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MRC Global Inc. (MRC - Analyst Report) reported mixed results for the second quarter of 2013 beating the Zacks Consensus Estimate for earnings but missing the same for revenues. Adjusted earnings per share in the quarter came in at 43 cents, beating the Zacks Consensus Estimate and year-ago earnings of 39 cents by 10.3%.

On a GAAP basis, earnings per share for the quarter were 43 cents, compared with 32 cents in the year-ago quarter.

Revenues

MRC Global reported 11.4% year-over-year decline in revenues that settled at $1,267.8 million and also fell short of the Zacks Consensus Estimate of $1,299.0 million. The decline was primarily due to weakness in the U.S. upstream and midstream sectors as well as planned reduction in oil country tubular goods (OCTG) business.

Geographically, MRC Global reported year-over-year decline in revenues in the U.S. to $975.2 million. The decline was a result of a decrease in the OCTG revenues. Canada generated revenues of $153.6 million, a decline of 4% compared with the year-ago quarter, resulting from a longer spring break-up in 2013. A reduction in demand in Australia led to an 8% drop in International sales to $139.0 million.

On a sector basis, upstream sales declined 17% year over year to $542.4 million, while midstream sales faced a decline of 5% year over year to $375.9 million. Downstream sales in the quarter were $349.5 million, falling 7% year over year.

Margins/Costs

Cost of sales in the second quarter went down 13.9% year over year to $1,023.8 million and represented 80.8% of total revenue, down from 83.1% in the year-ago quarter. Selling, general and administrative expenses, as a percentage of total revenue, stood at 12.1%. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $98.9 million, declining 20% year over year.

Balance Sheet

Exiting the second quarter of 2013, cash balance of MRC Global stood at $37.8 million, up from $27.4 million in the previous quarter. Long-term debt, net of current portion, registered a sequential increase to $1,077.3 million.

Cash Flow

For the six months ended Jun 30, 2013, MRC Global generated cash from operations of $181.9 million, versus cash utilization of $46.6 million in the prior-year period. Capital expenditure incurred in the first half of 2013 totaled $10.6 million, versus $14.9 million in the year-ago period.

Outlook

Due to lower revenues in the quarter led by reduction in the OCTG business as well as lower demand in various regions including Australia and Canada, management has revised downwards its expectations for 2013. For the year, management now expects revenues to range within $5.10 billion-$5.30 billion versus $5.75 billion-$5.95 billion expected earlier. Adjusted EBITDA is predicted to be within $385 million-$415 million down from $480 million-$510 million expected earlier, while earnings per share are expected in the range of $1.65-$1.85 versus the prior guidance of $2.10-$2.30.

MRC Global is a leading global distributor of pipe, valves and fittings (PVF) and related products and services to the energy and industrial sectors.

Other Stocks to Consider

Mueller Water Products, Inc. (MWA - Snapshot Report) released its fiscal third-quarter results on Jul 30, 2013. The company reported earnings per share of 8 cents, in line with the Zacks Consensus Estimate.

Valmont Industries, Inc. (VMI - Analyst Report) released its second-quarter results on Jul 17, 2013. The company reported earnings per share of $3.17, beating the Zacks Consensus Estimate of $2.92 by 8.6%.

Edgen Group Inc. is expected to release its second-quarter results after the market closes on Aug 8, 2013. The Zacks Consensus Estimate for the quarter is 4 cents.

MRC Global currently carries a Zacks Rank #5 (Strong Sell).

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