Houston-based industrial PVF distributor MRC Global recently announced third quarter 2017 results. The company's sales were $959 million for the third quarter of 2017, which was 21% higher than the third quarter of 2016 and 4% higher than the second quarter of 2017. Growth across all sectors drove the increase in both comparative periods. Net loss attributable to common stockholders for the third quarter of 2017 and 2016 was $(3) million, or $(0.03) per diluted share, and $(46) million, or $(0.48) per diluted share, respectively. The third quarter 2017 and 2016 results include after-tax charges of $5 million, or $0.05per diluted share for the write off of debt issuance costs associated with refinancing the company’s debt and $40 million, or $0.42 per diluted share of non-cash inventory and restructuring charges, respectively. "Third quarter results were strong, delivering adjusted gross margin of 19% and adjusted EBITDA of $56 million, as we worked through the disruption of two major hurricanes and helped our customers get their operations back online," Andrew R. Lane, MRC Global's president and chief executive officer stated. "I am pleased with 18% revenue growth for the first nine months of 2017 over the prior year as well as the continued execution of several multi-year framework agreements this year. In 2012, we executed the first global valve agreement in the industry with Shell and we have continued to build on that success, as this quarter we extended that agreement for an additional five years. Also, capitalizing on favorable market conditions, we refinanced our senior secured term loan and asset-based lending facility this quarter, extending our maturities to 2024 and 2022, respectively. We are well-positioned for continued growth as the energy markets continue to improve.” MRC Global's third quarter 2017 gross profit was $152 million, or 15.8% of sales, an increase from third-quarter 2016 gross profit of $88 million, or 11.1% of sales, which includes $45 million of non-cash inventory charges recorded in cost of sales. Gross profit for the third quarter of 2017 and 2016 reflects an expense of $13 million and a benefit of $3 million, respectively, in cost of sales relating to the use of the last-in, first out (LIFO) method of inventory cost accounting. Selling, general and administrative (SG&A) expenses were $130 million, or 13.6% of sales, for the third quarter of 2017 compared to $124 million, or 15.6% of sales, for the same period of 2016. SG&A expenses for the third quarter of 2016 include $3 million of pre-tax severance and restructuring charges. There were no such charges in the third quarter of 2017. Adjusted EBITDA was $56 million in the third quarter of 2017 compared to $24 million for the same period in 2016. Sales by segment U.S. sales in the third quarter of 2017 were $759 million, up $169 million, or 29%, from the same quarter in 2016. The increase was across all sectors and is primarily due to increased midstream customer activity and upstream well completion activity. Canadian sales in the third quarter of 2017 were $77 million, up $7 million, or 10%, from the same quarter in 2016 primarily due to the upstream business as a result of an increase in rig count and well completions, partially offset by a decline in the midstream business. Canadian sales were favorably impacted by $3 million as a result of a stronger Canadian dollar relative to the U.S. dollar. International sales in the third quarter of 2017 were $123 million, down $10 million, or 8%, from the same period in 2016. The decrease was primarily due to declines in the upstream sector partially offset by a $12 million Australian line pipe delivery in the midstream sector. The decline in upstream was due primarily to the conclusion of a major project in Norway. The strengthening of foreign currencies relative to the U.S. dollar favorably impacted sales by $3 million. Sales by sector Upstream sales in the third quarter of 2017 increased 20% over the third quarter of 2016 to $269 million, or 28% of total sales. The increase in upstream sales was in our U.S. segment, which was up 42% and our Canadian segment, which was up 55% as a result of increased customer activity. Midstream sales in the third quarter of 2017 increased 34% from the third quarter of 2016 to $437 million, or 46% of total sales. Sales to transmission and gathering customers were up 41% while sales to gas utility customers were up by 27% over the same quarter in 2016. Downstream sales in the third quarter of 2017 increased 5% from the third quarter of 2016 to $253 million, or 26% of total sales. The U.S. downstream sector was the primary driver of the increase, growing 6% over the third quarter of last year. Balance sheet During the third quarter, MRC refinanced its senior secured term loan and its asse- based lending facility at lower interest rates and extended the maturities to 2024 and 2022, respectively. The outstanding balances on the senior secured term loan and the asset-based lending facility (ABL) at Sept. 30, 2017 were $397 million and $50 million, respectively. Availability under the ABL was $489 million and debt, net of cash, was $407 million as of Sept. 30, 2017. Share repurchase program In October 2017, the board of directors authorized a share repurchase program for common stock of up to $100 million. The shares may be repurchased at management's discretion in the open market. Depending on market conditions and other factors, these repurchases may be commenced or suspended from time to time without prior notice. The program is scheduled to expire on Dec. 31, 2018. "This authorization demonstrates the confidence the board has in our strategy, our ability to deliver long-term shareholder value and the overall intrinsic value of the company. Our strong balance-sheet position provides sufficient capital for growth and opportunistic share repurchases." Lane commented. |
MRC Global announces third-quarter results
Source: MRC Global
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