MRC Global (MRC) Q4 2023 earnings summary

Executive summary

• FY23 revenue rose 1% YoY to $3.412B; adjusted EBITDA was $250M, or 7.3% of sales, and adjusted gross profit margin reached a record 21.5%.

• Q4 revenue fell 12% YoY to $768M; adjusted EBITDA was $48M, or 6.3% of sales, while adjusted gross profit margin was 21.9%.

• FY23 operating cash flow was $181M; year-end net debt leverage was 0.7x, a record low.

Financial highlights

• FY23 GAAP net income was $114M versus $75M in FY22; diluted EPS was $1.05 versus $0.60. Net income attributable to common stockholders was $90M versus $51M.

• FY23 adjusted net income was $97M, or $1.13 per diluted share, versus $101M, or $1.19; Q4 adjusted net income was $20M, or $0.23 per diluted share.

• Q4 GAAP net income was $21M; net income attributable to common stockholders was $15M and diluted EPS was $0.17.

• FY23 gross profit was $690M, or 20.2% of sales, versus $610M; Q4 gross profit was $153M, or 19.9% of sales.

• Q4 adjusted SG&A was $124M, or 16.1% of sales; FY adjusted SG&A was $498M versus $469M.

Outlook and guidance

• FY24 revenue is expected flat to modestly lower, or down low- to mid-single digits; management expects stronger activity in H2.

• FY24 adjusted gross profit margin is targeted to average 21% or better and adjusted EBITDA margin 7%; SG&A is targeted below 15% of sales.

• FY24 operating cash flow target is $200M; capital expenditures are forecast at $40M–$45M, including ERP investment.

• FY24 segment outlook: DIET modestly higher, PTI modestly lower, and Gas Utilities down for the year with H2 recovery; Q1 revenue is expected flat to modestly lower QoQ.

• Term Loan B is expected to be repaid by its September 2024 maturity using cash and the ABL facility, without additional financing; positive net cash is projected for 2025.