MRC Global Inc (MRC, Financial) released its 8-K filing on November 5, 2024, detailing its financial performance for the third quarter of 2024. The company, a leading distributor of pipes, valves, fittings, and related products to the energy industry, reported a net income attributable to common stockholders of $23 million, or $0.27 per diluted share, surpassing the analyst estimate of $0.19 per share. However, revenue fell short of expectations, coming in at $797 million against the estimated $804.16 million.
Performance and Challenges
Despite a challenging environment marked by slowing U.S. oilfield activity and project delays in the Downstream, Industrial, and Energy Transition (DIET) sector, MRC Global managed to achieve significant cash flow generation. The company reported operating cash flow of $96 million for the quarter, contributing to a year-to-date total of $197 million, nearly reaching its full-year target of $200 million. This robust cash flow performance led to an upward revision of the full-year operating cash flow guidance to $220 million or more.
Financial Achievements
MRC Global's financial achievements are noteworthy, particularly in the context of the oil and gas industry, which is often subject to volatile market conditions. The company's ability to maintain a low net debt leverage ratio of 0.1 times and achieve a new record low in net working capital as a percentage of sales at 14.3% underscores its strong financial management and operational efficiency.
Income Statement Highlights
The company's gross profit for the third quarter was $160 million, representing 20.1% of sales, compared to $183 million, or 20.6% of sales, in the same period last year. Adjusted Gross Profit, excluding the impact of LIFO, was $166 million, or 20.8% of sales. Selling, general, and administrative expenses were $123 million, or 15.4% of sales, slightly down from $126 million, or 14.2% of sales, in the third quarter of 2023.
Balance Sheet and Cash Flow
As of September 30, 2024, MRC Global reported a cash balance of $62 million and long-term debt of $85 million, resulting in a net debt of $23 million. The company also highlighted its liquidity position, with $547 million in available liquidity, including $485 million under its asset-based lending facility.
Sector and Segment Performance
Sales in the U.S. were $644 million, a 14% decrease from the same quarter in 2023, primarily due to declines in the PTI and DIET sectors. International sales, however, increased by 21% to $127 million, driven by growth in the PTI and DIET sectors, particularly in Europe and Asia.
Commentary from Leadership
Rob Saltiel, MRC Global’s President and CEO, stated, “As we guided on our last earnings call, revenue and Adjusted EBITDA declined in the third quarter due to slowing activity in the U.S. oilfield and project delays in our DIET sector. Despite these headwinds, we generated operating cash flow of $96 million, bringing our 2024 total to $197 million, essentially achieving our full year cash flow target of $200 million a quarter early.”
Analysis
MRC Global's performance in the third quarter of 2024 reflects both the challenges and opportunities within the energy sector. While revenue and adjusted EBITDA faced pressure from external factors, the company's strong cash flow generation and strategic financial management highlight its resilience. The ongoing efforts to simplify its capital structure and extend its asset-based lending facility further position MRC Global for future growth and stability.
Explore the complete 8-K earnings release (here) from MRC Global Inc for further details.
