On August 6, 2024, MRC Global Inc (MRC, Financial) released its 8-K filing for the second quarter of 2024. The company, a leading global distributor of pipes, valves, fittings, and related products and services to the energy industry, reported notable financial achievements despite facing sectoral challenges.
Financial Performance Overview
MRC Global Inc (MRC, Financial) reported net income attributable to common stockholders of $24 million, or $0.28 per diluted share, surpassing the analyst estimate of $0.25 per share. This marks an improvement from the $18 million, or $0.21 per diluted share, reported in the same quarter last year. Adjusted net income was $27 million, or $0.31 per diluted share, compared to $22 million, or $0.26 per diluted share, in Q2 2023.
Revenue and Sectoral Insights
The company achieved sales of $832 million, slightly above the analyst estimate of $831.32 million. This represents a 3% increase from the first quarter of 2024 but a 4% decrease from the same quarter last year. The Gas Utilities and Production and Transmission Infrastructure (PTI) sectors saw declines, partially offset by growth in the Downstream, Industrial, and Energy Transition (DIET) sector.
Gross Profit and EBITDA
Gross profit for Q2 2024 was $173 million, or 20.8% of sales, compared to $175 million, or 20.1% of sales, in Q2 2023. Adjusted Gross Profit, excluding the impact of the LIFO inventory costing method, was $184 million, or 22.1% of sales, down from $187 million, or 21.5% of sales, in the same period last year. Adjusted EBITDA was $65 million, or 7.8% of sales, up from $63 million, or 7.2% of sales, in Q2 2023.
Cash Flow and Debt Management
Cash flow from operations was $63 million for the second quarter and $101 million for the first half of 2024. The company repaid its Term Loan B, reducing net debt to an all-time low of $103 million. MRC Global's net debt leverage ratio stands at 0.4 times, the lowest in its history.
Rob Saltiel, MRC Global’s President and CEO, stated, “We achieved sequential growth in revenue, adjusted EBITDA, and cash flow from operations in the second quarter, despite slowing activity in the US oilfield and project delays in our DIET sector. We have generated $101 million in operating cash flow through the first half of 2024, and we are tracking well to meet or exceed our annual operating cash flow target of $200 million.”
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Sales | $832 million | $871 million |
| Gross Profit | $173 million | $175 million |
| Net Income | $24 million | $18 million |
| Adjusted EBITDA | $65 million | $63 million |
Sectoral Sales Breakdown
U.S. sales were $677 million, down 7% from Q2 2023. The Gas Utilities sector revenue decreased by 11%, while the PTI sector sales also fell by 11%. However, the DIET sector saw a 5% increase. International sales were $122 million, up 15% from the same period last year, driven by the PTI sector in Norway and the DIET sector in Europe.
Balance Sheet and Liquidity
As of June 30, 2024, MRC Global had a cash balance of $49 million and long-term debt of $152 million. The company’s available liquidity stood at $537 million, including $488 million under its asset-based lending facility.
Conclusion
MRC Global Inc (MRC, Financial) has demonstrated resilience and strategic financial management in Q2 2024, exceeding earnings estimates and maintaining strong cash flow and debt management. Despite sectoral challenges, the company’s performance underscores its robust operational capabilities and strategic focus on growth and efficiency.
Explore the complete 8-K earnings release (here) from MRC Global Inc for further details.
