Higher oil prices are starting to fuel a rebound in activity levels around the oil patch. That's pushing up demand for the products NOW Inc. (NYSE:DNOW) distributes, which helped drive a continued rebound in the company's financial results, including strong revenue growth and its second straight quarterly profit.

NOW results: The raw numbers

Metric

Q1 2018

Q1 2017

Year-Over-Year Change

Revenue

$764 million

$631 million

21%

Adjusted net income

$1 million

($16 million)

N/M

Adjusted EPS

$0.01

($0.15)

N/M

Data source: NOW Inc.

A drilling rig with the sun setting in the background.

Image source: Getty Images.

What happened with NOW this quarter? 

Improving industry-activity levels drove this quarter's rebound:

  • Revenue was up sharply versus the year-ago period, as well as rising 14% from the seasonally weak fourth quarter.
  • Sales improved in all three of the company's regions. In the U.S., revenue was $562 million, up 28% versus the year-ago period and 15.2% sequentially. In Canada, sales were $102 million, up 6.3% year over year and 20% from last quarter. Finally, other international sales were $100 million, which was 4.2% higher both sequentially and year over year.
  • Those higher sales enabled NOW to report its second straight quarterly profit, which, after adjustments, was flat with the fourth quarter. Though EBITDA did improve $3 million sequentially, while growing $25 million versus the year-ago period.

What management had to say 

CEO Robert Workman commented on the company's results, saying: "The impressive results produced in the first quarter signal a great start to 2018. We are focused on strategically growing the business by targeting more lucrative opportunities and continuing to deepen our relationships with customers, while minimizing operating expenses, to deliver value to our shareholders as the market expands."

The main factor driving NOW's continued rebound is the higher activity levels in North America, where the rig count has increased 31% year over year thanks to higher oil prices. Much of this growth is coming from the Permian Basin, where the company added several customers during the quarter. Another highlight was that the company booked its largest power service order since 2014, the year that oil prices started tanking. 

Looking forward 

The company remains optimistic due to the impact of higher oil prices on activity levels around the oil sector. The company sees revenue growth in the low double-digit range this year, with upside into the high teens. It's also evaluating several acquisitions that could provide an additional boost this year.

Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends NOW. The Motley Fool has a disclosure policy.