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MRC Global (MRC) Q4 Earnings Beat, Surge Y/Y on Higher Sales
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MRC Global Inc. (MRC - Free Report) reported fourth-quarter 2022 adjusted earnings of 32 cents per share, beating the Zacks Consensus Estimate of 28 cents. The bottom line surged more than 88.3% year over year. Results benefited from higher sales generation and improved margins.
Total revenues of $869 million missed the Zacks Consensus Estimate of $872 million. However, the top line increased approximately 26.7% year over year, owing to growth in gas utilities and downstream, industrial and energy transition (DIET) sectors.
Revenues by Product Line
Based on MRC Global’s product line, revenues from carbon pipe, fittings and flanges increased 37.6% year over year to $278 million. The same from valves, automation, measurement and instrumentation was up 24.5% from the year-ago quarter’s figure to $290 million. Gas product revenues grew 16.5% to $191 million. Sales for general products increased 37.5% to $77 million. The same for stainless steel, alloy pipe and fittings climbed 6.5% to $33 million.
Revenues by Sector
Based on the sectors served, revenues from upstream production were $195 million, up 39% from the year-ago quarter’s level. Midstream pipeline sales totaled $107 million, up 23% from the year-ago quarter’s tally, while sales for gas utilities totaled $319 million, increasing 24% year over year. DIET sales were $248 million, reflecting year-over-year growth of 24%.
Revenues by Segment
Sales generated from the U.S. segment (representing 82.9% of fourth-quarter revenues) totaled $720 million, rising 27% year over year. The results benefited from improvements in DIET, upstream production and midstream pipeline sectors.
Revenues from the Canada segment (5.2% of the quarter’s revenues) moved up 15% year over year to $46 million on the back of strength in the upstream production sector.
Sales from the International segment (11.9% of the quarter’s revenues) increased 29% to $103 million due to strength in the Upstream Production sector due to increased activity in the North Sea and the DIET sector for energy transition projects.
In the quarter under review, MRC Global’s cost of sales increased 22.8% year over year to $711 million. The adjusted gross profit in the quarter increased 24.3% year over year to $184 million. The adjusted gross margin was 21.2% in the reported quarter compared with 21.6% in the year-ago period. Adjusted selling, general and administrative expenses were up 16% year over year to $123 million. Adjusted EBITDA increased 40.4% year over year to $66 million.
Balance Sheet and Cash Flow
Exiting the fourth quarter, MRC Global had a cash balance of $32 million compared with $48 million at the end of December 2021. Long-term debt, net, increased to $337 million at the end of the fourth quarter compared with $295 million at the end of December 2021.
In 2022, MRC Global used net cash of $20 million from operating activities against $56 million of net cash generated in the year-ago period. Capital spent on purchasing property, plant and equipment was $11 million, up 10% year over year.
In the twelve months of 2022, MRC repurchased shares worth $2 million and paid out dividends totaling $24 million.
Outlook
For 2023, MRC Global anticipates revenues to increase by a double-digit percentage. Revenues in gas utilities are predicted to increase by an upper single-digit percentage, DIET is assumed to increase by an upper single-digit percentage, upstream production is projected to rise by the high teens percentage and the midstream pipeline sector is expected to increase by low teens percentage.
On a segmental basis, U.S. sales are predicted to be up by a low double-digit percentage, while Canadian sales are estimated to be up by a low double-digit percentage during 2023. International sales are anticipated to grow by a low double-digit percentage.
Adjusted EBITDA in the ongoing year is anticipated to grow 8% or higher, while the tax rate is expected to be 26-28%. Selling, general and administrative expenses are predicted to increase in the mid-13% range. Cash flow from operations is likely to be $120 million or more, while capital expenditure is envisioned to be $10-$15 million.
Zacks Rank & Other Stocks to Consider
MRC currently has a Zacks Rank #2 (Buy). Some other top-ranked companies from the Industrial Products sector are discussed below:
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MRC Global (MRC) Q4 Earnings Beat, Surge Y/Y on Higher Sales
MRC Global Inc. (MRC - Free Report) reported fourth-quarter 2022 adjusted earnings of 32 cents per share, beating the Zacks Consensus Estimate of 28 cents. The bottom line surged more than 88.3% year over year. Results benefited from higher sales generation and improved margins.
Total revenues of $869 million missed the Zacks Consensus Estimate of $872 million. However, the top line increased approximately 26.7% year over year, owing to growth in gas utilities and downstream, industrial and energy transition (DIET) sectors.
Revenues by Product Line
Based on MRC Global’s product line, revenues from carbon pipe, fittings and flanges increased 37.6% year over year to $278 million. The same from valves, automation, measurement and instrumentation was up 24.5% from the year-ago quarter’s figure to $290 million. Gas product revenues grew 16.5% to $191 million. Sales for general products increased 37.5% to $77 million. The same for stainless steel, alloy pipe and fittings climbed 6.5% to $33 million.
Revenues by Sector
Based on the sectors served, revenues from upstream production were $195 million, up 39% from the year-ago quarter’s level. Midstream pipeline sales totaled $107 million, up 23% from the year-ago quarter’s tally, while sales for gas utilities totaled $319 million, increasing 24% year over year. DIET sales were $248 million, reflecting year-over-year growth of 24%.
Revenues by Segment
Sales generated from the U.S. segment (representing 82.9% of fourth-quarter revenues) totaled $720 million, rising 27% year over year. The results benefited from improvements in DIET, upstream production and midstream pipeline sectors.
Revenues from the Canada segment (5.2% of the quarter’s revenues) moved up 15% year over year to $46 million on the back of strength in the upstream production sector.
Sales from the International segment (11.9% of the quarter’s revenues) increased 29% to $103 million due to strength in the Upstream Production sector due to increased activity in the North Sea and the DIET sector for energy transition projects.
MRC Global Inc. Price, Consensus and EPS Surprise
MRC Global Inc. price-consensus-eps-surprise-chart | MRC Global Inc. Quote
Margin Profile
In the quarter under review, MRC Global’s cost of sales increased 22.8% year over year to $711 million. The adjusted gross profit in the quarter increased 24.3% year over year to $184 million. The adjusted gross margin was 21.2% in the reported quarter compared with 21.6% in the year-ago period. Adjusted selling, general and administrative expenses were up 16% year over year to $123 million. Adjusted EBITDA increased 40.4% year over year to $66 million.
Balance Sheet and Cash Flow
Exiting the fourth quarter, MRC Global had a cash balance of $32 million compared with $48 million at the end of December 2021. Long-term debt, net, increased to $337 million at the end of the fourth quarter compared with $295 million at the end of December 2021.
In 2022, MRC Global used net cash of $20 million from operating activities against $56 million of net cash generated in the year-ago period. Capital spent on purchasing property, plant and equipment was $11 million, up 10% year over year.
In the twelve months of 2022, MRC repurchased shares worth $2 million and paid out dividends totaling $24 million.
Outlook
For 2023, MRC Global anticipates revenues to increase by a double-digit percentage. Revenues in gas utilities are predicted to increase by an upper single-digit percentage, DIET is assumed to increase by an upper single-digit percentage, upstream production is projected to rise by the high teens percentage and the midstream pipeline sector is expected to increase by low teens percentage.
On a segmental basis, U.S. sales are predicted to be up by a low double-digit percentage, while Canadian sales are estimated to be up by a low double-digit percentage during 2023. International sales are anticipated to grow by a low double-digit percentage.
Adjusted EBITDA in the ongoing year is anticipated to grow 8% or higher, while the tax rate is expected to be 26-28%. Selling, general and administrative expenses are predicted to increase in the mid-13% range. Cash flow from operations is likely to be $120 million or more, while capital expenditure is envisioned to be $10-$15 million.
Zacks Rank & Other Stocks to Consider
MRC currently has a Zacks Rank #2 (Buy). Some other top-ranked companies from the Industrial Products sector are discussed below:
Allegion plc (ALLE - Free Report) presently carries a Zacks Rank of 2. ALLE’s earnings surprise in the last four quarters was 8.8%, on average. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks.
In the past 60 days, Allegion’s earnings estimates have remained steady for 2022. The stock has gained 11.9% in the past six months.
A. O. Smith Corporation (AOS - Free Report) presently carries a Zacks Rank of 2 and a trailing four-quarter earnings surprise of 3.2%, on average.
AOS’ earnings estimates have increased 3.1% for 2023 in the past 60 days. Shares of A. O. Smith have risen 6.2% in the past six months.
Valmont Industries, Inc. (VMI - Free Report) presently has a Zacks Rank of 2. VMI’s earnings surprise in the last four quarters was 12.5%, on average.
In the past 60 days, Valmont’s earnings estimates have increased by a penny. The stock has rallied 12.4% in the past six months.