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MRC (MRC) Up 0.1% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for MRC Global (MRC - Free Report) . Shares have added about 0.1% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is MRC due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

MRC Global Q2 Earnings Top Estimates, Revenues Down Y/Y

MRC Global reported second-quarter 2024 adjusted earnings of 31 cents per share, which beat the Zacks Consensus Estimate of 24 cents. However, the bottom line declined 19.2% year over year.

Total revenues of $832 million surpassed the consensus estimate of $822 million. Yet, the top line decreased 4.5% year over year due to lower volume of sales in the Gas Utilities and Production & Transmission Infrastructure (PTI) sectors.

Revenues by Product Line

Based on MRC’s product line, revenues from carbon pipe, fittings and flanges were down 4.9% year over year to $235 million. Revenues from valves, automation, measurement and instrumentation were up 1% year over year to $302 million.

Gas product revenues decreased 9.8% year over year to $193 million. Sales of general products fell 10.7% to $67 million. Sales of stainless steel, alloy pipe and fittings decreased 2.8% to $35 million.

Revenues by Sector

Effective second-quarter 2023, MRC Global combined its Upstream Production and Midstream Pipeline into one sector, which is currently the PTI sector.

Based on the sectors served, revenues from Gas Utilities decreased 11.6% year over year to $287 million while DIET sales inched up 9.4% to $268 million. Sales from the PTI sector decreased 8.6% year over year to $277 million.

Revenues by Segment

Sales generated from the U.S. segment (representing 81.4% of revenues) totaled $677 million, down 6.9% year over year. The downtick was due to reduced demand in the Gas Utilities and PTI sectors.

Revenues from the Canada segment (4%) fell 13.2% year over year to $33 million due to weakness in the PTI sector.

Sales from the International segment (13.6%) grew 15.9% year over year to $122 million, driven by higher revenues from the PTI and DIET sectors.

Margin Profile

MRC Global’s cost of sales declined 5.3% year over year to $659 million. The adjusted gross profit was down 1.6% year over year to $184 million. The adjusted gross margin was 22.1% compared with 21.5% in the year-ago period.

Selling, general and administrative expenses were down 3.1% year over year to $126 million. Adjusted EBITDA increased 3.2% year over year to $65 million.

Balance Sheet and Cash Flow

Exiting the second quarter, MRC Global had a cash balance of $49 million compared with $131 million at the end of December 2023. Total debt (including the current portion) was $152 million at the end of the reported quarter.

In the first six months of 2024, the company generated net cash of $101 million from operating activities against $10 million cash used in the year-ago period. Capital spent on purchasing property, plant and equipment was $14 million, up 180% on a year-over-year basis.

In the first six months of the year, dividends paid on preferred stock were $12 million, flat year over year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -6.67% due to these changes.

VGM Scores

Currently, MRC has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise MRC has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.


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