MRC Global (MRC) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $832 million, up 3% sequentially but down 4% year-over-year, with record adjusted gross margins and strong international growth; net income attributable to common stockholders was $24 million ($0.28 per diluted share), and adjusted net income was $27 million ($0.31 per share).

• Adjusted EBITDA for Q2 2024 was $65 million (7.8% of sales), up from $63 million (7.2%) in Q2 2023, and operating cash flow reached $63 million for the quarter and $101 million for the first half.

• Net debt was reduced to a record-low $103 million, with a leverage ratio of 0.4x, following early repayment of Term Loan B.

• International business delivered 15% year-over-year and 11% sequential revenue growth, supported by a 32% higher backlog.

• A major new agreement was signed to become ExxonMobil’s primary PVF supplier in North America, expected to double business with ExxonMobil once integrations are complete.

Financial highlights

• Adjusted gross margin reached a record 22.1%, with adjusted EBITDA margin at 7.8%; SG&A expense was $126 million (15.1% of sales), with adjusted SG&A at $124 million (14.9% of sales).

• Net income for Q2 2024 was $24 million ($0.28 per diluted share); adjusted net income was $27 million ($0.31 per share).

• Interest expense dropped to $7 million from $10 million a year ago due to lower debt and rates.

• Cash balance at June 30, 2024, was $49 million; total liquidity was $537 million, including $488 million ABL availability.

• Net working capital to sales ratio improved to 15.5%.

Outlook and guidance

• Revenue for the second half of 2024 is expected to decline low single digits compared to the first half, with adjusted gross margins projected to average 21%.

• SG&A is projected to remain at Q2 levels, and 2024 CapEx is forecast at $36–$40 million, elevated due to ERP implementation.

• Operating cash flow for 2024 is expected to meet or exceed $200 million.

• Effective tax rate for 2024 is expected to be 26–28%.

• 2025 is anticipated to be a growth year as project delays resolve and sector fundamentals improve.