Net income attributable to common stockholders for the first quarter of 2024 was $13 million, or
MRC Global’s first quarter 2024 gross profit was $163 million, or 20.2% of sales, as compared to the first quarter 2023 gross profit of $179 million, or 20.2% of sales. Gross profit for the first quarter of 2024 and 2023 includes $1 million of expense and $1 million of income, respectively, in cost of sales relating to the use of the last-in, first-out (LIFO) method of inventory cost accounting. Adjusted Gross Profit, which excludes (among other items) the impact of LIFO, was $174 million, or 21.6% of sales, for the first quarter of 2024 and was $188 million, or 21.2% of sales, for the first quarter of 2023.
First Quarter 2024 Financial Highlights:
- Cash flow provided by operations of
$38 million - Sales of
$806 million , a 5% improvement compared to the fourth quarter of 2023 - Adjusted Gross Profit, as a percentage of sales, of 21.6%, and eight consecutive quarters above 21%
- Adjusted EBITDA of
$57 million , or 7.1% of sales - Net Debt leverage ratio of 0.6 times, the lowest in
MRC Global history
“In addition, we generated $38 million of operating cash flow in the first quarter and are on-track to meet or exceed our cash flow guidance of
Selling, general and administrative (SG&A) expenses were $125 million, or 15.5% of sales, for the first quarter of 2024 compared to $122 million, or 13.8% of sales, for the same period in 2023. Adjusted SG&A for the first quarter of 2024 was $122 million, or 15.1% of sales, excluding $3 million of activism response expenses.
Adjusted EBITDA was $57 million in the first quarter of 2024 compared to $69 million for the same period in 2023.
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Gross Profit, Adjusted Net Income, Adjusted SG&A, Net Debt and Leverage Ratio are all non-GAAP measures. Please refer to the reconciliation of each of these measures to the nearest GAAP measure in this release.
An income tax expense of $8 million was incurred in the first quarter of 2024, with an effective tax rate of 30%, as compared to an income tax expense of $13 million, with an effective tax rate of 28%, for the first quarter of 2023. Our rates differ from the
Sales
The company’s sales were $806 million for the first quarter of 2024, which was 5% higher than the fourth quarter of 2023 and 9% lower than the first quarter of 2023. Sequentially, all sectors were up, led by the Downstream, Industrial and Energy Transition (DIET) and Gas Utilities sectors. As compared to the first quarter of 2023, all sectors declined, led by the
Sales by Segment
Sequentially, as compared to the fourth quarter of 2023,
Canada sales in the first quarter of 2024 were $29 million, down $13 million, or 31%, from the same quarter in 2023, as decreases in the PTI sector offset an increase in the DIET sector.
Sequentially,
International sales in the first quarter of 2024 were $110 million, up $7 million, or 7%, from the same period in 2023. The increase was driven by the PTI sector primarily in Europe and Middle East, followed by the DIET sector in
Sequentially, as compared to the previous quarter, International sales were up $3 million, or 3%. The increase was driven by the DIET sector for project activity in the Middle East and
Sales by Sector
Sequentially, as compared to the fourth quarter of 2023, the
DIET sector sales in the first quarter of 2024 were $276 million, or 34% of total sales, a decrease of $2 million, or 1%, from the first quarter of 2023. The decrease in DIET sector sales was driven by the
Sequentially, as compared to the previous quarter, sales in the DIET sector were up $18 million, or 7%, led by the
PTI sector sales in the first quarter of 2024 were $264 million, or 33% of total sales, a decline of $36 million, or 12%, from the first quarter of 2023. The decrease in PTI sales was due to declines in the
Sequentially, as compared to the prior quarter, PTI sector sales increased $7 million, or 3%, driven by the
Backlog
As of
Balance Sheet and Cash Flow
As of March 31, 2024, the cash balance was $146 million, long-term debt (including current portion) was $295 million, and Net Debt was $149 million. Cash provided by operations was
Conference Call
The company will hold a conference call to discuss its first quarter 2024 results at
About
Headquartered in
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Words such as “will,” “expect,” “expected,” “anticipating,” “intend,” “believes,” "on-track," “well positioned,” “strong position,” “looking forward,” “guidance,” “plans,” “can,” "target," "targeted" and similar expressions are intended to identify forward-looking statements.
Statements about the company’s business, including its strategy, its industry, the company’s future profitability, the company’s guidance on its sales, adjusted EBITDA, adjusted EBITDA margin, tax rate, capital expenditures, achieving cost savings and cash flow, debt reduction, liquidity, growth in the company’s various markets and the company’s expectations, beliefs, plans, strategies, objectives, prospects and assumptions are not guarantees of future performance. These statements are based on management’s expectations that involve a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, most of which are difficult to predict and many of which are beyond
These risks and uncertainties include (among others) decreases in capital and other expenditure levels in the industries that the company serves;
For a discussion of key risk factors, please see the risk factors disclosed in the company’s
Undue reliance should not be placed on the company’s forward-looking statements. Although forward-looking statements reflect the company’s good faith beliefs, reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the company’s actual results, performance or achievements or future events to differ materially from anticipated future results, performance or achievements or future events expressed or implied by such forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except to the extent required by law.
Contact:
VP, Investor Relations & |
Monica.Broughton@mrcglobal.com |
832-308-2847 |
Condensed Consolidated Balance Sheets (Unaudited) (in millions, except shares) | ||||||||
2024 | 2023 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 146 | $ | 131 | ||||
Accounts receivable, net | 478 | 430 | ||||||
Inventories, net | 546 | 560 | ||||||
Other current assets | 34 | 34 | ||||||
Total current assets | 1,204 | 1,155 | ||||||
Long-term assets: | ||||||||
Operating lease assets | 196 | 205 | ||||||
Property, plant and equipment, net | 78 | 78 | ||||||
Other assets | 20 | 21 | ||||||
Intangible assets: | ||||||||
264 | 264 | |||||||
Other intangible assets, net | 158 | 163 | ||||||
$ | 1,920 | $ | 1,886 | |||||
Liabilities and stockholders' equity | ||||||||
Current liabilities: | ||||||||
Trade accounts payable | $ | 402 | $ | 355 | ||||
Accrued expenses and other current liabilities | 95 | 102 | ||||||
Operating lease liabilities | 25 | 34 | ||||||
Current portion of debt obligations | 292 | 292 | ||||||
Total current liabilities | 814 | 783 | ||||||
Long-term liabilities: | ||||||||
Long-term debt | 3 | 9 | ||||||
Operating lease liabilities | 186 | 186 | ||||||
Deferred income taxes | 47 | 45 | ||||||
Other liabilities | 20 | 20 | ||||||
Commitments and contingencies | ||||||||
6.5% Series A Convertible Perpetual Preferred Stock, | 355 | 355 | ||||||
Stockholders' equity: | ||||||||
Common stock, | 1 | 1 | ||||||
Additional paid-in capital | 1,767 | 1,768 | ||||||
Retained deficit | (665 | ) | (678 | ) | ||||
Less: | (375 | ) | (375 | ) | ||||
Accumulated other comprehensive loss | (233 | ) | (228 | ) | ||||
495 | 488 | |||||||
$ | 1,920 | $ | 1,886 |
Condensed Consolidated Statements of Operations (Unaudited) (in millions, except per share amounts) | ||||||||
Three Months Ended | ||||||||
2024 | 2023 | |||||||
Sales | $ | 806 | $ | 885 | ||||
Cost of sales | 643 | 706 | ||||||
Gross profit | 163 | 179 | ||||||
Selling, general and administrative expenses | 125 | 122 | ||||||
Operating income | 38 | 57 | ||||||
Other expense: | ||||||||
Interest expense | (8 | ) | (7 | ) | ||||
Other, net | (3 | ) | (3 | ) | ||||
Income before income taxes | 27 | 47 | ||||||
Income tax expense | 8 | 13 | ||||||
Net income | 19 | 34 | ||||||
Series A preferred stock dividends | 6 | 6 | ||||||
Net income attributable to common stockholders | $ | 13 | $ | 28 | ||||
Basic earnings per common share | $ | 0.15 | $ | 0.33 | ||||
Diluted earnings per common share | $ | 0.15 | $ | 0.33 | ||||
Weighted-average common shares, basic | 84.7 | 84.0 | ||||||
Weighted-average common shares, diluted | 86.1 | 85.4 |
Condensed Consolidated Statements of Cash Flows (Unaudited) (in millions) | ||||||||
Three Months Ended | ||||||||
2024 | 2023 | |||||||
Operating activities | ||||||||
Net income | $ | 19 | $ | 34 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operations: | ||||||||
Depreciation and amortization | 5 | 5 | ||||||
Amortization of intangibles | 5 | 5 | ||||||
Equity-based compensation expense | 4 | 3 | ||||||
Deferred income tax expense | 2 | 5 | ||||||
Other non-cash items | 3 | 4 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (51 | ) | (28 | ) | ||||
Inventories | 8 | (96 | ) | |||||
Other current assets | 1 | (1 | ) | |||||
Accounts payable | 49 | 54 | ||||||
Accrued expenses and other current liabilities | (7 | ) | (15 | ) | ||||
Net cash provided by (used in) operations | 38 | (30 | ) | |||||
Investing activities | ||||||||
Purchases of property, plant and equipment | (6 | ) | (3 | ) | ||||
Other investing activities | 1 | - | ||||||
Net cash used in investing activities | (5 | ) | (3 | ) | ||||
Financing activities | ||||||||
Payments on revolving credit facilities | (14 | ) | (211 | ) | ||||
Proceeds from revolving credit facilities | 9 | 262 | ||||||
Payments on debt obligations | (1 | ) | (1 | ) | ||||
Dividends paid on preferred stock | (6 | ) | (6 | ) | ||||
Repurchases of shares to satisfy tax withholdings | (5 | ) | (4 | ) | ||||
Net cash (used in) provided by financing activities | (17 | ) | 40 | |||||
Increase in cash | 16 | 7 | ||||||
Effect of foreign exchange rate on cash | (1 | ) | - | |||||
Cash -- beginning of period | 131 | 32 | ||||||
Cash -- end of period | $ | 146 | $ | 39 |
Supplemental Sales Information (Unaudited) (in millions) | ||||||||||||||||
Disaggregated Sales by Segment and Sector | ||||||||||||||||
Three Months Ended | ||||||||||||||||
International | Total | |||||||||||||||
2024 | ||||||||||||||||
$ | 265 | $ | 1 | $ | - | $ | 266 | |||||||||
DIET | 202 | 9 | 65 | 276 | ||||||||||||
PTI | 200 | 19 | 45 | 264 | ||||||||||||
$ | 667 | $ | 29 | $ | 110 | $ | 806 | |||||||||
2023 | ||||||||||||||||
$ | 306 | $ | 1 | $ | - | $ | 307 | |||||||||
DIET | 210 | 5 | 63 | 278 | ||||||||||||
PTI | 224 | 36 | 40 | 300 | ||||||||||||
$ | 740 | $ | 42 | $ | 103 | $ | 885 |
Supplemental Sales Information (Unaudited) (in millions) | ||||||||
Sales by Product Line | ||||||||
Three Months Ended | ||||||||
Type | 2024 | 2023 | ||||||
$ | 117 | $ | 141 | |||||
Carbon Fittings and Flanges | 100 | 117 | ||||||
Total Carbon Pipe, Fittings and Flanges | 217 | 258 | ||||||
Valves, Automation, Measurement and Instrumentation | 291 | 315 | ||||||
Gas Products | 187 | 207 | ||||||
Stainless Steel and Alloy Pipe and Fittings | 41 | 32 | ||||||
General Products | 70 | 73 | ||||||
$ | 806 | $ | 885 |
Supplemental Information (Unaudited) Reconciliation of Gross Profit to Adjusted Gross Profit (a non-GAAP measure) (in millions) | ||||||||||||||||
Three Months Ended | ||||||||||||||||
Percentage | Percentage | |||||||||||||||
2024 | of Revenue* | 2023 | of Revenue* | |||||||||||||
Gross profit, as reported | $ | 163 | 20.2 | % | $ | 179 | 20.2 | % | ||||||||
Depreciation and amortization | 5 | 0.6 | % | 5 | 0.6 | % | ||||||||||
Amortization of intangibles | 5 | 0.6 | % | 5 | 0.6 | % | ||||||||||
Increase (decrease) in LIFO reserve | 1 | 0.1 | % | (1 | ) | (0.1 | )% | |||||||||
Adjusted Gross Profit | $ | 174 | 21.6 | % | $ | 188 | 21.2 | % |
Notes to above:
* Does not foot due to rounding
The company defines Adjusted Gross Profit as sales, less cost of sales, plus depreciation and amortization, plus amortization of intangibles, plus inventory-related charges incremental to normal operations and plus or minus the impact of its LIFO inventory costing methodology. The company presents Adjusted Gross Profit because the company believes it is a useful indicator of the company’s operating performance without regard to items, such as amortization of intangibles, that can vary substantially from company to company depending upon the nature and extent of acquisitions of which they have been involved. Similarly, the impact of the LIFO inventory costing method can cause results to vary substantially from company to company depending upon whether they elect to utilize LIFO and depending upon which method they may elect. The company uses Adjusted Gross Profit as a key performance indicator in managing its business. The company believes that gross profit is the financial measure calculated and presented in accordance with
Supplemental Information (Unaudited) Reconciliation of Selling, General and Administrative Expenses (SG&A) to Adjusted SG&A (a non-GAAP measure) (in millions) | ||||||||
Three Months Ended | ||||||||
2024 | 2023 | |||||||
Selling, general and administrative expenses | $ | 125 | $ | 122 | ||||
Activism response legal and consulting costs | (3 | ) | - | |||||
Adjusted Selling, general and administrative expenses | $ | 122 | $ | 122 |
Notes to above:
The company defines adjusted selling, general and administrative (SG&A) expenses as SG&A, less severance and restructuring expenses and other unusual items. The company presents adjusted SG&A because the company believes it is a useful indicator of the company’s operating performance. Among other things, adjusted SG&A measures the company’s operating performance without regard to certain non-recurring, non-cash or transaction-related expenses. The company uses adjusted SG&A as a key performance indicator in managing its business. The company believes that SG&A is the financial measure calculated and presented in accordance with
Supplemental Information (Unaudited) Reconciliation of Net Income to Adjusted EBITDA (a non-GAAP measure) (in millions) | ||||||||
Three Months Ended | ||||||||
2024 | 2023 | |||||||
Net income | $ | 19 | $ | 34 | ||||
Income tax expense | 8 | 13 | ||||||
Interest expense | 8 | 7 | ||||||
Depreciation and amortization | 5 | 5 | ||||||
Amortization of intangibles | 5 | 5 | ||||||
Increase (decrease) in LIFO reserve | 1 | (1 | ) | |||||
Equity-based compensation expense (1) | 4 | 3 | ||||||
Activism response legal and consulting costs (1) | 3 | - | ||||||
Write off of debt issuance costs | 1 | - | ||||||
Asset disposal (2) | 1 | - | ||||||
Foreign currency losses | 2 | 3 | ||||||
Adjusted EBITDA | $ | 57 | $ | 69 |
Notes to above:
(1) Charges (pre-tax) recorded in SG&A.
(2) Charge (pre-tax) for an asset disposal in our International segment.
The company defines adjusted EBITDA as net income plus interest, income taxes, depreciation and amortization, amortization of intangibles, and certain other expenses, including non-cash expenses, (such as equity-based compensation, severance and restructuring, changes in the fair value of derivative instruments, asset impairments, including inventory, long-lived asset impairments (including goodwill and intangible assets), inventory-related charges incremental to normal operations, and plus or minus the impact of its LIFO inventory costing methodology. The company presents adjusted EBITDA because the company believes adjusted EBITDA is a useful indicator of the company’s operating performance. Among other things, adjusted EBITDA measures the company’s operating performance without regard to certain non-recurring, non-cash or transaction-related expenses. adjusted EBITDA, however, does not represent and should not be considered as an alternative to net income, cash flow from operations or any other measure of financial performance calculated and presented in accordance with GAAP. Because adjusted EBITDA does not account for certain expenses, its utility as a measure of the company’s operating performance has material limitations. Because of these limitations, the company does not view adjusted EBITDA in isolation or as a primary performance measure and also uses other measures, such as net income and sales, to measure operating performance. See the company's Annual Report filed on Form 10-K for a more thorough discussion of the use of adjusted EBITDA.
Supplemental Information (Unaudited) Reconciliation of Net Income Attributable to Common Stockholders to Adjusted Net Income Attributable to Common Stockholders (a non-GAAP measure) (in millions, except per share amounts) | ||||||||
Three Months Ended | ||||||||
Amount | Per Share | |||||||
Net income attributable to common stockholders | $ | 13 | $ | 0.15 | ||||
Asset disposal, net of tax (1) | 1 | 0.01 | ||||||
Activism response legal and consulting costs, net of tax | 2 | 0.03 | ||||||
Increase in LIFO reserve, net of tax | 1 | 0.01 | ||||||
Adjusted net income attributable to common stockholders | $ | 17 | $ | 0.20 |
Notes to above:
(1) An after-tax charge for an asset disposal in our International segment.
Three Months Ended | ||||||||
Amount | Per Share | |||||||
Net income attributable to common stockholders | $ | 28 | $ | 0.33 | ||||
Decrease in LIFO reserve, net of tax | (1 | ) | (0.01 | ) | ||||
Adjusted net income attributable to common stockholders | $ | 27 | $ | 0.32 |
Notes to above:
The company defines adjusted net income attributable to common stockholders (a non-GAAP measure) as net income attributable to common stockholders plus or minus the after-tax impact of items deemed non-standard and plus or minus the after-tax impact of its LIFO inventory costing methodology. After-tax impacts were determined using the company's
Supplemental Information (Unaudited) Reconciliation of Long-term Debt to Net Debt (a non-GAAP measure) and the Leverage Ratio Calculation (in millions) | ||||
2024 | ||||
Long-term debt | $ | 3 | ||
Plus: current portion of debt obligations | 292 | |||
Total debt | 295 | |||
Less: cash | 146 | |||
Net Debt | $ | 149 | ||
Net Debt | $ | 149 | ||
Trailing twelve months adjusted EBITDA | 238 | |||
Leverage ratio | 0.6 |
Notes to above:
Net Debt and related leverage metrics may be considered non-GAAP measures. The company defines Net Debt as total long-term debt, including current portion, minus cash. The company defines its leverage ratio as Net Debt divided by trailing twelve months Adjusted EBITDA. The company believes Net Debt is an indicator of the extent to which the company’s outstanding debt obligations could be satisfied by cash on hand and a useful metric for investors to evaluate the company’s leverage position. The company believes the leverage ratio is a commonly used metric that management and investors use to assess the borrowing capacity of the company. The company believes total long-term debt (including the current portion) is the financial measure calculated and presented in accordance with
Source:
2024 GlobeNewswire, Inc., source