Release Date: March 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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.
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