MRC Global (MRC) Q1 Earnings Top Estimates, Revenues Up Y/Y

MRC Global Inc. (NYSE:MRC) reported better-than-expected results for first-quarter 2018.

Earnings/Revenues

Quarterly adjusted earnings came in at 13 cents per share, beating the Zacks Consensus Estimate of 9 cents. The company had posted break-even results in the year-ago quarter.

Aggregate sales in the first quarter were $1,010 million, outpacing the Zacks Consensus Estimate of $954 million. Top-line results also improved 17.2% year over year.

Segmental Break-Up

First-quarter sales in the United States totaled $806 million, up 21% year over year. Solid growth across all end-markets supported the upswing.

International sales came in at $126 million, up 6% year over year. This uptick stemmed from robust upstream project activity and favorable foreign currency translation.

Revenues from Canada marginally improved 1% year over year to $78 million. Growth in midstream and downstream businesses were largely hurt by weaker upstream business performance during the reported quarter.

Costs/Margins

Cost of sales during the first quarter was $841 million compared to $722 million recorded in the year-earlier quarter. Adjusted gross profit margin in the quarter came in at 19.1%, up 90 basis points (bps) year over year.

Selling, general and administrative expenses came in at $138 million, higher than $126 million recorded in the year-earlier quarter. Operating margin was 3.1% in the quarter, up 150 bps year over year.

Balance Sheet/Cash Flow

Existing the first quarter, MRC Global had cash worth $45 million, down from $48 million recorded on Dec 31, 2017. Long-term debt at the end of the first quarter was $635 million compared to $522 million posted at the end of 2017.

In the first three months of 2018, this Zacks Rank #1 (Strong Buy) company used $74 million cash from operations, as against $22 million generated in the comparable period last year. Capital expenditure during the first quarter was $5 million, down from $11 million recorded in the prior-year quarter.

During the first quarter, MRC Global repurchased $30 million common stock at an average price of $17.39 per share, under its ongoing $100-million share-repurchase program. Subsequent to the quarter, the company acquired another $20-million common stock at the same average price. The program is scheduled to close on Dec 31, 2018.

Outlook

MRC Global expects that improving macroeconomic conditions across all end-markets will likely boost its revenues and profitability in the quarters ahead. The company also remains on track to improve shareholders’ value, over the long run.

Other Stocks to Consider

Some other top-ranked stocks within the Zacks Industrial Products sector are listed below:

Axon Enterprise, Inc (NASDAQ:AAXN) sports a Zacks Rank of 1. The company pulled off an outstanding average positive earnings surprise of 188.33% over the past four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Applied Industrial Technologies, Inc. (NYSE:AIT) also flaunts a Zacks Rank #1. The company delivered an average positive earnings surprise of 11.61% during the same time frame.

Altra Industrial Motion Corp. (NASDAQ:AIMC) holds a Zacks Rank #2 (Buy). The company came up with an average positive earnings surprise of 5.06%, over the preceding four quarters.

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