• Revenue: Fourth-quarter 2024 revenue was $664 million, a 14% sequential decrease and 10% lower than the same quarter a year ago.
• Operating Cash Flow: Generated $268 million from continuing operations for the full year 2024.
• Adjusted Gross Profit Margin: Exceeded 21% for the third consecutive year.
• International Revenue Growth: 14% increase in 2024, marking the second consecutive year of double-digit growth.
• Adjusted EBITDA: $202 million for the full year 2024, representing 6.7% of sales.
• Net Loss: Fourth-quarter net loss from continuing operations was $1 million or $0.14 per diluted share.
• Adjusted Net Income: $4 million for the fourth quarter of 2024.
• Capital Expenditures: $28 million for 2024, with expectations to increase to $45 million in 2025.
• Leverage Ratio: 1.6 times net debt at year-end 2024, with a target of 1.5 times by the end of 2025.
• Liquidity: $523 million, including $460 million of availability on the ABL and $63 million of cash at year-end.

• Warning! GuruFocus has detected 3 Warning Sign with MRC.

Release Date: March 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• MRC Global Inc (NYSE:MRC) successfully simplified its capital structure by repurchasing convertible preferred shares, which is expected to be accretive to cash generation and earnings.
• The company extended its asset-based lending facility maturity to 2029, providing ample liquidity and flexibility.
• MRC Global Inc (NYSE:MRC) announced a $125 million share buyback program, reflecting confidence in the company's future and financial flexibility.
• The international segment showed strong momentum with a 14% revenue growth in 2024, marking the second consecutive year of double-digit growth.
• MRC Global Inc (NYSE:MRC) generated $268 million in operating cash flow from continuing operations in 2024, one of the highest amounts ever achieved by the company.

Negative Points

• The U.S. segment experienced a decline in revenue due to project timing delays and a pronounced year-end pullback in spending.
• Fourth-quarter sales were $664 million, a 14% sequential decrease and 10% lower than the same quarter a year ago.
• Adjusted EBITDA for the full year 2024 was $202 million, representing a decline compared to 2023.
• The company faced an inventory control issue, requiring physical counts to validate inventory balances, though no material discrepancies were found.
• MRC Global Inc (NYSE:MRC) anticipates a conservative gross margin guidance of 21% for 2025, despite potential tailwinds from tariffs and inflation.

Q & A Highlights

Q: Can you elaborate on the revenue outlook, particularly the expected increase from Q1 to Q2, and what gives you confidence in this growth? A: Robert Saltiel, President and CEO, explained that the U.S. segment, which was weak last year, is showing a 19% increase in backlog compared to year-end. This growth is across all three sectors, driven by factors such as the end of destocking in gas utilities, tariff-induced inflation, and a bullish midstream natural gas outlook. The backlog growth is expected to translate into higher revenues and profitability in future quarters.

Q: Why is the gross margin guidance for 2025 set at 21% despite potential tailwinds from tariffs and inflation? A: Kelly Youngblood, Executive Vice President and CFO, noted that while 2024 had some large sales with accretive margins, the 2025 guidance is conservative due to uncertainties around tariffs and inflation. If tariffs and inflation impact positively, there could be upside to the margin guidance.

Q: Can you provide more details on the IMTEC joint venture and its potential impact? A: Robert Saltiel highlighted that the IMTEC JV aims to enhance MRC Global's presence in the gas utilities sector by integrating smart meter technology. This venture could significantly increase meter sales, which currently account for less than 10% of sector revenue, potentially unlocking tens of millions in additional revenue.

Q: What are the bright spots and challenges in the international markets for 2025? A: Robert Saltiel stated that the international segment, driven by projects and valve sales, is strong, particularly in Europe and Asia Pacific. The backlog is at its highest in years, with significant contributions from energy transition projects and robust activity in the PTI and DIET sectors.

Q: How is MRC Global addressing the inventory process issue discovered at the end of 2024? A: Robert Saltiel and Kelly Youngblood explained that the issue was due to execution lapses in the cycle count process at two locations. A remediation plan includes enhanced oversight, consulting reviews, resource changes, and training. The upcoming Oracle ERP implementation will further automate and improve inventory management.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.