Good morning, and welcome to the First Quarter Earnings Conference Call. My name is Brandon, and I will be your operator for today. 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 Marketing and Investor Relations, Brad Wise. Mr. Wise, you may begin.

Good morning, and welcome to NOW Inc.'s First Quarter 2021 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 DistributionNOW 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 the call, including responses to your questions, may contain forecasts, projections and estimates, including, but not limited to, comments about the outlook for the Company's business. These are forward-looking statements within the meaning of the US federal securities laws based on limited information as of today, which is subject to change. They are subject to risks and uncertainties and actual results may differ materially. No one should assume that these forward-looking statements remain valid 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 the latest forms 10-K and 10-Q that NOW Inc. has on file with the US 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, excluding other costs, and diluted earnings per share, excluding other costs. Each excludes the impact of certain other costs and therefore have not been calculated in accordance with GAAP. A reconciliation of each of these non-GAAP financial measures to its most comparable GAAP financial measure is included within 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 quarter. A replay of today's call will be available on the site for the next 30 days. We plan to file our first quarter 2021 Form 10-Q today, and it will also be available on our website. And now let me turn the call over to Dave.

Thanks, Brad. Good morning, everyone, and thank you for joining us. As we post earnings for the first quarter of 2021, and tell you our story and talk about what we're building for the future, much has changed. During the last 12 months, we had seen rigs laid down, budgets slashed, projects canceled, wells shut-in, contractors sent home, and for the first time, negative oil prices, making for perhaps the bleakest energy predicament since the Great Depression. From what was a great shutdown just one year ago to now a period of relative stability with strong oil prices, the economy strengthening, hiring ramping up, and anxious consumers clamoring for a reversion to the norm. The underpinnings around the things that drive our business are encouraging. While DNOW entered the downturn on firm financial footing with no debt and ample excess cash, we committed to transform our business. We committed to get to breakeven EBITDA in the first half of 2021, with those who cover our stock earmarking us for a full year 2021 EBITDA loss. Yet, we're happy to say, we achieved our goal of returning to positive territory one quarter earlier than committed after just three short quarters of EBITDA losses in the worst market ever. But survival and breaking even are ambitions ranking at the lowest levels of Maslow's hierarchy of needs; survival has never been an issue for us. The challenge for us then and the opportunities now is for DNOW to pursue self-actualization as an organization to fully achieve our potential as a team and as a partner to our suppliers and customers. We have talked exhaustively about customer order fulfillment, migration and modernization, where we adapt our geographic footprint to be customer proximate, while reducing our cost structure to be more competitive by employing highly skilled people, leveraging relationships with key manufacturers, and employing disruptive digital innovation to simplify the customer experience. As Mark will cover the numbers, I'd like to focus on the business, customers, and our strategy and tell you where we are on our journey. First, I'm excited to share a little bit about Flex Flow, our second acquisition this year. Flex Flow is the leading provider of horizontal pump solutions for fluid movement applications. Flex Flow has earned a strong reputation as a leader in pump expertise through its suite of rental, permanent installation, service, and support offerings primarily in the United States. As we join together two best-in-class, highly trained technical service organizations from Odessa Pumps and Flex Flow, this combination creates greater value for our customers and elevates DistributionNOW into a pump supplier of choice. Flex Flow systems integrate a large fleet of trailer-mounted horizontal pumping systems with a variable speed drive, surface controls, and automated reporting capabilities for a wide range of application flow rates and pressures. The systems are used in a variety of end market applications, such as reservoir production enhancements, crude and natural gas liquids transfer, saltwater disposal, salt cavern leaching, and brine water transfer. Other applications may be found in downstream petrochemical plants and mining applications. The acquisition meets the criteria we have set for inorganic investment. It bolsters and further differentiates DistributionNOW in non-commoditized customer solutions, strengthens and broadens process solutions in the fluid handling space, and provides enhanced gross margins and EBITDA flow-through dynamics. And as I mentioned on our last call, we also added the talented employees from Master Corporation, expanding our midstream engineering and construction services expertise within our Process Solutions Group. Our strategy is to continue to be selective and to further differentiate DNOW by acquiring value-added companies with higher barriers to entry that generate significantly better margins than our base business has delivered historically. Now to our operating segments and end markets. In the first quarter, US revenue was up $28 million sequentially, or 13%. Although we experienced an increase in February freeze-related product orders, this did not offset the loss of product sales we typically would have seen without the severe weather event, due to the days of idling of so many of our locations. Several of our supply chain service customers showed strong growth as drilling activity picked up in the Permian, while in other areas, workover rigs operated to minimize production declines in the Bakken. Our Houston and Freeport Texas locations experienced increased sales related to ice storm repairs, supplying MRO material as plant workers repaired broken pipes and instrumentation. In South Texas, we saw increased drilling rig activity from smaller independents as new wells were drilled and completed, resulting in the demand for PVF-related wellhead connects and well site production facilities. And we supplied 30,000 feet of fiberglass pipe for produced water flow lines to a water management company operating in the Williston Basin. Now, I'd like to share a Process Solutions customer success story. Back in December of 2019, we were successful in securing a quantity of eight three-phase bulk separator vessels from an independent E&P for their Permian operations. This customer was one of our first to tour and approve our new Tomball, Texas facility. In 2020, this customer was acquired by a much larger independent, and in February of 2021, the acquired customer requested 19 more vessels, prompting the new combined company's engineering department to recertify our Tomball facility. Upon completion of the inspection, the 19 vessels were ordered as well as 40 additional units based on a new design for the acquiring company. This customer consolidation opened up the opportunity for DNOW to capture additional revenue across the entire production of the now larger customer. These were clear market share gains. We continue to focus on end market diversification, including legacy, midstream, and downstream, as well as emerging sustainable energy and carbon capture markets by actively marketing our products and services and expanding our customer base. In downstream, we grew sequential revenue of an independent refining company in the northwest by providing PBF and MRO related material for a scheduled turnaround. In several Midwestern Gulf Coast refineries, we provided MRO consumables to first quarter turnarounds, and we were awarded pumps, seals, and consumables for a couple of refinery expansions in the Northwest. Additionally, we were awarded a large valve package consisting of control positive shut-off and isolation valves from a soda ash mine operator for a surface chemical plant expansion project tied to their bicarbonate production process. The revenue was part of our continuing focus on key customer targets in the mining and chemical processing areas outside our upstream stronghold. Additional key wins include multiple fabricated pipe rack orders, water and oil pump skids, and saltwater disposal packages for a new tapeless battery designed for an oil and gas operator, as well as pipeline for midstream customers. With a midstream customer, we provided meter skids and rental transfer pumps for water transfer and fill applications used in their firewater systems. With another large midstream customer, we provided several large deposit displacement pumps for crude oil transfer pipeline applications. The increased focus on our pump aftermarket and service program has resulted in greater access to customer sites, allowing us to capture higher margin aftermarket opportunities. In the industrial end market, we provided saltwater disposal units from the waste management company in Southeast Texas and provided diesel pumps to a maritime contractor, which were used on barge dredging applications. And in the biotechnology space, we were successful leveraging a strategic pump product line to provide a large pump order to a blood and cell technology manufacturer in their processing of blood plasma and fluid handling. Now to Canada. Increased market activity led to revenue of $58 million, a sequential increase of $10 million or 21%. From a product line perspective, we set the number of valve actuation orders for a midstream rail product terminal. Business among our largest Canadian locations experienced growth in our artificial lift product line with a record number of pumps, a number not seen since 2014. On the e-commerce side, in Canada, we completed the implementations of a new B2B midstream customer and a mining company recovering potash from underground deposits for use in the fertilizer market. Both implementations further help diversify our Canadian customer business in the midstream and industrial mining sectors, coalescing our online digital technology with customers. For International, in the first quarter, International revenue was up $4 million sequentially, or 9%. We saw improved activity in countries with fewer COVID restrictions. In the Middle East, we had a large project order from a major IOC operator that fully delivered in the first quarter. In Australia, we captured a new three-year term contract with a major IOC LNG player for electrical products to our McLean electrical business. In Latin America, we continue to provide valve and valve actuation products to an offshore production platform operator. Our McLean UK business, known for servicing electrical customers, continues to expand their product lines to include valve safety and industrial products. During the quarter, they received a sizable valve order through an EPC for a European chemical producer in the downstream market. During the quarter, we went live with an IOC's Australian business unit by providing a B2B e-catalogue for the procurement of PPE-related material. And in Asia, we completed an e-commerce implementation for a new MRO contract with a major IOC, inclusive of electrical valves, PPE, and MRO products. Now I'll give a little more color on our DigitalNOW investments. We've committed to becoming a leader in our space by investing in digital technology, not only to make our internal systems more efficient, but also to speed the journey in customer appeal of our DigitalNOW ecosystem. We continue to add more customers to our e-commerce platform, with a percentage of our digital transactions growing, accounting for 37% of our SAP revenue and 43% of transactions. I'd like to take a minute to highlight several more customer success stories and how our DigitalNOW platform is delivering to customers. A leading independent producer's field crew uses our e-commerce mobile app on their smart device to manage the day-to-day material needs for their warehouse. Our app's workflow allows instant visibility to inventory, quick and easy touchscreen order replenishment, and consolidated billing. Their superintendents and engineers use our e-commerce site, shop.dnow.com to easily find and procure a wide range of products from their DNOW managed B2B catalogue while leveraging our new order builder enhancement, which allows the user to select pipe, fittings, and flanges using the table view format that populates the cards in real-time. Our order Builder Workflow feature enables users to select and procure large bill of materials in a fast, more efficient, simplified manner. Additional value is generated from using our dashboard reporting, providing customers with full visibility to real-time procurement trends and budget management tools, which drive improvements in their costs and enhance cash flow. In addition, this customer sees the value in the efficiency of eSpec, our digital tool that allows for user-driven, easy to configure, efficient ordering of power services, fabricated process, and production equipment. In March, we completed a digital integration for a large oilfield manufacturing company by integrating into their Oracle ERP system. The customer's goal is to drive vendor consolidation and standardization while enabling spend visibility and control through the reduction of the number of vendors used by their numerous operating facilities, down to meeting technology, e-commerce suppliers that have the scale, product range, and technology platform to meet their needs. DNOW was selected because we have all these competencies and could accommodate the customer's requirements. One of the more exciting products we're working on is eTrack, our asset lifecycle management tool. Accessed through an app or web browser, eTrack uses asset attributes to make it easy for customers to display a wealth of information in a matter of seconds from nested relationships, like a pump as a part of the last unit to location identification using latitude, longitude, and geo-locator. eTrack provides access to a vast data repository of operating manuals, pump curves, dimensional drawings, certifications, and digital images. At the moment, we are working with a select group of customers for beta testing before a broader release. Once released, all packaged units from process solutions will be equipped with the eTrack solution. I'm excited about the future of eTrack as it provides a meaningful step towards realizing our vision of integrating and leveraging technology with our products and services to provide actionable information for our customers, thus further differentiating DNOW in the market and offering a revenue opportunity for equipment replacement and aftermarket expansion. With that, let me hand it over to Mark.

Thank you, Dave, and good morning, everyone. Total first quarter 2021 revenue was $361 million, a 13% increase over the fourth quarter of 2020, outperforming our guided sequential mid to high single-digit percentage range. Our first quarter results showed sequential growth across all segments. The U.S. first quarter 2021 revenue was $252 million, up $28 million or 13% from the fourth quarter on increased drilling and completions activity, despite the disruptive impacts from the freeze brought by winter storm theory. Our U.S. energy centers revenue was up 12% from the fourth quarter, and U.S. process solutions revenue was up 14%, driven primarily by increased drilling and completions activity and seasonal recovery. U.S. energy revenue accounted for 81% of the U.S. segment in the first quarter, unchanged from the fourth quarter. Moving to the Canadian segment, first quarter 2021 revenue was $58 million, up $10 million or 21% from the fourth quarter, driven by seasonal increases in the market and customer share gains driven by greater attraction to DNOW’s unique combination of application-based solutions and products. The stronger Canadian dollar relative to the U.S. dollar favorably impacted sales by approximately $2 million sequentially. Outside of North America, project deliveries in the Middle East, coupled with partial easing of COVID lockdowns and travel restrictions in certain areas, drove international revenue to $51 million, an increase of $4 million or 9% from the fourth quarter. Stronger foreign currencies relative to the U.S. dollar favorably impacted sales by approximately $1 million sequentially. In addition to DNOW’s growing revenue, our product margins remained resilient and gross margins improved to 20.8%. This increase was primarily a result of reduced inventory charges sequentially from $24 million in the fourth quarter to $5 million this quarter. In the second quarter, we are continuing the evaluation of additional product rationalization measures to adapt to the changing market conditions, customer preferences, and structural changes in the business, and this could impact the level of inventory charges going forward. In the first quarter of 2021, warehousing, selling, and administrative expenses, or WSA, were $79 million, or down $2 million sequentially primarily driven by successfully collecting almost $2 million in aged receivables in the period. That's not expected to repeat. Our cost reduction initiatives continued into the first quarter and offset the anticipated seasonal increases in WSA expenses driven by resetting of limit-based payroll taxes and healthcare cost inflation. As we model the second quarter, and later in the acquisition contribution, we expect the second quarter 2021 WSA to be in the low-to-mid $80 million range. In the quarter, we also initiated exits from leased and company-owned facilities that resulted in an impairment loss of $4 million, primarily related to properties held for sale at $331. The net loss for the first quarter was $10 million or a loss of $0.09 per share. On a non-GAAP basis, net loss excluding other costs was $5 million or $0.04 per share. Non-GAAP EBITDA excluding other costs was positive $1 million for the first quarter of 2021. This has been a pivotal year. At the onset of the pandemic, we swiftly identified and implemented initiatives focused on maximizing customer service and transforming our operating model. These actions are recognizable today in our financial performance. As DNOW delivered EBITDA similar to that from the first quarter of 2020 on 40% lower revenues, a testament to the determination, ingenuity, and collective effort of our team to respond to the market challenges and execute strategic shifts that continuously transform DNOW. Moving to the balance sheet, at the end of the first quarter, we have zero debt and a cash position of $374 million. Total liquidity equal to availability from our undrawn credit facility, plus cash on hand increased to $598 million as of March 31, 2021. Accounts Receivable at the end of the quarter was $245 million, an increase of $47 million from year-end. Inventory at the end of the first quarter was $247 million, down 6% from year-end, with inventory turns of 4.6 times, a quarterly best. As we strategically invest in inventory for our customers and face the control activity headwinds from Canadian breakup, we anticipated inventory turns to lower into the second quarter. Our accounts payable ended at $200 million with days payable of 64 days in the first quarter. And as of March 31, 2021, working capital excluding cash as a percentage of first quarter annualized revenue was 14.5%, a solid performance, but we expect this ratio to expand as we intentionally add working capital to fund growth in the business. Our focus on working capital efficiency gains is also reflected with a new quarterly best cash conversion cycle of 77 days that helped minimize the cash required to fund our quarterly revenue growth of 13%. Net cash used in operating activities was $4 million for the first quarter of 2021, and we had capital expenditures of $1 million. Looking back over the last two years, we've generated $408 million in free cash flow. We will continue our commitment to balance sheet management, make investments in good inventory, and pursue strategic acquisitions in order to maximize asset health and secure liquidity to fuel the future. As previously discussed, in the first quarter, we completed the acquisition of Master Corporation, and in April, we closed the acquisition of Flex Flow. And I want to welcome those employees to the DNOW family who are listening today. Our team is focused on profitable market share gains, targeting high-margin product lines, and we are rigorously pursuing fitness at the expense line. We're actively deploying technology to augment labor content, automate and digitize processes, and reduce discretionary and infrastructure costs. We are intent on continuously developing a more agile business with increasing productivity. We continue into 2021 with optimism for the future, and we possess the talent, resources, and fortitude to grow our bottom line and create sustained value for our customers and shareholders. With that, I'll turn the call back to Dave.

Thank you, Mark. And now, our view on the second quarter. Like we mentioned, first quarter 2021 revenues were up 13% over the fourth quarter of 2020, outperforming our guide and generally posting much higher sequential growth than most companies in our space. We attribute that solid sequential revenue incline to the timing of projects in the first quarter and strength with our upstream customers. We do not expect first quarter international projects to recur and as such, anticipate international to be relatively flat sequentially in the second quarter. While Canada grew 21% sequentially from the fourth quarter to the first, you might see the reverse occur as Canada moves into breakup in the second quarter. Finally, we expect solid US sequential growth going into the second quarter to be similar to US growth in the fourth to first quarters. As such, with fewer international projects, the expected seasonal Canada decline, and strong US revenue gains, we expect second quarter sequential revenue growth in the mid to high-single-digit percentage range. And now some closing thoughts. We've expanded our ability to deliver solutions across the full lifecycle of a project, from early feed stage work to engineering, design, construction, management, commissioning, aftermarket support, and lifecycle asset management. As an example, if you take a six-well pad project that includes wellhead hookups, a tank battery facility, fluid handling, gas recovery, compression, produced water transfer and disposal, gathering lines, and midstream tie-ins, DNOW offers a unified solutions approach towards the project. From inception to start-up, to aftermarket and materials management support. From the scope of supply perspective, DNOW delivers the engineered, fabricated quality control processes and production equipment, PBF for flow lines and instrumentation controls, while performing the field construction, asset tie-ins, and commissioning before handing the keys to the operator. Key benefits to the customer include project management oversight, providing singular accountability, capturing efficiencies through design and equipment standardization and leverage procurement while offering the ability to de-risk the project by minimizing the number of service providers. Process Solutions will provide project management oversight, enabling pull-through sourcing of materials from our energy locations, while benefiting from our DigitalNOW platform. Digital solutions like our eSpec product will be used to assist with budgeting, configuration, specification, and standardization of fabricated and packaged equipment. While eTrack will be used to manage asset performance, analytics, and scheduled maintenance from an app or web-based browser. For MRO items, DNOW’s energy locations will choreograph staging inventory and our customers will be able to leverage our e-commerce marketplace for product sourcing that offers online accessibility to a customer-specific catalogue of products. Furthermore, customers have access to powerful real-time dashboards of consumption data to better manage their maintenance CapEx through analysis and reporting. Equally as powerful, we can design and provide innovative solutions to help our customers reduce their carbon footprint and greenhouse gas emissions. We offer a wide array of products and services that help our customers reduce emissions, like vapor recovery units, pump and compressor energy-efficient audits, CLS charge pumps on transfer or measurement units, containment systems, and solar-powered pumps to name a few. Our goal is to assist our customers in developing and processing cleaner energy. It's serendipitous for DNOW that many of the products we already sell to existing customers will be consumed by the very same customers as they migrate capital to emerging sustainable energy projects. Thus, a primary tactic in our end market strategy is to join hands with existing customers as they deploy their own strategies in that direction. Finally, we are focused on being a differentiated supplier to our new and existing customers, offering a unique combination of solutions for today's energy needs, the energy transition, and tomorrow's challenges ahead. We've made significant progress to ensure maneuverability in the evolving energy space. We have a significant cash balance, total liquidity nearing $600 million, zero debt, zero interest expense, a profound shift towards efficiencies, and most importantly, a passion for simplifying the customer experience through investment in differentiating technology. All of which provide a great deal of flexibility for whatever the market brings us. With that, let's open the call for questions.

Hey, good morning, Dave, Mark, and Brad.

Good morning, Jon.

So, I appreciate the second quarter guidance for revenue to be up mid to high single digits and the kind of geographic breakout that you gave us. I was wondering if you could help give us an idea of how revenues trended kind of throughout April, and what's kind of assumed for the monthly progression of revenues to get up the mid to high single-digits in the second quarter?

Okay. So let me start a little bit with the first quarter. So January started off slow. I think we mentioned that in our February call. And during our February call, we were in this room without heat and we were contemplating giving guidance, and we moderated it based on 60 locations that hadn't been closed at that time. So February was slow due to that slowdown in our business. March, however, really took off. So there was a little bit of a snapback, and March ended up being the best month of the quarter. And it made for a real nice revenue increase sequentially. Now, April was down versus March, in part because it's a shorter month, it has fewer business days for DNOW and its customers, and partly because March was so strong. So we're starting off kind of slow, but we do expect things to get a little better. Of course, Canada, in breakup in April is probably the worst month of the quarter for Canada. So we experienced that as well. So, you know, we feel pretty good about, you know, except for Canada, that recline as we called it in terms of moving into breakup. We expect the US to continue to grow, and we expect some flatness internationally. But that's kind of the cadence of how things happened during the first months of the year.

Understood. Thanks for that. And then, obviously had really strong performance on the gross margin front in the quarter. Curious if just on the sustainability of that level of margins in 2Q and then later in 2021, obviously you have inventory charges that you need to consider. But then, also what were the moving pieces between pricing of mix, it seems like pricing will be a bit of a tailwind as we move through this year. So curious if you can help us out with – is the 1Q margin level a good starting point for the second quarter and beyond? Thanks.

Okay, so in terms of the change in margins, of course, the lack of inventory charges has a big deal to do with that, as your question implied. Inventory charges during the quarter were $5 million, more of a normalized level, not so much as a percent of revenue. But with where we are in the cycle, those will be in line with that during the year, could be a little higher, could be a little lower, depends on – we are going through some level of restructuring as we stand up supercenters in our business, and change the role of what will become express centers to maximize inventory utility and de-risk the inventory component of our business. But I think gross margin, this is a good level for us. And there will be some puts and takes. So in the second quarter, Canada is a higher operating margin business for us. They're our most profitable segment right now. They tend to have higher gross margins as well. So they're going to shrink in the second quarter. We're going to see some continued strength in the US, but we do see – expect to see some projects, which will be a little bit of a drag, which could mean a little bit lower gross margins in the second quarter. I mean, I’d like to think – I think Mark said it, that our first quarter gross margins were the highest since we've spun seven years ago. And I like, you know, I think there's a gravity component there. Well, there's likely going to be a little bit of a reduction in the second quarter based on the things I said with Canada, some project works in the US, et cetera. But the underlying product pricing and product margins for us are strong. And to your point, I think this is a good level for us in terms of gross margins. Those numbers could get a little better, as we start to see inflation, lead times grow, demand increase, you know, kind of all the things that would pull pricing in our favor.

That's all. So Dave, thanks. I'll turn it back.

Thank you, Jon.

Thanks. It was a really good quarter on the cash conversion cycle, working capital excluding cash, with stronger sales, lowest seen in fairly at least quite a while. Understand that's going to increase a little bit in the second quarter. Have there been any revised targets regarding working capital, cash conversion cycle, as we go through the year? Just seems like a really important aspect of the story, as activity increases and working capital requirements normally increase?

Sure, Doug. This is Mark. Thank you for your comments. You are correct that this quarter showed strong sequential revenue growth, and our inventory levels decreased. We anticipate some easing in the next quarter, which may result in some cash consumption. When we project top-line growth, we foresee adding approximately $30 to $40 million in working capital to our balance sheet as we increase receivables and inventory to support our customers. We are also committed to maintaining an efficient balance sheet to minimize the impact on our cash consumption. We remain significantly below the 20% level we have discussed previously, and we are implementing measures to keep our operations lean.

Yeah. Let me add a little bit there. So if you go back a couple of years, and routinely, our working capital excluding cash as a percent of revenue is 25%. Before that, it was even higher than that. So that's been a major focus for us. And it served us well as we entered the downturn because we had a much more responsive balance sheet. And we had kind of a very conservative approach to managing the balance sheet. We had a focus on that, and we got a working capital turns to be very high in this quarter. So there'll be a little bit of an increase. But they're going to be in that 15 to 20 range, and we're going to try to keep them closer to 15. But we're moving into a modest recovery, so we're going to be buying more strategic inventory, not like we might have in the past, where we would be buying a lot more speculative stuff that we'd ultimately have to deal with in a downturn. But we're going to be real thoughtful about what we put on the shelf. But we want to take advantage of the recovery. We want to have products when our customers need them, especially the high demand predictable less risky stuff. So we're going to see a little bit of a reduction there, primarily because we're going to see a revenue decline in Canada, which is going to be just a numerator impact. I think that's a major focus for us and it will be going forward.

That all makes sense. The $30 million to $40 million that you mentioned, Mark, that's for the full year?

No, I was just looking at a sequential bill. If you hold the efficiencies, let's say where we are now, maybe with a little bit of easing, just with that revenue growth alone, we're going to add that sum to the balance sheet. Just looking at working capital as a percent of revenue staying similar, we're going to put on some level. But again, I mean, $600 million in liquidity, managing our balance sheet is something that we're interested in doing by ensuring we're taking care of our customers, especially in this period of time where we're seeing growth here in the US. It's something that you're right there, there's not a peg for us to need to generate liquidity in the moment to make any kind of payments or anything like that.

So, yeah, I mean, I think that's a good range. Maybe more $20 million, $40 million that we would consume in the second quarter, if we see the kind of revenue progression we expect. Now, Mark talked about in his opening comment, that we generated $400 million in the last eight quarters. That's, you know, you understand that the kind of cyclicality of our business. Now we're in the cash consumption phase. But we're going to go into, you know, a little more wide open eyes in terms of the risk components of the inventory put on the shelf, but we also want to see is that growth.

Understood. Obviously, a pristine balance sheet, just want to get a little color on the M&A pipeline in the near term over the next couple of quarters?

We have recently completed two acquisitions and are enthusiastic about them. Our primary focus is on successfully integrating these acquisitions and achieving returns. However, our deal team is not responsible for the integrations; we have a separate group handling that. We continue to seek new deals that align with the company as we enter a phase of organic growth, which we have previously discussed. This will involve cash consumption. We're always selective in our acquisition efforts, and the two deals we just completed were advantageous for us. We will maintain a high level of selectivity and are currently engaging with various companies. The acquisition landscape remains as promising as it was prior to these two transactions.

Thank you.

Thank you, 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 David Cherechinsky, CEO and President for closing statements.

Okay, so thank you very much everyone for calling in. We appreciate you listening to the call and we'll see you next quarter.

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for joining. You may now disconnect.