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MRC Global Inc. (MRC - Analyst Report) reported mixed first-quarter 2014 results. Adjusted earnings per share in the quarter came in at 28 cents, beating the Zacks Consensus Estimate by a cent. However, the adjusted earnings for the quarter lagged the year-ago figure of 45 cents due primarily to reduced margins.

On a GAAP basis, earnings per share for the quarter came in at 23 cents, which compared unfavorably with 45 cents in the year-ago quarter.

Revenues

MRC Global reported flat year-over-year revenues of $1,305.7 million, beating the Zacks Consensus Estimate of $1,283.0 million. In the quarter, revenues were negatively impacted by inclement weather, partially offset by improvement in the upstream sector toward quarter-end.

Geographically, MRC Global reported 1.8% year-over-year decrease in revenues in the U.S. to $948.0 million. The decline was primarily attributable to lower line pipe pricing accompanied by bad weather. However, contribution from acquisitions helped offset the decline partially.

In Canada, revenues generated were $166.2 million, down 18.7% from the year-ago quarter due to the sale of PCP distribution and servicing business. Additionally, growth in acquired businesses including Stream and Flangefitt increased the International sales by 41.9% year over year to $191.5 million.

On a sector basis, upstream sales increased 9.7% year over year to $634.8 million. Midstream sales decreased 11.1% year over year to $307.4 million. Downstream sales in the quarter were $363.5 million, down 4.6% year over year.

Margins/Costs

Cost of sales in the first quarter went up 1.4% year over year to $1,073.5 million and represented 82.2% of the total revenue, up from 81.1% in the year-ago quarter. Selling, general and administrative expenses, as a percentage of total revenue, came in at 13.1%. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $84.0 million, down from $103.9 million in the first quarter of 2013.

Balance Sheet

Exiting the quarter, cash balance of MRC Global stood at $30.1 million, up from $25.2 million in the previous quarter. Long-term debt, net of current portion, increased sequentially to $1,306.3 million from $978.9 million.

Cash Flow

For the first quarter of 2014, MRC Global used $74.3 million in operating activities versus cash generation of $174.4 million in the prior-year quarter. Capital expenditure incurred in the quarter totaled $2.0 million, versus $4.9 million in the year-ago period.

Outlook

Based on the current results, management reiterated its guidance for 2014. For the year, management anticipates revenues to range of $5.5–$5.8 billion. Adjusted EBITDA is predicted within $400–$450 million, while capital expenditure is expected in the band of $25.0 to $30.0 million. Also, MRC Global is expected to generate cash flow from operations in the $175.0 to $200.0 million range.

MRC Global is a leading global distributor of pipe, valves and fittings, and related products and services to the energy and industrial sectors. The company currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry worth considering include Gorman-Rupp Co. (GRC - Snapshot Report), Tenaris SA (TS - Snapshot Report) and Altra Industrial Motion Corp. (AIMC - Snapshot Report). While Gorman-Rupp sports a Zacks Rank #1 (Strong Buy), Tenaris and Altra Industrial Motion have a Zacks Rank #2 (Buy).

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