor's growth opportunities in the RNG or renewable gas sector. Biogas and RNG capacity have grown rapidly over the last few years, and expectations of production growth could be in the neighborhood of 50% by 2024. Sales of EcoVapor's ZerO2 product line and associated equipment from the RNG sector are a growing contributor to EcoVapor's revenue and earnings. EcoVapor's position in this industry is somewhat unique and enjoys some key competitive differentiators. These advantages are particularly evident in the livestock and agricultural-based biogas projects, which represent three-quarters of all biogas projects under construction. The ZerO2 product line is well suited for the ag-based projects with multiple sizes, which allows the project owners to optimize capacity and cost. EcoVapor resides as part of our expanding U.S. Process Solutions business alongside our market-leading Power Service, Odessa Pumps, and FlexFlow brands, further differentiating DNOW and the value we provide our customers. Switching to our outlook for 2023. In the U.S., we expect customer spending to increase year-over-year with capital discipline regulating production growth according to industry forecasts. It is worth noting rig day rates and completion expense continues to rise. In fact, they are forecasted to rise more as a percentage than the product we provide. In Canada, we expect customers to look to maintain production, we see a basically flat scenario playing out there. Internationally, we expect to see growth as activity and sales inquiries have increased as IOCs and NOCs post larger% year-over-year growth. Specific to the Q1 of 2023, we expect sequential revenue to increase in the low to mid-single digit% range compared to Q4 2022. Q1 2023 EBITDA dollars could reach as much as 50% above Q1 2022 EBITDA dollars, which was $28 million. We upgrade our forecasted Full Year 2023 revenue to now increase 8%-12% compared to the Full Year 2022 revenue. Full Year 2023 EBITDA is targeted at 8% of revenue. Cash flow from operations to approximately $100 million in the Full Year 2023 at these forecasted levels of activity. I'm thrilled about our strong Q4 results, which capped off a stellar record year for DNOW. For the year, we achieved revenue growth of $504 million or 31% growth compared to 2021 without consuming cash from operations as we turned working capital 7x, delivered impressive gross margins of 23.7% and generated $175 million in EBITDA excluding other costs or 8.2% of revenue. Our investments in four super centers equip us to grow in those regional markets and calibrate product availability to resolve customer supply chain challenges. Additionally, the three acquisitions we completed during the year further enhanced our competitive position and importance to suppliers, while deepening our appeal to customers. Entering 2023, we are in a great place as a company. We remain debt-free with ample liquidity and are well-positioned for continued growth and success. To my DNOW family, our success is a direct result of your singular focus on our customers each and every day. For that and for everything you do for DNOW, I thank you. With that, let's open the call for questions. Thank you. We will now begin the question-and-answer session. If you have a question, please press star one on your touchtone phone. If you wish to be removed from the queue, please press star two. If you are using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star one on your touchtone phone. Our first question today comes from Cole Couzens from Stephens. Cole, please go ahead. Your line is open. Hey, guys. Thanks for taking my questions. Good morning, Cole. How are you? Doing well. 2023 looks like it's going to be a strong year for cash generation with $100 million of expected operating cash flow. Can you guys talk a little bit more about how you plan to allocate that between M&A and repurchases? I think we would continue along the same path. We said when we launched the share repurchase program that our priorities were fund organic growth, and we've done that. We're focused on that. In 2022, the market expanded, and our revenues grew 31%. We think that rate of growth will decline, but be strong in 2023, thus allowing for more cash thrown off from the business. That allows the opportunity for more M&A. We closed two deals in December, three in the Full Year of 2022, and that's a priority for us. As the rate of growth in the organic space is a little slower, we're going to focus even more on M&A. Of course, the third alternative is to bolster our participation in our share repurchase program, which began in earnest in the H2 of last year. That's helpful. On WS&A, you guys saw a pretty significant improvement in 2023. Can you talk through any additional levers you have to continue to drive improvement and productivity there? Sure. Yeah, this is Mark. I agree. I think, you know, us transforming the business over the last several years has really generated, you know, record flow-throughs on this revenue growth. I think, you know, our focus for 2023 is a lot of intent on gross margins. Looking at the levers there as we all recognize, steel pipe or steel prices and line pipe prices have stabilized some and are starting to come down a bit. That's a focus of ours, finding ways to maximize margin mix as well as operational efficiencies. We're still marching through, you know, our super center model and finding ways to enhance that closeness to customers and solutions there. You know, 2023 was an incredible year for us in that productivity. You know, our guidance next year would have, you know, lighter flow-throughs on a year-over-year basis, 'cause we will have, you know, some gross margin compression slightly forecast. You know, WSA, we're going to continue to invest in the business. Great. If I could squeeze one last question in. You talked about gross margin being down in 2023. How are you guys thinking about gross margin seasonality throughout 2023? I'll take that, Mark. I think we're going to start off the year. Q1 tends to be our lowest gross margin period. That's just how it tends to be. I think we'll see a little bit of a dip there for the seasonal impacts. In 2022, like 2021, our purchase volumes, especially towards the end of the year, ramped up enough where our vendor consideration, capped it off in the Q4, and it favorably impacted gross margins. I think we'll see a Q1 contraction, I think the H1 gross margins will be stronger perhaps than the H2. We hadn't talked about overall gross margin changes going into the new year, but it could be a 30 basis points decline, but still well above our 2021/2022 average. You know, if you recall, we had pipe prices mid 2022 at very high levels. We enjoyed the benefit, our competitors enjoyed the benefit of that hyperinflation in pipe. Like Mark mentioned earlier, that's diminished. We still expect really strong gross margins, but a little bit of an easing going into the new year. Perfect. Thanks, guys. I'll turn it back. The next question is from Nathan Jones from Stifel. Nathan, please go ahead. Your line is open. Good morning, everyone. Morning, Nathan. Morning. Dave, I'm going to pick up a comment you made in your opening remarks that said, "Build on and get better at what you're good at and avoid distractions." Can you maybe talk about where you think you are in that process, what are the, you know, the primary things you need to build on and get better at? You know, if there's still things in there within the business that you need to maybe get out of the business to avoid some of those distractions? Yeah, I think we're. That, you know, really I was referencing the sentiment and the main thing I wanted to focus on two years ago. We've done a lot along those lines. We're a much more efficient organization. We've changed our fulfillment model, where historically, Projects were managed from all of our locations. It was inefficient. It left excess inventory across the whole network. We've tried to regionalize that where we can manage projects regionally, with a lot better flow through, more efficiency, and I think we're very well down that path. You know, we talked about a super center that we're going to expand in Canada in the H1 of this year. We'll probably do another one, which we haven't named the location yet publicly, but we'll probably do another one in the H1 of the year as well. With that, standing up of that newer super center, we'll be well down that, journey towards optimizing the network. Now it's a matter of seizing growth organically and inorganically. Okay. Thanks for that. I guess, second question I wanted to ask on this EcoVapor business. I was just thinking about it as it relates to Power Service and the turnkey tank battery solutions that you're doing. Is this basically just a piece of equipment you can bolt on to the turnkey tank battery that'll capture, you know, some of the emissions that come out of that? I would think that's a pretty easy way for you to expand their sales. Just what you believe the main opportunities for you to grow their sales are? Hey, Nathan, this Brad, I'll start, and maybe David or Mark will have additional comments. Yeah, you're right. I mean, you know, we highlighted 2 applications, first of all, in the pre-prepared remarks, the first one being oil and gas tank batteries, the other opportunity being the RNG market, which is positioned to grow greatly. In the oil and gas market, the opportunities in existing tank batteries, what we call brownfield applications, are attractive. They tend to be lower flow rates, where, you know, new greenfield opportunities are of larger tank batteries that have higher production. We have a scalability of our product based on the flow of gas. The application's really on the low pressure gas side, where, you know, the oil storage and produced water tanks will, you know, emit a vapor. It's actually a rich vapor that's saturated with liquid. The recovered gas, once we remove the oxygen out of that captured gas, is a rich gas and is really a nice premium for the oil and gas companies to recover that and be able to sell that for additional benefit. Obviously, you know, this would be the the re-routine flaring if a midstream operator, which is sampling the gas stream, detects a high parts per million oxygen level, you know, they'll shut down, you know, the supply line of gas and therefore, you know, results in the flaring,, you know, non-routine flaring of the oil and gas company. Kind of that, Dave talked about that dual value proposition. We're excited about that opportunity. You know, it naturally fits within our U.S. Process Solutions business. We have, you know, a full portfolio or suite of products for that tank battery, and we can leverage not only the EcoVapor existing sales, technical sales team, but we have a highly technical sales force that we employ with our Power Service and Odessa Pumps and also FlexFlow organization. We plan to scale the business development and sales opportunities there to get more exposure to DNOW's customer base where, you know, prior EcoVapor's exposure was limited or less just because it was a smaller company. Dave or Mark, any, anything? Yeah. No, go on, Nathan. I was going to say, yeah, it seems like a business that you should be able to grow pretty rapidly with your customer relationships. Is there any information you can give us on what level of revenue they're at now and what level of revenue you think you can grow that to over three to five years? Yeah. I'll give you some summary information. They're probably in the $12 million-$15 million revenue range at good margins. I think the opportunity is, you know, to put more units in the fleet, to favor sales over rental for some of the products, but to grow, really, I think the sweet spot would be to grow outside of oil and gas as we, you know, as we embrace the e-energy evolution. You know, it starts off small, but it really to your, you know, implied in your question, I think there's real benefit as we anneal it with our Power Service business in particular. Okay. Thanks for taking my questions. You're welcome. The next question comes from Doug Becker from Capital One. Doug, your line is open. Please go ahead. Thanks. Dave, I was hoping you'd expand on what you're hearing from the U.S. upstream customers about activity this year, and particularly given the decline in natural gas prices. Brad, you want to take that? Yeah, Doug, thanks for the question. You know, we're, you know, obviously in the middle of earnings season here, we're seeing much like many of you, customer budgets come out. You know, we're seeing, you know, increases year-over-year of customer budgets, and a lot of built into our, you know, 8%-12% year-over-year revenue guide was really thinking about the drilling contractor, you know, the field is somewhat tight as far as inventory. We're seeing day rate pricing pressure increase. We're seeing, you know, tightness there, that's driving inflation. That's going to consume part of our customers' budgets. We're seeing completions and frac spreads rate also limited, and tight supply there. We're thinking more of the CapEx that customers are spending going to be consumed there. You know, conversely, you know, the pipe mills over the past couple of quarters have caught up the supply to the demand. You know, we're seeing some deflationary pricing pressure associated with our line pipe, which we, you know, benefited from, you know, last year. You know, we still think, you know, obviously growth is poised for the U.S. market, poised for growth. You know, maybe an immediate concern is, you know, how the market's going to respond to lower gas prices that we've seen here recently. Still trying to digest that. You know, taken all together, you know, I think, again, a larger% of the customer budgets on a year-over-year basis are being consumed by, you know, the products and the labor that we don't sell right now. So, you know, our% of that pie is a little bit smaller, so we bake that into our guide as Dave denoted, earlier. Yeah, that makes sense, but it sounds like as we sit here today, you haven't noticed any response to the natural gas prices. Is that fair to say? Yeah, I actually think that's fair. I mean, we've seen rig counts decline, and I think that's going to impact us, especially in the Q1. No, we, you know, we still... You know, we gauge our near-term outlook on customers' projects that they place with us versus the projects that are in the pipeline. We look at our order book versus and how that's trending. We feel like, you know, our guide is not a conservative one. It's not going to be an easy one to deliver in 2023. We'll learn more as the customers put out their budgets. I think what Brad was trying to say is the bulk of the customer CapEx budget's going to be consumed by day rates and frac crew costs and things that really aren't product cost related. You know, the impacts of oil prices at a 5-quarter low and gas prices as we discussed. I don't think we've seen the impacts yet, but except in the rig count, which really is, to me, the best barometer for our revenue opportunity, and that's starting off pretty slow this year. Right. Maybe Mark, what are the assumptions around working capital and the cash flow from operation guidance for the year? Yeah. That's a great question. I think we're, you know, we're going to work to optimize some of our working capital metrics to try to get some of that balance sheet into that free cash flow number into next year. Again, still a growth year, still an expectation, you know, for us to add inventory to the balance sheet in the coming year. You know, I think as we finish the year, inventory turns were a little lower than we would've historically wanted as the metric goes. There was some intentional forward deployment there for some inventory. I think, you know, as the quarters ebb and flow, especially, you know, maybe heavy in the year, we're going to see a little bit of a build there in working capital on the balance sheet. Yeah, let me, let me add to that, Mark. We have really strong working capital turns. In 2021, we had a a era of inventory depletion, which made our working capital turns, you know, eight and almost 9x in some of the quarters. That's changed of course, 'cause we're still in build mode. The market's still going to expand but we will now be able to see the rate of growth on absolute inventory values and absolute receivables values taper off, and then we'll, you know, we'll be able to burn off cash in that, in that scenario. I think we'll see our working capital turns ease a little bit or be a little less, you know, strong. I think that's just a natural result of, you know, We're in a fully stocked mode in terms of customer order fulfillment, and that's showing in our numbers, but still, really good balance sheet management. There's room for improvement for sure. Got it. Just a last one. The pace of share repurchases slowed modestly during the Q4. Wanted to get a sense for what the thought process was behind it. Is it just a byproduct of the buyback program, you know, being opportunistic? Was it the acquisitions, or was it some other factor? Yeah, I think you hit it. We, primarily, it was we did two acquisitions in the Q4. You know, we spent $59 million. When we spoke about opportunistic, obviously you want to buy a good price and buy at the right time. Like I've said from the beginning, we want to execute that program, but the timing was, you know, we favored the acquisitions were made in the quarter. I think we'll see some increased participation in 2023. It was really, it was an opportunity to seize two acquisition opportunities, and we jumped on those. Thank you very much. Thank you, Doug. Our final question today comes from Jeff Robertson from Water Tower Research. Jeff, your line is open. Please go ahead. Thank you. Dave, can you talk a little bit about the strategy for acquisitions and with respect to process solutions? Is there a goal in terms of what you would like that to become for the as a share of U.S. revenue? I think where we're at today is 3 quarters of the U.S. is energy and approximately 25% is Process Solutions. Naturally, we want them both to grow, and I'd be happy if they both grew 50% and the ratios were the same 3 years from now. Process Solutions to me, it's primarily a pump business, but a lot more than that. It has, you know, a level of stickiness with our customers. It puts us in a really sweet spot with core manufacturers, that's I think where we've done our last 8 or so acquisitions because it's a business we simply want to build organically and inorganically. Anyway, I think the focus is on bolstering that business because it's, you know, it's something that's a bit of a departure from standard upstream oil and gas, and process solutions does afford us some opportunities to grow in the industrial space as well. Now I've said for, you know, my tenure as CEO that we've been less interested in energy businesses because our energy business wasn't as strong as it is today. We'll be looking to grow acquisitions and, across the board, by segment or by business unit. There's more aftermarket service opportunities and some of these acquisitions we're focused on, and that tends to be more on the process solution side. You know, that's where we're putting our acquisition dollars so far, but that could change. Thanks for the question, Jeff. Ladies and gentlemen, we've reached the end of our time for the question and answer session. I will now turn the call over to Brad Wise for closing remarks. Well, thank you everyone for your questions today and your interest in NOW Inc. We look forward to talking with everyone on the Q1 2023 Earnings Conference Call in May. Have a nice day, and I'll turn the call back over to the operator. Thank you. Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect your lines.