MRC Global Inc. (MRC - Free Report) reported encouraging results for first-quarter 2022. MRC’s adjusted earnings are in line with the Zacks Consensus Estimate of 17 cents while its sales surpassed the same by 3%.
The bottom line reversed the year-ago quarter’s loss of 7 cents per share. Results benefited from higher sales generation and improved margins.
Revenue Details
In the quarter under review, MRC Global’s revenues were $742 million, reflecting an increase of 22% from the year-ago quarter’s level. The top line gained from sales growth in the United States and Canada segments, partially offset by a weakness in the International segment.
Revenues surpassed the Zacks Consensus Estimate of $721 million.
Based on MRC Global’s product line, revenues from carbon pipe, fittings and flanges increased 41.3% year over year to $212 million. The same from valves, automation, measurement and instrumentation was up 4.1% from the year-ago quarter’s figure to $251 million. Gas product revenues grew 37.3% to $184 million. Sales for general products increased 7.3% to $59 million. The same for stainless steel, and alloy pipe and fittings grew 24.1% to $36 million.
Based on the sectors served, revenues from the upstream production were $158 million, up 24% from the year-ago quarter’s level. Midstream pipeline sales totaled $87 million, up 12% from the year-ago quarter’s tally, while sales for gas utilities totaled $271 million, increasing 29% year over year. Downstream, and industrial & energy transition (DIET) sales were $226 million, reflecting year-over-year growth of 16%.
MRC Global has three reportable segments, namely the United States, Canada and International that are discussed in detail below:
Sales generated from the U.S. segment (representing 83.3% of first-quarter revenues) totaled $618 million, rising 28% year over year. The results benefitted from improvements in DIET, upstream production and midstream pipeline sectors.
Revenues from the Canada segment (5.8% of the quarter’s revenues) moved up 34% year over year to $43 million on the back of strength in the upstream production sector.
Sales from the International segment (10.9% of the quarter’s revenues) declined 13% to $81 million due to the pandemic-induced constraints.
Margin Profile
In the quarter under review, MRC Global’s cost of sales increased 19.8% year over year to $606 million. The adjusted gross profit in the quarter increased 28.8% year over year to $152 million. Margin at 20.5% grew 110 basis points (bps) year over year. Adjusted selling, general and administrative expenses were up 9.2% year over year to $107 million.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased 100% year over year to $48 million, while the adjusted EBITDA margin was up 260 bps to 6.5%. Interest expenses were $6 million, flat with the figure reported in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting the first quarter, MRC Global had cash and cash equivalents of $31 million, down 35.4% from $48 million at the end of the previous quarter. Long-term debt, net, increased 1.7% to $300 million from $295 million in the previous quarter.
In the first three months of 2022, MRC Global used net cash of $13 million from operating activities compared with $24 million of net cash generated in the previous year’s quarter. Capital spent on purchasing property, plant and equipment was $2 million, flat year over year.
In the first three months of the current year, MRC repurchased shares worth $2 million and paid out dividends totaling $6 million.
Outlook
For 2022, MRC Global anticipates revenues of $3.1 billion, suggesting growth from $2.67 billion generated in 2021. Revenues in each of the gas utilities, DIET, upstream production and midstream pipeline sectors are predicted to increase in double-digit percentages.
On a segmental basis, the U.S. and Canada sales are predicted to be up in double-digit percentage during 2022. International sales are anticipated to grow in mid-single digits.
Adjusted EBITDA in the ongoing year is anticipated to be $200 million, while the tax rate is expected to be 24-26%. Selling, general and administrative expenses are predicted to be $111-$113 million per quarter. Cash flow from operations is likely to increase modestly year over year while capital expenditure is anticipated to be $10-$15 million.
For second-quarter 2022, MRC anticipates revenue growth in high-single-digit percentage, sequentially.
Zacks Rank & Other Stocks to Consider
With a market capitalization of $930.8 billion, MRC Global currently carries a Zacks Rank #2 (Buy).
Some other top-ranked companies from the industrial products sector are discussed below.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1. AIT delivered a trailing four-quarter earnings surprise of 25.4%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AIT’s earnings estimates have increased 5.4% for fiscal 2022 (ending June 2022) in the past 60 days. Its shares have rallied 12% in the past three months.
Roper Technologies, Inc. (ROP - Free Report) presently has a Zacks Rank of 2. Its earnings surprise in the last four quarters was 2%, on average.
In the past 60 days, ROP’s earnings estimates have increased 1.1% for 2022. The stock has declined 1.1% in the past three months.
Ferguson plc (FERG - Free Report) is presently Zacks #2 Ranked. FERG’s earnings surprise in the last four quarters was 14.2%, on average.
In the past 60 days, the stock’s earnings estimates have increased 6.5% for fiscal 2022 (ending July 2022). The same has declined 23.4% in the past three months.
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MRC Global Inc. (MRC - Free Report) reported encouraging results for first-quarter 2022. MRC’s adjusted earnings are in line with the Zacks Consensus Estimate of 17 cents while its sales surpassed the same by 3%.
The bottom line reversed the year-ago quarter’s loss of 7 cents per share. Results benefited from higher sales generation and improved margins.
Revenue Details
In the quarter under review, MRC Global’s revenues were $742 million, reflecting an increase of 22% from the year-ago quarter’s level. The top line gained from sales growth in the United States and Canada segments, partially offset by a weakness in the International segment.
Revenues surpassed the Zacks Consensus Estimate of $721 million.
Based on MRC Global’s product line, revenues from carbon pipe, fittings and flanges increased 41.3% year over year to $212 million. The same from valves, automation, measurement and instrumentation was up 4.1% from the year-ago quarter’s figure to $251 million. Gas product revenues grew 37.3% to $184 million. Sales for general products increased 7.3% to $59 million. The same for stainless steel, and alloy pipe and fittings grew 24.1% to $36 million.
Based on the sectors served, revenues from the upstream production were $158 million, up 24% from the year-ago quarter’s level. Midstream pipeline sales totaled $87 million, up 12% from the year-ago quarter’s tally, while sales for gas utilities totaled $271 million, increasing 29% year over year. Downstream, and industrial & energy transition (DIET) sales were $226 million, reflecting year-over-year growth of 16%.
MRC Global has three reportable segments, namely the United States, Canada and International that are discussed in detail below:
Sales generated from the U.S. segment (representing 83.3% of first-quarter revenues) totaled $618 million, rising 28% year over year. The results benefitted from improvements in DIET, upstream production and midstream pipeline sectors.
Revenues from the Canada segment (5.8% of the quarter’s revenues) moved up 34% year over year to $43 million on the back of strength in the upstream production sector.
Sales from the International segment (10.9% of the quarter’s revenues) declined 13% to $81 million due to the pandemic-induced constraints.
Margin Profile
In the quarter under review, MRC Global’s cost of sales increased 19.8% year over year to $606 million. The adjusted gross profit in the quarter increased 28.8% year over year to $152 million. Margin at 20.5% grew 110 basis points (bps) year over year. Adjusted selling, general and administrative expenses were up 9.2% year over year to $107 million.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased 100% year over year to $48 million, while the adjusted EBITDA margin was up 260 bps to 6.5%. Interest expenses were $6 million, flat with the figure reported in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting the first quarter, MRC Global had cash and cash equivalents of $31 million, down 35.4% from $48 million at the end of the previous quarter. Long-term debt, net, increased 1.7% to $300 million from $295 million in the previous quarter.
In the first three months of 2022, MRC Global used net cash of $13 million from operating activities compared with $24 million of net cash generated in the previous year’s quarter. Capital spent on purchasing property, plant and equipment was $2 million, flat year over year.
In the first three months of the current year, MRC repurchased shares worth $2 million and paid out dividends totaling $6 million.
Outlook
For 2022, MRC Global anticipates revenues of $3.1 billion, suggesting growth from $2.67 billion generated in 2021. Revenues in each of the gas utilities, DIET, upstream production and midstream pipeline sectors are predicted to increase in double-digit percentages.
On a segmental basis, the U.S. and Canada sales are predicted to be up in double-digit percentage during 2022. International sales are anticipated to grow in mid-single digits.
Adjusted EBITDA in the ongoing year is anticipated to be $200 million, while the tax rate is expected to be 24-26%. Selling, general and administrative expenses are predicted to be $111-$113 million per quarter. Cash flow from operations is likely to increase modestly year over year while capital expenditure is anticipated to be $10-$15 million.
For second-quarter 2022, MRC anticipates revenue growth in high-single-digit percentage, sequentially.
Zacks Rank & Other Stocks to Consider
With a market capitalization of $930.8 billion, MRC Global currently carries a Zacks Rank #2 (Buy).
Some other top-ranked companies from the industrial products sector are discussed below.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1. AIT delivered a trailing four-quarter earnings surprise of 25.4%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AIT’s earnings estimates have increased 5.4% for fiscal 2022 (ending June 2022) in the past 60 days. Its shares have rallied 12% in the past three months.
Roper Technologies, Inc. (ROP - Free Report) presently has a Zacks Rank of 2. Its earnings surprise in the last four quarters was 2%, on average.
In the past 60 days, ROP’s earnings estimates have increased 1.1% for 2022. The stock has declined 1.1% in the past three months.
Ferguson plc (FERG - Free Report) is presently Zacks #2 Ranked. FERG’s earnings surprise in the last four quarters was 14.2%, on average.
In the past 60 days, the stock’s earnings estimates have increased 6.5% for fiscal 2022 (ending July 2022). The same has declined 23.4% in the past three months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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