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MRC Global Inc. (MRC - Analyst Report) reported decent results for the first quarter 2013. Earnings per share in the quarter came in at 45 cents, reflecting an improvement of one cent from the year-ago quarter. The results also exceeded the Zacks Consensus Estimate of 43 cents.

Revenue


MRC Global reported a 5.6% year-over-year decline in revenue that settled at $1,305.1 million and also fell short of the Zacks Consensus Estimate of $1,385 million. The poor results were 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 revenue declines in the U.S., a 2% decline in revenue generated in Canada and 11% improvement in International sales.

Margins

Cost of sales in the first quarter went down 7.6% year over year and represented 81.1% of total revenue; down from 82.9% in the year-ago quarter. Selling, general and administrative expenses, as a percentage of total revenue, stood at 12.3%. Operating margin in the quarter was 6.7%, up 20 basis points year over year.

Balance Sheet

Exiting the first quarter 2013, cash balance of MRC Global stood at $27.4 million, down 26.1% from $37.1 million in the previous quarter. Long-term debt, net of current portion also registered a sequential decline of 14.7% to 1,066.6 million.
 
Cash Flow

Net cash flow from operating activities in the quarter was $174.4 million, up from $18.3 million in the year-ago quarter while capital expenditure was at $4.9 million versus $4.5 million in the year-ago quarter.

Outlook

For 2013, management of MRC Global now anticipates revenue to range within $5.75-$5.95 billion versus $5.75-$6.05 billion range expected earlier. Adjusted EBITDA is predicted to range within $480-$510 million as compared to the $480-$520 million range expected earlier while earnings per share are expected to be $2.10-$2.30 versus the prior guidance of $2.10-$2.35.

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

The company currently has a market capitalization of $2.9 billion and carries a Zacks Rank #3 (Hold). Other stocks to watch out for are Mueller Water Products, Inc. (MWA - Snapshot Report), with a Zacks Rank #1 (Strong Buy) while Valmont Industries, Inc. (VMI - Analyst Report) and W.W. Grainger, Inc. (GWW - Analyst Report), each with a Zacks Rank #2 (Buy).
 

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