Yahoo Finance MRC (MRC) Up 0.2% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for MRC Global (MRC). Shares have added about 0.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is MRC due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
MRC Global Q1 Earnings & Revenues Top Estimates, Down Y/Y
MRC Global reported first-quarter 2024 adjusted earnings of 20 cents per share, which beat the Zacks Consensus Estimate of 11 cents. However, the bottom line declined 37.5% year over year.
Total revenues of $806 million surpassed the consensus estimate of $752 million. Yet, the top line decreased 8.9% year over year due to lower volume of sales in the Gas Utilities and Production & Transmission Infrastructure (PTI) sectors.
Revenues by Product Line
Based on MRC’s product line, revenues from carbon pipe, fittings and flanges plunged 15.9% year over year to $217 million. The same from valves, automation, measurement and instrumentation was down 7.6% year over year to $291 million.
Gas product revenues decreased 9.7% year over year to $187 million. Sales of general products fell 4.1% to $70 million. The same for stainless steel, alloy pipe and fittings increased 28.1% to $41 million.
Revenues by Sector
Effective first-quarter 2023, MRC combined its Upstream Production and Midstream Pipeline into one sector, which is currently the PTI sector.
Based on the sectors served, revenues from Gas Utilities decreased 13% year over year to $266 million while DIET sales inched down 1% to $276 million. Sales from the PTI sector decreased 12% year over year to $264 million.
Revenues by Segment
Sales generated from the U.S. segment (representing 82.8% of revenues) totaled $667 million, down 9.9% year over year. The downtick was due to reduced demand in the Gas Utilities and PTI sectors.
Revenues from the Canada segment (3.6%) fell 30.1% year over year to $29 million due to weakness in the PTI sector.
Sales from the International segment (13.6%) grew 6.8% year over year to $110 million, driven by higher revenues from the PTI sector in the Middle East and Europe. This was followed by strength in the DIET sector on solid renewable and LNG projects.
Margin Profile
MRC Global’s cost of sales declined 8.9% year over year to $643 million. The adjusted gross profit was down 7.4% year over year to $174 million. The adjusted gross margin was 21.6% compared with 21.2% in the year-ago period.
Selling, general and administrative expenses were up 2.5% year over year to $125 million. Adjusted EBITDA tumbled 17.4% year over year to $57 million.
Balance Sheet and Cash Flow
Exiting the first quarter of 2024, MRC had a cash balance of $146 million compared with $131 million at the end of December 2023. Total debt (including the current portion) was $295 million at the end of the reported quarter.
In the first three months of 2024, the company generated net cash of $38 million from operating activities against $30 million cash used in the year-ago period. Capital spent on purchasing property, plant and equipment was $6 million, up 100% on a year-ver-year basis.
In the first three months of 2024, dividends paid on preferred stock was $6 million, flat year over year.
2024 Outlook
Management expects revenues to be in the range of flat to down in low-single digits. Revenues from the DIET sector is suggested to be modestly higher, while the same from PTI is projected to be modestly lower from the year-earlier levels. Revenues from the Gas Utilities sector is estimated to decline for the full year.
It anticipates capital expenditures to be between $40 million and 45 million, while cash flow from operations is forecast to be atleast $200 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 9.09% due to these changes.
VGM Scores
At this time, MRC has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, MRC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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MRC Global Inc. (MRC) : Free Stock Analysis Report
