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MRC Global (MRC) Misses Q3 Earnings and Revenue Estimates

MRC Global Inc. MRC reported lower-than-expected results for third-quarter 2017.

Bottom-Line Performance

Quarterly adjusted earnings came in at 2 cents per share, missing the Zacks Consensus Estimate of 7 cents. However, the company had reported a loss of 6 cents per share in the prior-year quarter.

Top-Line Performance

Sales in the reported quarter came in at $959 million, missing the Zacks Consensus Estimate of $964 million. However, quarterly revenues improved 20.9% year over year.

Segmental Details

MRC Global’s third-quarter sales in the United States totaled $759 million, up 29% year over year. This upside was driven by increased upstream well completion and midstream customer spending activity.

International sales came in at $123 million, declining 8% year over year. The segment was hit by lower sales from the upstream sector. The sector’s revenues dipped due to conclusion of an important project in Norway.

Revenues from Canada came in at $77 million, up 10% year over year. The year-over-year improvement was backed by solid upstream business and increased well completion activities, as well as higher rig count.

MRC Global Inc. Price, Consensus and EPS Surprise

 

MRC Global Inc. Price, Consensus and EPS Surprise | MRC Global Inc. Quote

Costs and Margins

Cost of sales during the quarter was $807 million compared to $705 million recorded in the year-ago quarter. Adjusted gross profit margin in the reported quarter came in at 19%, expanding 600 basis points (bps) year over year.

Selling, general and administrative expenses came in at $130 million, as against $124 million incurred in the year-earlier quarter.

Balance Sheet and Cash Flow

Existing the third quarter, MRC Global had cash worth $40 million, down from $109 million recorded on Dec 31, 2016. Long-term debt at the end of the third quarter was $444 million compared to $406 million recorded at the end of 2016.

In the first nine months of 2017, MRC Global used $37 million cash from operations, as against $230 million cash generated in the comparable period last year. Capital expenditure during the quarter was $23 million, down from $24 million recorded in the year-ago quarter.

Share Repurchase Program

MRC Global launched a share repurchase program this October, for common stock up to $100 million. The program is scheduled to close on Dec 31, 2018.

Outlook

During the reported quarter, MRC Global extended its global-valve agreement with Shell (first inked in 2012) by five years. Considering improving market conditions, the company has refinanced its asset-based loaning facility and senior secured term loan, expanding maturities to 2022 and 2024, respectively. It believes recovering conditions in the oil and gas markets will likely bolster revenues and profitability in the quarters ahead.

Zacks Rank & Stocks to Consider

MRC Global currently carries a Zacks Rank #4 (Sell).  Some better-ranked stocks in the same space are listed below:

TASER International, Inc. AAXN currently carries a Zacks Rank of 2 (Buy) and has a positive average earnings surprise of 45.61% for the last four quarters. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Acco Brands Corporation ACCO also holds a Zacks Rank of 2 and has a positive average earnings surprise of 81.89% for the trailing four quarters.

Altra Industrial Motion Corp. AIMC carries a Zacks Rank of 2 and has a positive average earnings surprise of 17.30% for the same time frame.

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