MRC Global (MRC) Breaks Even in Q1 Earnings, Tops Revenues
MRC Global Inc. MRC reported better-than-expected first-quarter 2017 results. Strong midstream and upstream sector business drove the top- and bottom-line performance during the quarter.
Over the last six months, shares of this Zacks Rank #3 (Hold) stock yielded a return of 17.70%, outperforming 8.62% growth recorded by the Zacks categorized Steel - Pipe and Tube industry.
Bottom-Line Performance
The company posted break-even results for the quarter, as against the Zacks Consensus Estimate of a loss of 6 cents and the year-ago reported loss of 10 cents per share.
Top-Line Performance
Sales in the reported quarter came in at $862 million, handily beating the Zacks Consensus Estimate of $808 million. Notably, quarterly revenues exceeded the year-ago tally by 10.1%. The upside was stemmed by increased customer activity, majorly in the mid-stream sector.
Segmental Details
MRC Global’s first-quarter sales in the U.S. totaled $666 million, up 10% year over year. The year-over-year improvement was driven by increased rig counts and a major ongoing project secured from a transmission customer.
International sales came in at $119 million, up 5% year over year, backed by the Australian line pipe deal received in the mid-stream sector domain.
Revenues from Canada were $77 million, up 20% year over year. The remarkable upside was driven by solid up-stream sector business and appreciation of the Canadian currency with respect to the U.S. dollar.
Costs and Margins
Cost of sales during the quarter was $722 million compared to $650 million recorded in the year-ago quarter. Selling, general and administrative expenses came in at $126 million as against $137 million recorded in the year-earlier quarter.
Gross profit margin in the first quarter was 16.2%, down 80 basis points (bps) year over year.
Balance Sheet and Cash Flow
Existing the first quarter, MRC Global had cash worth $93 million as against $109 million recorded on Dec 31, 2016. Long-term debt at the end of the reported quarter was $404 million compared to $406 million recorded at the end of 2016.
During first-quarter 2017, MRC Global generated $22 million cash from operations, down 62.1% year over year. Capital expenditure during the quarter was $11 million compared to $10 million recorded in the comparable period last year.
The company also successfully completed is ongoing share buyback program (initiated in Nov 2015) worth $125 million, by repurchasing $18 million stock during the quarter, at an average price of $20.54 per share. As of Mar 31, 2017, MRC Global’s outstanding share count was 94.4 million.
Outlook
The company believes that recovering conditions in the oil and gas markets would likely boost revenues and profitability in the quarters ahead.
Stocks to Consider
Better-ranked stocks within the industry are listed below:
Caterpillar Inc. CAT has a positive average earnings surprise of 40.25% for the trailing four quarters and boasts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Industrial Technologies, Inc. AIT, which currently flaunts a Zacks Rank #1, generated an average earnings surprise of 9.78% over the last four quarters.
Avery Dennison Corporation AVY holds a Zacks Rank #2 and has an average earnings surprise of 5.53% for the past quarters.
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