HOUSTON--(BUSINESS WIRE)--DNOW Inc. (NYSE: DNOW) ("DNOW†or "the Company†) today announced its future leadership team effective upon the completion of the pending transaction with MRC Global Inc. (NYSE: MRC) ("MRC Global†). The team will be comprised of leaders from both companies who bring expertise and proven track records in customer service, operational excellence, and supply chain management across the energy and industrial sectors. They collectively possess deep industry knowledge, have s. ...

Group 1 - DNOW Inc. is merging with MRC Global to create a dominant industrial distributor in North America, with DNOW shareholders receiving 57% and MRC shareholders 43% of the combined company [2] - The merger is expected to close in the fourth quarter, resulting in a company valued at $2.6 billion with $200 million in net debt, which management plans to reduce over the next year [2] - The combined entity is positioned to benefit from growth in alternative energy, data center infrastructure, and mining, while achieving operational and purchasing synergies [3][4] Group 2 - Both DNOW and MRC have improved their business models over the past decade, focusing on higher-margin products and integrated supply chain solutions, with DNOW transitioning from distribution to purpose-built solutions [4] - The merger is expected to create significant cost synergies and revenue enhancements, providing a strong platform for future mergers and acquisitions or share repurchases [5] - The combined business trades at a discount relative to peers, with a conservative synergy estimate of $70 million, indicating a compelling investment opportunity [3][5]

Core Viewpoint - The proposed sale of MRC Global Inc. to DNOW Inc. is under investigation to assess whether the transaction adequately values MRC Global and the process leading to this valuation is appropriate [1]. Group 1 - MRC Global shareholders will receive 0.9489 shares of DNOW for each share of MRC they own as part of the proposed transaction [1]. - Kahn Swick & Foti, LLC is investigating the adequacy of the consideration offered to MRC Global shareholders [1]. - The investigation aims to determine if the proposed sale undervalues MRC Global [1].

Core Insights - MRC Global Inc. reported second-quarter 2025 adjusted earnings of 25 cents per share, exceeding the Zacks Consensus Estimate of 23 cents, but down from 31 cents per share in the same quarter last year [1][7] - Total revenues reached $798 million, surpassing the consensus estimate of $772 million, although this represented a slight decrease of 0.1% year over year due to lower sales volumes in the Downstream, Industrial and Energy Transition (DIET) sector [1][7] Revenue Breakdown by Product Line - Revenues from carbon pipe, fittings, and flanges decreased by 11.9% year over year to $200 million [2] - Revenues from valves, automation, measurement, and instrumentation increased by 3.5% year over year to $294 million [2] - Gas product revenues rose by 8.3% year over year to $209 million [2] - Sales of general products increased by 1.7% to $61 million [2] - Sales of stainless steel and alloy pipe and fittings decreased by 2.9% to $34 million [2] Revenue Breakdown by Sector - Revenues from Gas Utilities increased by 4% year over year to $299 million [3] - DIET sales declined by 13% to $223 million [3] - Sales from the PTI sector increased by 8% year over year to $276 million [3] Revenue Breakdown by Segment - Sales from the U.S. segment, which represents 82% of total revenues, totaled $658 million, down 3% year over year due to reduced demand in the DIET and PTI sectors [4] - Sales from the International segment, accounting for 18% of revenues, grew by 15% year over year to $140 million, driven by higher revenues from the PTI sector [4] Margin Profile - MRC Global's cost of sales increased by 2.7% year over year to $647 million [5] - Adjusted gross profit decreased by 4.4% year over year to $172 million, resulting in an adjusted gross margin of 21.6%, down from 22.5% in the previous year [5][7] - Selling, general, and administrative expenses rose by 6.6% year over year to $130 million [5] - Adjusted EBITDA decreased by 16.9% year over year to $54 million [5] Balance Sheet and Cash Flow - As of the end of the second quarter 2025, MRC had a cash balance of $75 million, up from $63 million at the end of December 2024 [6] - Long-term debt, including the current portion, was $449 million, with net debt at $374 million [6] - In the first half of 2025, the company used net cash of $30 million in operating activities, compared to $101 million used in the same period last year [6] 2025 Outlook - MRC Global anticipates its 2025 revenues to increase in the low to high-single-digit range on a year-over-year basis [9]

PART I – FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and comprehensive notes, covering financial position, performance, cash flows, and significant accounting policies and events [ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, income statements, comprehensive income, equity, and cash flows, along with detailed explanatory notes [CONDENSED CONSOLIDATED BALANCE SHEETS](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific points in time | Metric | June 30, 2025 (millions) | December 31, 2024 (millions) | Change (millions) | | :-------------------------------- | :----------------------- | :------------------------- | :---------------- | | Total Assets | $1,774 | $1,624 | +$150 | | Total Liabilities | $800 | $724 | +$76 | | Total Stockholders' Equity | $536 | $516 | +$20 | | Cash | $75 | $63 | +$12 | | Accounts receivable, net | $469 | $378 | +$91 | | Inventories, net | $490 | $415 | +$75 | | Current assets of discontinued operations | $1 | $36 | -$35 | | Trade accounts payable | $438 | $329 | +$109 | | Long-term debt | $445 | $384 | +$61 | [CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) This section presents the company's financial performance over specific periods, including sales, gross profit, operating income, and net income Three Months Ended June 30 (2025 vs. 2024) | Metric | 2025 (millions) | 2024 (millions) | Change (millions) | % Change | | :------------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | Sales | $798 | $799 | -$1 | (0.1)% | | Gross profit | $151 | $169 | -$18 | (10.7)% | | Operating income | $21 | $47 | -$26 | (55.3)% | | Net income (loss) | $13 | $30 | -$17 | (56.7)% | | Basic EPS | $0.15 | $0.28 | -$0.13 | (46.4)% | | Diluted EPS | $0.15 | $0.28 | -$0.13 | (46.4)% | Six Months Ended June 30 (2025 vs. 2024) | Metric | 2025 (millions) | 2024 (millions) | Change (millions) | % Change | | :------------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | Sales | $1,510 | $1,576 | -$66 | (4.2)% | | Gross profit | $293 | $328 | -$35 | (10.7)% | | Operating income | $39 | $86 | -$47 | (54.7)% | | Net income (loss) | $(9) | $49 | -$58 | N/M | | Basic EPS | $(0.11) | $0.44 | -$0.55 | N/M | | Diluted EPS | $(0.11) | $0.43 | -$0.54 | N/M | - The net loss for the six months ended June 30, 2025, was primarily due to a **$30 million loss from discontinued operations**, net of tax[7](index=7&type=chunk) [CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) This section details the company's comprehensive income, including net income and other comprehensive income items not reported in the income statement Three Months Ended June 30 (2025 vs. 2024) | Metric | 2025 (millions) | 2024 (millions) | Change (millions) | | :------------------------------------- | :-------------- | :-------------- | :---------------- | | Net income (loss) | $13 | $30 | -$17 | | Total other comprehensive income (loss), net of tax | $9 | $1 | +$8 | | Comprehensive income | $22 | $31 | -$9 | Six Months Ended June 30 (2025 vs. 2024) | Metric | 2025 (millions) | 2024 (millions) | Change (millions) | | :------------------------------------- | :-------------- | :-------------- | :---------------- | | Net income (loss) | $(9) | $49 | -$58 | | Total other comprehensive income (loss), net of tax | $42 | $(4) | +$46 | | Comprehensive income | $33 | $45 | -$12 | - The six-month period in 2025 included a reclassification of **$28 million of foreign currency translation adjustments** to net income as a result of the sale of Canada operations[9](index=9&type=chunk) [CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS'%20EQUITY) This section outlines changes in the company's equity over time, reflecting net income, share repurchases, and other equity adjustments - Total Stockholders' Equity increased from **$516 million** at December 31, 2024, to **$536 million** at June 30, 2025[6](index=6&type=chunk)[10](index=10&type=chunk) - Net income for the three months ended June 30, 2025, was **$13 million**, contributing to the overall equity[10](index=10&type=chunk) - Common stock repurchases totaled **$15 million** for the six months ended June 30, 2025[10](index=10&type=chunk) - Foreign currency translation adjustments contributed **$14 million** (net of reclassification) for the six months ended June 30, 2025[11](index=11&type=chunk) - A reclassification of **$28 million** in foreign currency translation adjustments to net income occurred due to the sale of Canada operations for the six months ended June 30, 2025[10](index=10&type=chunk) - Equity-based compensation expense was **$8 million** for the six months ended June 30, 2025[11](index=11&type=chunk) [CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section reports the cash generated and used by the company across operating, investing, and financing activities over specific periods Net Cash Flows (Six Months Ended June 30) | Activity | 2025 (millions) | 2024 (millions) | | :------------------------------------- | :-------------- | :-------------- | | Operating activities | $(30) | $101 | | Investing activities | $(2) | $(13) | | Financing activities | $39 | $(169) | | Net increase (decrease) in cash | $7 | $(81) | - Net cash used in operating activities for the six months ended June 30, 2025, was primarily due to increases in accounts receivable and inventories and lower profitability, partially offset by an increase in accounts payable[13](index=13&type=chunk) - Investing activities in 2025 included **$17 million** provided by discontinued operations from the sale of the Canada business[13](index=13&type=chunk) - The shift in financing activities from cash used to cash provided was primarily due to fewer debt payments and no preferred dividends in 2025, offset by common stock repurchases (**$15 million**) and lower net proceeds from revolving credit facilities[13](index=13&type=chunk) [NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=10&type=section&id=NOTES%20TO%20THE%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [NOTE 1 – BACKGROUND AND BASIS OF PRESENTATION](index=10&type=section&id=NOTE%201%20%E2%80%93%20BACKGROUND%20AND%20BASIS%20OF%20PRESENTATION) This note describes the company's business, the planned merger with DNOW Inc., the sale of Canada operations, and the accounting principles used for financial statement preparation - MRC Global Inc. is a global distributor of pipe, valves, fittings ("PVF") and infrastructure products and services across Gas Utilities, DIET (downstream, industrial, energy transition), and PTI (production and transmission infrastructure) sectors[14](index=14&type=chunk) - On June 26, 2025, MRC Global entered into a Merger Agreement with DNOW Inc., where each MRC Global common stock share will convert into **0.9489 shares of DNOW common stock**, subject to shareholder and regulatory approvals[15](index=15&type=chunk)[16](index=16&type=chunk) - A termination fee of **$45.5 million** would be payable under specified circumstances if the Merger Agreement is terminated[17](index=17&type=chunk) - The company incurred **$6 million** and **$7 million** in third-party legal and consulting costs for the three and six months ended June 30, 2025, respectively, related to the merger, recorded in SG&A expenses[18](index=18&type=chunk) - The unaudited condensed consolidated financial statements are prepared in accordance with Rule 10-01 of Regulation S-X[19](index=19&type=chunk) - The sale of Canada operations was completed on March 14, 2025, with historical results reflected as discontinued operations[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) - The company adopted ASU 2023-09 on January 1, 2025, for enhanced income tax disclosures and is evaluating ASU 2024-03 (effective after December 15, 2026) for detailed expense disclosures[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) [NOTE 2 – DISCONTINUED OPERATIONS](index=12&type=section&id=NOTE%202%20%E2%80%93%20DISCONTINUED%20OPERATIONS) This note details the financial impact and accounting treatment of the company's discontinued Canada operations - The sale of Canada operations to EMCO Corporation was completed on March 14, 2025, generating net cash proceeds of **$18 million**[28](index=28&type=chunk) - A pre-tax, non-cash loss of approximately **$22 million** on discontinued operations was recorded in Q4 2024[28](index=28&type=chunk) - A cumulative foreign currency translation adjustment of **$28 million** was released from accumulated other comprehensive income and recognized in the condensed consolidated statement of operations for the six months ended June 30, 2025[31](index=31&type=chunk) - The total loss from discontinued operations, net of tax, for the six months ended June 30, 2025, was **$(30) million**[31](index=31&type=chunk) - The company recognized **$1 million** in income for transition services provided to EMCO Corporation for the three and six months ended June 30, 2025[29](index=29&type=chunk) Discontinued Operations Financials (Six Months Ended June 30) | Metric | 2025 (millions) | 2024 (millions) | | :------------------------------------- | :-------------- | :-------------- | | Sales | $16 | $62 | | Operating loss | $(3) | $(1) | | Reclassification of foreign currency translation adjustments | $(28) | — | | Loss from discontinued operations, net of tax | $(30) | $(1) | Disposal Group Assets and Liabilities (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 (millions) | December 31, 2024 (millions) | | :------------------------------------- | :----------------------- | :------------------------- | | Current assets of discontinued operations | $1 | $36 | | Current liabilities of discontinued operations | $0 | $21 | [NOTE 3 – REVENUE RECOGNITION](index=14&type=section&id=NOTE%203%20%E2%80%93%20REVENUE%20RECOGNITION) This note explains the company's policies for recognizing revenue, including contract assets, deferred revenue, and disaggregated sales data - Revenue is generally recognized upon shipment or delivery of products, with payment typically due within 30 days[33](index=33&type=chunk) - Contract assets increased to **$39 million** as of June 30, 2025, from **$18 million** as of December 31, 2024, due to delayed invoicing for customer-specific documentation[36](index=36&type=chunk) - Deferred revenue increased to **$22 million** as of June 30, 2025, from **$16 million** as of December 31, 2024. The company recognized **$14 million** of deferred revenue from December 31, 2024, during the six months ended June 30, 2025[37](index=37&type=chunk) Disaggregated Revenue by Sector and Geography (Three Months Ended June 30) | Sector | U.S. 2025 (millions) | International 2025 (millions) | Total 2025 (millions) | U.S. 2024 (millions) | International 2024 (millions) | Total 2024 (millions) | | :------------------------------------- | :------------------- | :-------------------------- | :------------------ | :------------------- | :-------------------------- | :------------------ | | Gas Utilities | $299 | $0 | $299 | $287 | $0 | $287 | | DIET | $162 | $61 | $223 | $188 | $68 | $256 | | PTI | $197 | $79 | $276 | $202 | $54 | $256 | | **Total Sales** | **$658** | **$140** | **$798** | **$677** | **$122** | **$799** | Disaggregated Revenue by Sector and Geography (Six Months Ended June 30) | Sector | U.S. 2025 (millions) | International 2025 (millions) | Total 2025 (millions) | U.S. 2024 (millions) | International 2024 (millions) | Total 2024 (millions) | | :------------------------------------- | :------------------- | :-------------------------- | :------------------ | :------------------- | :-------------------------- | :------------------ | | Gas Utilities | $572 | $0 | $572 | $552 | $0 | $552 | | DIET | $324 | $119 | $443 | $390 | $133 | $523 | | PTI | $353 | $142 | $495 | $402 | $99 | $501 | | **Total Sales** | **$1,249** | **$261** | **$1,510** | **$1,344** | **$232** | **$1,576** | [NOTE 4 – INVENTORIES](index=16&type=section&id=NOTE%204%20%E2%80%93%20INVENTORIES) This note provides details on the composition and valuation methods of the company's inventories, including LIFO accounting - Total inventories, net, increased to **$490 million** as of June 30, 2025, from **$415 million** as of December 31, 2024[6](index=6&type=chunk)[42](index=42&type=chunk) Inventory Composition (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 (millions) | December 31, 2024 (millions) | | :------------------------------------- | :----------------------- | :------------------------- | | Valves, automation, measurement and instrumentation | $221 | $206 | | Carbon steel pipe, fittings and flanges | $153 | $135 | | Gas products | $281 | $265 | | All other products | $143 | $104 | | Less: Excess of weighted-average cost over LIFO cost (LIFO reserve) | $(291) | $(280) | | Less: Other inventory reserves | $(17) | $(15) | - The company uses the last-in, first-out ("LIFO") method for valuing U.S. inventories, which reduces net income during inflationary periods and increases it during deflationary periods[42](index=42&type=chunk) [NOTE 5 – LEASES](index=18&type=section&id=NOTE%205%20%E2%80%93%20LEASES) This note outlines the company's lease assets, liabilities, expenses, and related terms, including commitments from discontinued operations Lease Assets and Liabilities (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 (millions) | December 31, 2024 (millions) | | :------------------------------------- | :----------------------- | :------------------------- | | Operating lease assets | $159 | $170 | | Total lease assets | $168 | $178 | | Total lease liabilities | $183 | $193 | - Operating lease expense was **$11 million** for the three months ended June 30, 2025 (vs. **$10 million** in 2024) and **$23 million** for the six months ended June 30, 2025 (vs. **$21 million** in 2024)[47](index=47&type=chunk) - Finance lease expense was **$1 million** for the three months ended June 30, 2025 (vs. less than **$1 million** in 2024) and **$2 million** for the six months ended June 30, 2025 (vs. less than **$1 million** in 2024)[47](index=47&type=chunk) - The weighted-average remaining lease term for operating leases was **11 years** for both periods ended June 30, 2025, and 2024[50](index=50&type=chunk) - The weighted-average discount rate for operating leases was **6.8%** for June 30, 2025 (vs. **6.7%** in 2024)[50](index=50&type=chunk) - In connection with the sale of the Canada business, three operating lease commitments were assigned to buyers, with the company remaining obligated if buyers fail to perform. Undiscounted remaining lease payments totaled **$7 million** as of June 30, 2025[51](index=51&type=chunk) [NOTE 6 – DEBT](index=20&type=section&id=NOTE%206%20%E2%80%93%20DEBT) This note details the company's debt structure, including term loans, revolving credit facilities, interest rates, and restrictive covenants Components of Debt (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 (millions) | December 31, 2024 (millions) | | :------------------------------------- | :----------------------- | :------------------------- | | Senior Secured Term Loan B | $343 | $344 | | Global ABL Facility | $106 | $43 | | **Total Debt** | **$449** | **$387** | - The Senior Secured Term Loan B has an original principal amount of **$350 million**, matures in October 2031, and will be paid off or amended upon closing of the DNOW merger[53](index=53&type=chunk) - The Global ABL Facility is a **$750 million** revolving credit facility maturing in November 2029, with **$499 million** of Excess Availability at June 30, 2025. It must also be paid off or amended upon closing of the DNOW merger[61](index=61&type=chunk) - The weighted average interest rate on outstanding borrowings was **7.25%** at June 30, 2025, down from **7.79%** at December 31, 2024[69](index=69&type=chunk) - The Term Loan contains restrictive covenants limiting the company's ability to make investments, incur additional debt, sell assets, and pay dividends, but does not include financial maintenance covenants[58](index=58&type=chunk) [NOTE 7 – INCOME TAXES](index=24&type=section&id=NOTE%207%20%E2%80%93%20INCOME%20TAXES) This note presents the company's income tax expense, effective tax rates, and factors influencing tax variations Income Tax Expense and Effective Tax Rate (Three Months Ended June 30) | Metric | 2025 (millions) | Effective Tax Rate | 2024 (millions) | Effective Tax Rate | | :------------------------------------- | :-------------- | :----------------- | :-------------- | :----------------- | | Income tax expense | $5 | 28% | $12 | 29% | Income Tax Expense and Effective Tax Rate (Six Months Ended June 30) | Metric | 2025 (millions) | Effective Tax Rate | 2024 (millions) | Effective Tax Rate | | :------------------------------------- | :-------------- | :----------------- | :-------------- | :----------------- | | Income tax expense | $6 | 22% | $20 | 29% | - The decrease in income tax expense for both periods is primarily due to decreased profitability, and for the six-month period, a tax windfall on stock vestings. Effective tax rates differ from the U.S. federal statutory rate of **21%** due to state income taxes, non-deductible expenses, and differing foreign income tax rates[70](index=70&type=chunk)[71](index=71&type=chunk) - The company is evaluating the impact of the recently enacted One Big Beautiful Bill Act (July 4, 2025) on its effective tax rate and deferred tax assets[72](index=72&type=chunk) [NOTE 8 – REDEEMABLE PREFERRED STOCK](index=26&type=section&id=NOTE%208%20%E2%80%93%20REDEEMABLE%20PREFERRED%20STOCK) This note describes the repurchase of the company's outstanding Series A Convertible Perpetual Preferred Stock and its terms - On October 29, 2024, the company repurchased all outstanding Series A Convertible Perpetual Preferred Stock for **$361 million** plus **$4 million** in accrued dividends, funded by the Term Loan, cash on hand, and Global ABL Facility drawings[74](index=74&type=chunk) - The Preferred Stock had a stated value of **$1,000 per share** and cumulative dividends payable quarterly at **6.50% per annum**[75](index=75&type=chunk) - It was convertible into common stock at an initial rate of **55.9284 shares per preferred share**[75](index=75&type=chunk) [NOTE 9 – STOCKHOLDERS' EQUITY](index=26&type=section&id=NOTE%209%20%E2%80%93%20STOCKHOLDERS'%20EQUITY) This note details changes in stockholders' equity, including share repurchases, outstanding shares, and accumulated other comprehensive loss - In January 2025, the board authorized a share repurchase program for common stock up to **$125 million**, expiring January 2, 2028[77](index=77&type=chunk) Share Repurchases (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :------------------------------------- | :----------------------------- | :--------------------------- | | April 1 - April 30, 2025 | 179,900 | $11.67 | | May 1 - May 31, 2025 | 1,037,056 | $12.46 | | June 1 - June 30, 2025 | — | — | | **Total** | **1,216,956** | **$12.35** | - The company repurchased **1,216,956 shares** for a total cost of **$15 million** during the three and six months ended June 30, 2025[78](index=78&type=chunk) - As of June 30, 2025, there were **84,984,602 shares** of common stock outstanding[80](index=80&type=chunk) - The Merger Agreement restricts further common stock repurchases between June 26, 2025, and the earlier of the closing or termination of the agreement[78](index=78&type=chunk) - Accumulated other comprehensive loss decreased to **$(195) million** as of June 30, 2025, from **$(237) million** as of December 31, 2024, primarily due to currency translation adjustments[80](index=80&type=chunk) Earnings Per Share (Three Months Ended June 30) | Metric | 2025 | 2024 | | :------------------------------------- | :----- | :----- | | Basic EPS | $0.15 | $0.28 | | Diluted EPS | $0.15 | $0.28 | Earnings Per Share (Six Months Ended June 30) | Metric | 2025 | 2024 | | :------------------------------------- | :------ | :----- | | Basic EPS | $(0.11) | $0.44 | | Diluted EPS | $(0.11) | $0.43 | [NOTE 10 – SEGMENT INFORMATION](index=28&type=section&id=NOTE%2010%20%E2%80%93%20SEGMENT%20INFORMATION) This note provides financial data disaggregated by the company's operating segments and product lines - The company operates in two reportable segments: U.S. and International, serving Gas Utilities, DIET, and PTI sectors. Canada operations were reclassified as discontinued[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk) Sales by Segment (Three Months Ended June 30) | Segment | 2025 (millions) | 2024 (millions) | Change (millions) | % Change | | :------------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | U.S. | $658 | $677 | -$19 | (3)% | | International | $140 | $122 | +$18 | 15% | | **Total Consolidated Sales** | **$798** | **$799** | **-$1** | **(0.1)%** | Sales by Segment (Six Months Ended June 30) | Segment | 2025 (millions) | 2024 (millions) | Change (millions) | % Change | | :------------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | U.S. | $1,249 | $1,344 | -$95 | (7)% | | International | $261 | $232 | +$29 | 13% | | **Total Consolidated Sales** | **$1,510** | **$1,576** | **-$66** | **(4)%** | Operating Income by Segment (Three Months Ended June 30) | Segment | 2025 (millions) | 2024 (millions) | Change (millions) | % Change | | :------------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | U.S. | $9 | $38 | -$29 | (76)% | | International | $12 | $10 | +$2 | 20% | | **Total Operating Income** | **$21** | **$47** | **-$26** | **(55)%** | Operating Income by Segment (Six Months Ended June 30) | Segment | 2025 (millions) | 2024 (millions) | Change (millions) | % Change | | :------------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | U.S. | $16 | $72 | -$56 | (78)% | | International | $23 | $16 | +$7 | 44% | | **Total Operating Income** | **$39** | **$86** | **-$47** | **(55)%** | Total Assets by Segment (June 30, 2025 vs. December 31, 2024) | Segment | June 30, 2025 (millions) | December 31, 2024 (millions) | | :------------------------------------- | :----------------------- | :------------------------- | | U.S. | $1,421 | $1,278 | | International | $345 | $301 | | Discontinued operations | $1 | $36 | | **Total Assets** | **$1,774** | **$1,624** | Sales by Product Line (Six Months Ended June 30) | Product Line | 2025 (millions) | 2024 (millions) | Change (millions) | % Change | | :------------------------------------- | :-------------- | :-------------- | :---------------- | :------- | | Line Pipe | $166 | $238 | -$72 | (30.3)% | | Carbon Fittings and Flanges | $196 | $198 | -$2 | (1.0)% | | Valves, Automation, Measurement and Instrumentation | $571 | $563 | +$8 | 1.4% | | Gas Products | $396 | $380 | +$16 | 4.2% | | Stainless Steel and Alloy Pipe and Fittings | $74 | $73 | +$1 | 1.4% | | General Products | $107 | $124 | -$17 | (13.7)% | | **Total Sales** | **$1,510** | **$1,576** | **-$66** | **(4.2)%** | [NOTE 11 – FAIR VALUE MEASUREMENTS](index=31&type=section&id=NOTE%2011%20%E2%80%93%20FAIR%20VALUE%20MEASUREMENTS) This note explains the fair value measurements of the company's financial instruments, particularly debt - The fair values of most financial instruments (cash, receivables, payables, accrued liabilities) approximate their carrying values[89](index=89&type=chunk) Debt Carrying Value vs. Fair Value | Metric | June 30, 2025 (millions) | December 31, 2024 (millions) | | :------------------------------------- | :----------------------- | :------------------------- | | Carrying value of debt | $449 | $387 | | Fair value of debt | $460 | $394 | - The fair value of debt is estimated using Level 2 inputs, which are quoted market prices[89](index=89&type=chunk) [NOTE 12 – COMMITMENTS AND CONTINGENCIES](index=32&type=section&id=NOTE%2012%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines the company's various legal, environmental, and contractual commitments and potential liabilities - The company is a defendant in approximately **451 asbestos lawsuits** involving **1,016 claims**, with most settled, dismissed, or resolved, and substantially covered by insurance. The likelihood of a material adverse effect is remote[91](index=91&type=chunk) - Various other legal claims and proceedings are incidental to the business, with insurance coverage, and are not expected to have a material adverse effect[92](index=92&type=chunk) - The company is undergoing a multi-state unclaimed property audit, the outcome of which cannot be predicted, but an adverse decision could have an impact[93](index=93&type=chunk) - Product claims from customers are generally indemnified by manufacturers, and the ultimate disposition is not expected to have a material adverse effect[94](index=94&type=chunk) - Customer contracts dictate sales terms and are subject to audits, but historical settlements have not been material[95](index=95&type=chunk) - Purchase obligations primarily consist of inventory purchases, with potential cancellation fees or penalties[96](index=96&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=33&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's analysis of the company's financial condition, operational results, and future outlook, including the impact of strategic transactions and market trends [Cautionary Note Regarding Forward-Looking Statements](index=33&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section advises that the report contains forward-looking statements subject to risks and uncertainties, which are not guarantees of future performance - The report contains forward-looking statements regarding future events, business strategies, anticipated merger benefits, and financial results, which are not guarantees of future performance[98](index=98&type=chunk) - These statements involve known and unknown risks and uncertainties, many beyond the company's control, including those related to the DNOW merger (approvals, integration, synergies), economic conditions, commodity prices, supply chain issues, and regulatory changes[98](index=98&type=chunk)[100](index=100&type=chunk) - The company undertakes no obligation to publicly update or revise any forward-looking statement, except as required by law[102](index=102&type=chunk) [Overview](index=35&type=section&id=Overview) This section provides a general description of the company's business, its role as a global distributor, and the sectors it serves - MRC Global Inc. is a leading global distributor of pipe, valves, fittings ("PVF") and other infrastructure products and services[101](index=101&type=chunk) - The company serves diversified energy, industrial, and gas utility sectors, including Gas Utilities, DIET (downstream, industrial, energy transition), and PTI (production and transmission infrastructure)[103](index=103&type=chunk) - It offers approximately **200,000 SKUs** from over **7,100 suppliers** and serves over **8,300 customers** through approximately **200 service locations** globally[103](index=103&type=chunk) [Key Drivers of Our Business](index=36&type=section&id=Key%20Drivers%20of%20Our%20Business) This section identifies the primary factors influencing the company's revenue and profitability, including market demand, commodity prices, and economic conditions - Revenue is predominantly derived from selling PVF and other supplies to gas utility, energy, and industrial customers, dependent on their maintenance and expansionary expenditures[104](index=104&type=chunk) - Gas Utility and Energy Infrastructure Integrity and Modernization: Driven by upgrades and replacements, offering stable business independent of commodity prices[105](index=105&type=chunk) - Oil and Natural Gas Demand and Prices: Impacts customer capital spending, pipeline additions, refinery utilization, and petrochemical processing[105](index=105&type=chunk) - Economic Conditions: Changes in the general economy or energy sector can cause demand for products to vary[105](index=105&type=chunk) - Manufacturer and Distributor Inventory Levels: Fluctuations can lead to oversupply or undersupply, affecting pricing and profitability[105](index=105&type=chunk) - Steel Prices, Availability and Supply and Demand: Volatility influences pricing, availability, sales, and operating profitability, with supply chain disruptions and logistical challenges also playing a role[105](index=105&type=chunk) [Planned Merger with DNOW Inc.](index=36&type=section&id=Planned%20Merger%20with%20DNOW%20Inc.) This section outlines the details of the proposed merger with DNOW Inc., including the stock conversion ratio and conditions for completion - On June 26, 2025, MRC Global entered into a Merger Agreement with DNOW Inc. The transaction involves a two-step merger where MRC Global will become a wholly owned, direct subsidiary of DNOW[104](index=104&type=chunk)[106](index=106&type=chunk) - Each share of MRC Global common stock will be converted into the right to receive **0.9489 shares of DNOW common stock**[107](index=107&type=chunk) - The completion of the mergers is subject to shareholder and regulatory approvals and other customary closing conditions[107](index=107&type=chunk) [MRC Global Sale of Canada Business](index=38&type=section&id=MRC%20Global%20Sale%20of%20Canada%20Business) This section discusses the completed sale of the Canadian operations, its financial impact, and the reclassification of historical results - The company completed the sale of its Canadian operations to EMCO Corporation on March 14, 2025, using the proceeds to reduce debt[108](index=108&type=chunk) - A pre-tax, non-cash loss of approximately **$22 million** on discontinued operations was recorded in Q4 2024[108](index=108&type=chunk) - Upon completion, a cumulative foreign currency translation adjustment of **$28 million** was released from accumulated other comprehensive income and recognized in the condensed consolidated statement of operations for the six months ended June 30, 2025[108](index=108&type=chunk) - The historical results of the Canada segment have been reflected as discontinued operations in the condensed consolidated financial statements for all prior periods[108](index=108&type=chunk) [Recent Trends and Outlook](index=38&type=section&id=Recent%20Trends%20and%20Outlook) This section analyzes current market trends, political impacts, and sector-specific performance, providing an outlook on future business conditions - New U.S. political policies, including reduced tax rates, support for oil and gas producers, and tariffs on imported goods (especially steel and products from China), could impact the business, though the overall effect remains unclear[109](index=109&type=chunk) - Revenue for the three months ended June 30, 2025, increased **$86 million** sequentially from Q1 2025 but decreased **$1 million** year-over-year from Q2 2024[110](index=110&type=chunk) - For the first six months of 2025, Gas Utilities comprised **38%** of total revenue, DIET **29%**, and PTI **33%**[110](index=110&type=chunk) - The Gas Utilities sector saw a **4% YoY revenue increase** for H1 2025 and a **10% sequential increase** in Q2 2025, driven by infrastructure upgrades and new home construction, and is expected to have steady, less volatile growth[111](index=111&type=chunk)[112](index=112&type=chunk) - The DIET sector's revenue decreased **15% YoY** for H1 2025 but is expected to grow from energy transition projects, MRO, and refinery turnarounds, with expansion into mining and data centers[113](index=113&type=chunk)[114](index=114&type=chunk) - The PTI sector, the most cyclical, experienced a **1% YoY revenue decrease** for H1 2025, influenced by volatile oil and natural gas prices and potential declines due to OPEC+ increased production plans, though larger public E&P companies are expected to drive activity[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) - Inflation for products eased in 2024, but U.S. tariffs in 2025 have caused price increases, which the company aims to pass on to customers[118](index=118&type=chunk)[119](index=119&type=chunk) - Inventory levels have been reduced due to supply chain normalization, and labor constraints continue to impact SG&A expenses[121](index=121&type=chunk) [Backlog](index=41&type=section&id=Backlog) This section reports the total value of unshipped customer orders and the expected timeline for their realization as revenue - The total backlog of unshipped customer orders was **$589 million** as of June 30, 2025, compared to **$558 million** as of December 31, 2024, and **$599 million** as of June 30, 2024[122](index=122&type=chunk) Backlog by Segment (June 30) | Segment | 2025 (millions) | 2024 (millions) | | :------------------------------------- | :-------------- | :-------------- | | U.S. | $352 | $328 | | International | $237 | $271 | - Substantially all backlog sales are expected to be realized as revenue within twelve months[122](index=122&type=chunk) [Results of Operations](index=42&type=section&id=Results%20of%20Operations) This section provides a detailed comparative analysis of the company's financial performance for the current and prior periods [Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024](index=42&type=section&id=Three%20Months%20Ended%20June%2030,%202025%20Compared%20to%20the%20Three%20Months%20Ended%20June%2030,%202024) This section compares the company's financial results for the second quarter of 2025 against the same period in 2024 Sales by Sector (Q2 2025 vs. Q2 2024) | Sector | 2025 (millions) | % of Total | 2024 (millions) | % of Total | Change (millions) | | :------------------------------------- | :-------------- | :--------- | :-------------- | :--------- | :---------------- | | Gas Utilities | $299 | 37% | $287 | 36% | +$12 | | DIET | $223 | 28% | $256 | 32% | -$33 | | PTI | $276 | 35% | $256 | 32% | +$20 | | **Total** | **$798** | **100%** | **$799** | **100%** | **-$1** | - Consolidated sales decreased by **$1 million** to **$798 million**. U.S. sales decreased by **$19 million (3%)** due to fewer DIET and PTI projects, offset by Gas Utilities growth. International sales increased by **$18 million (15%)** driven by PTI[125](index=125&type=chunk)[126](index=126&type=chunk) - Gross profit decreased by **$18 million (11%)** to **$151 million (18.9% of sales)**, primarily due to lower sales and reduced margins in line pipe. LIFO increased cost of sales by **$10 million** in Q2 2025 vs. **$1 million** in Q2 2024[127](index=127&type=chunk)[131](index=131&type=chunk) - SG&A expenses increased by **$8 million** to **$130 million (16.3% of sales)**, mainly due to **$6 million** in legal and professional fees for the DNOW merger and higher personnel expenses[132](index=132&type=chunk)[133](index=133&type=chunk) - Operating income decreased by **$26 million (55%)** to **$21 million**, primarily due to lower sales and increased SG&A. U.S. operating income decreased by **$29 million**, while International increased by **$2 million**[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) - Interest expense increased by **$3 million** to **$10 million**, due to higher benchmark interest rates on the Term Loan[137](index=137&type=chunk) - Other, net, increased to **$7 million income** from **$2 million income**, including **$3 million** from an asset disposal and **$1 million** from transition services for the Canada business sale[138](index=138&type=chunk)[140](index=140&type=chunk) - Income tax expense decreased by **$7 million** to **$5 million**, due to decreased profitability. The effective tax rate was **28%** (2025) vs. **29%** (2024)[142](index=142&type=chunk) - Net income from continuing operations decreased by **$17 million (57%)** to **$13 million**, due to lower sales and margins[145](index=145&type=chunk) - Adjusted EBITDA decreased by **$11 million (17%)** to **$54 million (6.8% of sales)**[145](index=145&type=chunk) [Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024](index=46&type=section&id=Six%20Months%20Ended%20June%2030,%202025%20Compared%20to%20the%20Six%20Months%20Ended%20June%2030,%202024) This section compares the company's financial results for the first six months of 2025 against the same period in 2024 Sales by Sector (H1 2025 vs. H1 2024) | Sector | 2025 (millions) | % of Total | 2024 (millions) | % of Total | Change (millions) | | :------------------------------------- | :-------------- | :--------- | :-------------- | :--------- | :---------------- | | Gas Utilities | $572 | 38% | $552 | 35% | +$20 | | DIET | $443 | 29% | $523 | 33% | -$80 | | PTI | $495 | 33% | $501 | 32% | -$6 | | **Total** | **$1,510** | **100%** | **$1,576** | **100%** | **-$66** | - Consolidated sales decreased by **$66 million (4%)** to **$1,510 million**. U.S. sales decreased by **$95 million (7%)** due to fewer DIET and PTI projects. International sales increased by **$29 million (13%)** driven by PTI[149](index=149&type=chunk) - Gross profit decreased by **$35 million (11%)** to **$293 million (19.4% of sales)**, primarily due to lower sales and reduced margins in line pipe. LIFO increased cost of sales by **$11 million** in H1 2025 vs. **$2 million** in H1 2024[150](index=150&type=chunk)[151](index=151&type=chunk) - SG&A expenses increased by **$12 million** to **$254 million (16.8% of sales)**, mainly due to **$7 million** in legal and professional fees for the DNOW merger and higher personnel expenses[155](index=155&type=chunk)[156](index=156&type=chunk) - Operating income decreased by **$47 million (55%)** to **$39 million**, primarily due to lower sales. U.S. operating income decreased by **$56 million**, while International increased by **$7 million**[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk) - Interest expense increased by **$4 million** to **$19 million**, due to higher benchmark interest rates on the Term Loan[160](index=160&type=chunk) - Other, net, increased to **$7 million income** from **$1 million expense**, including **$3 million** from an asset disposal and **$1 million** from transition services for the Canada business sale[161](index=161&type=chunk)[162](index=162&type=chunk) - Income tax expense decreased by **$14 million (70%)** to **$6 million**, due to decreased profitability and a tax windfall on stock vestings. The effective tax rate was **22%** (2025) vs. **29%** (2024)[164](index=164&type=chunk) - Net income from continuing operations decreased by **$29 million (58%)** to **$21 million**, due to lower sales and margins[165](index=165&type=chunk) - Loss from discontinued operations, net of tax, increased to **$30 million loss** from **$1 million loss**, primarily due to the reclassification of foreign currency translation adjustments (**$28 million**) and decreased revenues from the Canada business sale[167](index=167&type=chunk) - Adjusted EBITDA decreased by **$32 million (26%)** to **$90 million (6.0% of sales)**[170](index=170&type=chunk) [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to meet its short-term and long-term financial obligations, including available credit facilities and cash on hand - Primary credit facilities include a **$750 million Global ABL Facility** (matures Nov 2029) and a **$350 million Senior Secured Term Loan B** (matures Oct 2031)[171](index=171&type=chunk) - As of June 30, 2025, the Global ABL Facility had **$106 million** in borrowings and **$499 million** of Excess Availability. The Term Loan had an outstanding balance of **$343 million** (net of discount/costs). Both facilities must be paid off or amended upon DNOW merger closing[172](index=172&type=chunk) - Total liquidity, comprising cash on hand and Global ABL Facility availability, was **$574 million** as of June 30, 2025[173](index=173&type=chunk) - Cash on hand was **$75 million** as of June 30, 2025, with a significant portion held in foreign subsidiaries[174](index=174&type=chunk) - The company's credit ratings are below 'investment grade'. Moody's upgraded the corporate family rating to **'B1'** in October 2024. S&P affirmed **'B'** with a 'positive' outlook in April 2025, then **'CreditWatch Positive'** in June 2025 due to the DNOW merger announcement[175](index=175&type=chunk) - The company was in compliance with credit facility covenants as of and during the six months ended June 30, 2025, and expects to remain so[176](index=176&type=chunk) - Management believes current liquidity sources are sufficient to satisfy anticipated cash requirements for the foreseeable future[176](index=176&type=chunk) [Cash Flows](index=52&type=section&id=Cash%20Flows) This section analyzes the company's cash generation and usage from operating, investing, and financing activities Net Cash Flows (Six Months Ended June 30) | Activity | 2025 (millions) | 2024 (millions) | | :------------------------------------- | :-------------- | :-------------- | | Operating activities | $(30) | $101 | | Investing activities | $(2) | $(13) | | Financing activities | $39 | $(169) | | Net increase (decrease) in cash | $7 | $(81) | - Net cash used in operating activities was **$30 million** in H1 2025, a decrease from **$101 million** provided in H1 2024, primarily due to increases in inventory and receivables and lower profitability, partially offset by increased payables[179](index=179&type=chunk) - Net cash used in investing activities was **$2 million** in H1 2025, including **$17 million** provided by discontinued operations from the Canada business sale[180](index=180&type=chunk) - Net cash provided by financing activities was **$39 million** in H1 2025, a significant change from **$169 million** used in H1 2024, primarily due to fewer debt payments and no preferred dividends in 2025, offset by common stock repurchases and lower net proceeds from revolving credit facilities[181](index=181&type=chunk) [Critical Accounting Policies](index=52&type=section&id=Critical%20Accounting%20Policies) This section highlights the accounting policies that require significant management judgment and estimation, which could materially impact financial reporting - The preparation of financial statements requires management to make judgments, estimates, and assumptions about highly uncertain matters that could materially impact financial presentation[182](index=182&type=chunk) - For a detailed description of critical accounting policies, refer to "Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[183](index=183&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=53&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is primarily exposed to market risks associated with unfavorable movements in interest rates, foreign currencies, and steel price volatility. No material changes to market risk policies or instruments were reported since the December 31, 2024, Annual Report on Form 10-K - The company is primarily exposed to market risks related to interest rates, foreign currencies, and steel price volatility[184](index=184&type=chunk) - There have been no material changes to the company's market risk policies or market risk sensitive instruments and positions as described in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024[184](index=184&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=53&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were not effective as of June 30, 2025, solely due to a material weakness in the operating effectiveness of its inventory cycle count control. A remediation plan is underway, including hiring expertise, engaging consultants, enhancing training, and implementing a new ERP system by the end of 2025 - Management concluded that disclosure controls and procedures were not effective as of June 30, 2025, solely due to a material weakness regarding the operating effectiveness of its inventory cycle count control[185](index=185&type=chunk) - The remediation plan includes hiring additional resources with inventory management expertise, engaging a consulting firm for process improvement, enhancing training programs for operational leaders and warehouse staff, and implementing a new cloud-based ERP system by the end of 2025[186](index=186&type=chunk) - The material weakness will not be considered fully remediated until the new processes have been in operation and successfully tested for a period of time[187](index=187&type=chunk) - No other material changes in internal control over financial reporting occurred during the second quarter of 2025, apart from these remediation efforts[188](index=188&type=chunk) PART II – OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, equity sales, and exhibits [ITEM 1. LEGAL PROCEEDINGS](index=54&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is involved in various legal claims and proceedings incidental to its business, including asbestos and product liability claims. Management believes no pending legal proceedings are likely to have a material adverse effect on the business, financial condition, results of operations, or cash flows, as most are covered by insurance or manufacturer indemnification - The company is subject to various claims and legal proceedings incidental to its business, maintaining insurance coverage to reduce financial risk[190](index=190&type=chunk) - Management believes there are no pending legal proceedings likely to have a material effect on the business, financial condition, results of operations, or cash flows[191](index=191&type=chunk) - Product claims from customers are considered ordinary and routine, with manufacturers generally required to indemnify the company, and are not expected to have a material adverse effect[192](index=192&type=chunk) - Information regarding asbestos cases and other claims is detailed in Note 12 to the unaudited condensed consolidated financial statements[192](index=192&type=chunk) [ITEM 1A. RISK FACTORS](index=54&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section highlights risks specific to the company and general market factors, with a particular focus on risks related to the planned merger with DNOW Inc. These merger-related risks include the uncertainty of obtaining necessary approvals, potential disruptions to business relationships, negative impacts if the merger fails to complete, restrictions on business activities prior to closing, and the possibility that anticipated synergies may not be fully realized - The company is affected by risks specific to its operations and general global market factors, as detailed in its Annual Report on Form 10-K[193](index=193&type=chunk) - The Mergers are subject to numerous conditions, including shareholder and regulatory approvals, which may delay completion or result in termination of the Merger Agreement[194](index=194&type=chunk)[195](index=195&type=chunk) - Business relationships may be disrupted due to uncertainty associated with the Mergers, potentially affecting results of operations, cash flows, and financial position[196](index=196&type=chunk) - Failure to complete the Mergers could negatively impact the company's stock price, financial results, and cash flows, and incur significant costs[198](index=198&type=chunk) - The Merger Agreement imposes restrictions on business activities prior to the Effective Time, potentially limiting new opportunities[199](index=199&type=chunk) - The anticipated benefits and synergies from the Mergers may not be fully achieved or may take longer to realize than expected, adversely affecting the combined company's business[201](index=201&type=chunk)[202](index=202&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=57&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details the common stock repurchases made during the three months ended June 30, 2025, under the $125 million share repurchase program authorized in January 2025. The company repurchased 1,216,956 shares for $15 million at an average price of $12.35 per share, with no repurchases in June 2025 due to the merger agreement - In January 2025, the company's board of directors authorized a share repurchase program for common stock up to **$125 million**[205](index=205&type=chunk) Share Repurchases (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares that May Yet Be Purchased (millions) | | :------------------------------------- | :----------------------------- | :--------------------------- | :-------------------------------------------------------------------- | | April 1 - April 30, 2025 | 179,900 | $11.67 | $2 | | May 1 - May 31, 2025 | 1,037,056 | $12.46 | $13 | | June 1 - June 30, 2025 | — | — | — | | **Total** | **1,216,956** | **$12.35** | **—** | - No shares were repurchased in June 2025 due to the restriction imposed by the Merger Agreement[78](index=78&type=chunk)[204](index=204&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=57&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) No defaults upon senior securities were reported for the quarter ended June 30, 2025 - No defaults upon senior securities were reported for the quarter ended June 30, 2025[206](index=206&type=chunk) [ITEM 4. MINING SAFETY DISCLOSURES](index=57&type=section&id=ITEM%204.%20MINING%20SAFETY%20DISCLOSURES) No mining safety disclosures were reported for the quarter ended June 30, 2025 - No mining safety disclosures were reported for the quarter ended June 30, 2025[207](index=207&type=chunk) [ITEM 5. OTHER INFORMATION](index=57&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No director or executive officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the quarter ended June 30, 2025 - No director or executive officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the quarter ended June 30, 2025[208](index=208&type=chunk) [ITEM 6. EXHIBITS](index=58&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Form 10-Q, including the Merger Agreement, corporate organizational documents, bonus letters, certifications (CEO, CFO), and financial information formatted in iXBRL - Key exhibits include the Agreement and Plan of Merger (Exhibit 2.1), Amended and Restated Certificate of Incorporation (3.1.1, 3.1.2), Amended and Restated Bylaws (3.2), Omnibus Amendment (10.1), Bonus Letter (10.2), CEO/CFO Certifications (31.1, 31.2, 32), and financial information formatted in Inline Extensible Business Reporting Language (iXBRL) (101, 104)[209](index=209&type=chunk) [SIGNATURES](index=59&type=section&id=SIGNATURES) This section contains the formal declaration that the report has been duly signed on behalf of MRC Global Inc. by Kelly Youngblood, Executive Vice President and Chief Financial Officer, on August 6, 2025 - The report was signed by Kelly Youngblood, Executive Vice President and Chief Financial Officer, on August 6, 2025[213](index=213&type=chunk)

[Executive Summary](index=1&type=section&id=Executive%20Summary) [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) The company delivered strong Q2 2025 results with revenue rising 12% sequentially to $798 million and Adjusted EBITDA surging 50% Second Quarter 2025 Key Financial Highlights: | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Sales | $798 million | $799 million | | Net income from continuing operations | $13 million | $30 million | | Adjusted net income from continuing operations | $22 million | $33 million | | Net income attributable to common stockholders | $13 million | $24 million | | Diluted EPS | $0.15 | $0.28 | | Adjusted Diluted EPS | $0.25 | $0.31 | | Adjusted EBITDA | $54 million | $65 million | | Adjusted EBITDA % of Sales | 6.8% | 8.1% | - Revenue increased **12% from Q1 2025**, reaching the top of the previous guidance range, with all sectors contributing to sequential growth[3](index=3&type=chunk) - Adjusted EBITDA surged **50% sequentially**, with margins expanding **170 basis points**, reflecting strong operating leverage[3](index=3&type=chunk) - Returned **$15 million** to shareholders through strategic share repurchases at an average price of **$12.35 per share**[3](index=3&type=chunk)[9](index=9&type=chunk) [Strategic Developments and Outlook](index=1&type=section&id=Strategic%20Developments%20and%20Outlook) The company announced a definitive all-stock merger agreement with DNOW Inc, expected to close in Q4 2025 - Announced a definitive merger agreement with DNOW Inc on June 26, 2025, in an **all-stock transaction**, unanimously approved by both boards[4](index=4&type=chunk)[27](index=27&type=chunk) - The merger is anticipated to close in the **fourth quarter of 2025**, subject to shareholder and regulatory approvals[27](index=27&type=chunk) - Reaffirmed full-year guidance provided last quarter but will not provide future financial guidance due to the pending merger[5](index=5&type=chunk)[28](index=28&type=chunk) [Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) [Consolidated Financial Results](index=1&type=section&id=Consolidated%20Financial%20Results) Q2 2025 consolidated sales were $798 million, with year-over-year declines in gross profit and net income [Sales Performance](index=1&type=section&id=Sales%20Performance) Total sales were $798 million in Q2 2025, flat year-over-year but up 12% sequentially across all sectors Sales Performance (Q2 2025): | Metric | Amount | | :--- | :--- | | Sales | $798 million | | YoY Change | Similar to Q2 2024 | | QoQ Change | +12% from Q1 2025 | - Sequential sales increase was across all sectors, led by the PTI sector, followed by the Gas Utilities and DIET sectors[15](index=15&type=chunk) [Gross Profit](index=2&type=section&id=Gross%20Profit) Gross profit decreased to $151 million, impacted by a significantly higher LIFO expense compared to the prior year Gross Profit Performance: | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Gross Profit | $151 million | $169 million | -$18 million | | Gross Profit % of Sales | 18.9% | 21.2% | -2.3 ppts | | LIFO Expense | $10 million | $1 million | +$9 million | | Adjusted Gross Profit | $172 million | $180 million | -$8 million | | Adjusted Gross Profit % of Sales | 21.6% | 22.5% | -0.9 ppts | [Selling, General and Administrative (SG&A) Expenses](index=2&type=section&id=Selling%2C%20General%20and%20Administrative%20%28SG%26A%29%20Expenses) SG&A expenses rose to $130 million, with adjusted SG&A at $124 million after excluding merger-related costs SG&A Expenses Performance: | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | SG&A Expenses | $130 million | $122 million | +$8 million | | SG&A % of Sales | 16.3% | 15.3% | +1.0 ppts | | Adjusted SG&A | $124 million | $120 million | +$4 million | | Adjusted SG&A % of Sales | 15.5% | 15.0% | +0.5 ppts | - Adjusted SG&A for Q2 2025 excluded **$6 million** of other non-recurring legal and consulting costs related to the pending DNOW–MRC Global merger[11](index=11&type=chunk) [Net Income and Earnings Per Share](index=1&type=section&id=Net%20Income%20and%20Earnings%20Per%20Share) Net income from continuing operations declined to $13 million, with diluted EPS at $0.15 Net Income and EPS Performance: | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net income from continuing operations | $13 million | $30 million | -$17 million | | Diluted EPS from continuing operations | $0.15 | $0.28 | -$0.13 | | Adjusted net income from continuing operations | $22 million | $33 million | -$11 million | | Adjusted diluted EPS from continuing operations | $0.25 | $0.31 | -$0.06 | [Adjusted EBITDA](index=1&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA decreased year-over-year to $54 million but showed a strong 50% sequential increase Adjusted EBITDA Performance: | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $54 million | $65 million | -$11 million | | Adjusted EBITDA % of Sales | 6.8% | 8.1% | -1.3 ppts | - Adjusted EBITDA surged **50% sequentially** from Q1 2025, with margins expanding **170 basis points**[3](index=3&type=chunk) [Income Tax Expense](index=2&type=section&id=Income%20Tax%20Expense) The income tax expense was $5 million, resulting in an effective tax rate of 28% for Q2 2025 Income Tax Expense: | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Income Tax Expense | $5 million | $12 million | | Effective Tax Rate | 28% | 29% | [Sales by Segment and Sector](index=2&type=section&id=Sales%20by%20Segment%20and%20Sector) A 3% decrease in U.S. sales was offset by a 15% increase in International sales, driven by the PTI sector [U.S. Sales](index=2&type=section&id=U.S.%20Sales) U.S. sales decreased 3% year-over-year to $658 million but grew 11% sequentially, led by the PTI sector U.S. Sales Performance: | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | U.S. Sales | $658 million | $677 million | -$19 million (-3%) | | DIET Sector (YoY) | | | -$26 million (-14%) | | PTI Sector (YoY) | | | -$5 million (-2%) | | Gas Utilities Sector (YoY) | | | +$12 million (+4%) | - Sequentially, U.S. sales increased **$67 million (11%)** from Q1 2025, with PTI leading (+26%) and Gas Utilities contributing (+10%)[17](index=17&type=chunk) [International Sales](index=2&type=section&id=International%20Sales) International sales grew 15% year-over-year to $140 million, primarily driven by the PTI sector International Sales Performance: | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | International Sales | $140 million | $122 million | +$18 million (+15%) | | YoY Growth Driver | PTI sector (North Sea projects) | | | | QoQ Change | +$19 million (+16%) from Q1 2025 | | | | QoQ Growth Drivers | PTI (Middle East, Norway), DIET (wind energy, mining) | | | [Gas Utilities Sector Sales](index=3&type=section&id=Gas%20Utilities%20Sector%20Sales) Gas Utilities sector sales increased 4% year-over-year to $299 million, representing 37% of total sales Gas Utilities Sector Sales: | Metric | Q2 2025 | Q2 2024 | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | :--- | | Gas Utilities Sales | $299 million | $287 million | +$12 million (+4%) | +$26 million (+10%) | | % of Total Sales | 37% | | | | [DIET Sector Sales](index=3&type=section&id=DIET%20Sector%20Sales) DIET sector sales decreased 13% year-over-year to $223 million, accounting for 28% of total sales DIET Sector Sales: | Metric | Q2 2025 | Q2 2024 | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | :--- | | DIET Sales | $223 million | $256 million | -$33 million (-13%) | +$3 million (+1%) | | % of Total Sales | 28% | | | | - Year-over-year decline in DIET sales was observed in both U.S. and International segments[21](index=21&type=chunk) [PTI Sector Sales](index=3&type=section&id=PTI%20Sector%20Sales) PTI sector sales grew 8% year-over-year to $276 million, driven by strong international performance PTI Sector Sales: | Metric | Q2 2025 | Q2 2024 | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | :--- | | PTI Sales | $276 million | $256 million | +$20 million (+8%) | +$57 million (+26%) | | % of Total Sales | 35% | | | | - Year-over-year increase in PTI sales was driven by the International segment, partially offset by the U.S. segment[22](index=22&type=chunk) [Backlog](index=3&type=section&id=Backlog) The company's backlog stood at $589 million as of June 30, 2025, a 2% decrease from the previous quarter Backlog as of June 30, 2025: | Metric | Amount | | :--- | :--- | | Backlog | $589 million | | QoQ Change | -2% | | Primary Driver of Decline | PTI sector backlog | | Offsetting Increases | DIET and Gas Utilities sectors | [Financial Position and Cash Flow](index=3&type=section&id=Financial%20Position%20and%20Cash%20Flow) [Balance Sheet Highlights](index=3&type=section&id=Balance%20Sheet%20Highlights) The company's cash balance increased to $75 million, with Net Debt standing at $374 million as of June 30, 2025 Balance Sheet Highlights (June 30, 2025): | Metric | Amount | | :--- | :--- | | Cash Balance | $75 million | | Long-term Debt (incl. current portion) | $449 million | | Net Debt | $374 million | [Cash Flow from Operations](index=3&type=section&id=Cash%20Flow%20from%20Operations) Cash used in continuing operations for the second quarter of 2025 was $46 million Cash Flow from Continuing Operations (Q2 2025): | Metric | Amount | | :--- | :--- | | Cash used in continuing operations | $46 million | [Debt and Liquidity](index=3&type=section&id=Debt%20and%20Liquidity) Total liquidity remained strong at $574 million, with a Net Debt Leverage Ratio of 2.2 as of June 30, 2025 Debt and Liquidity (June 30, 2025): | Metric | Amount | | :--- | :--- | | Net Debt | $374 million | | Net Debt Leverage Ratio | 2.2 | | ABL Facility Availability | $499 million | | Total Liquidity | $574 million | [Capital Allocation](index=3&type=section&id=Capital%20Allocation) [Share Repurchase Program](index=3&type=section&id=Share%20Repurchase%20Program) The company repurchased $15 million of its common stock in Q2 2025 before suspending the program due to the pending merger Share Repurchase Program (Q2 2025): | Metric | Amount | | :--- | :--- | | Repurchase Amount | $15 million | | Average Price Per Share | $12.35 | | Common Shares Outstanding (June 30, 2025) | 85.0 million | | Program Status | Suspended due to pending merger | [Strategic Corporate Actions](index=4&type=section&id=Strategic%20Corporate%20Actions) [Agreement to Combine with DNOW](index=4&type=section&id=Agreement%20to%20Combine%20with%20DNOW) A definitive all-stock merger agreement with DNOW Inc was announced, expected to close in the fourth quarter of 2025 - DNOW Inc will acquire MRC Global in an **all-stock transaction**, unanimously approved by both boards of directors[27](index=27&type=chunk) - The transaction is subject to shareholder and regulatory approvals and is currently anticipated to close in the **fourth quarter of 2025**[27](index=27&type=chunk) - The combination is expected to create a premier energy and industrial solutions provider with expanded capabilities and scale[4](index=4&type=chunk) [Future Guidance and Reporting](index=4&type=section&id=Future%20Guidance%20and%20Reporting) Due to the pending merger, the company reaffirmed full-year guidance but will not provide future guidance or host a conference call - Reaffirming full-year guidance provided last quarter[5](index=5&type=chunk)[28](index=28&type=chunk) - Will not be providing future financial guidance due to the pending combination with DNOW[5](index=5&type=chunk)[28](index=28&type=chunk) - Will not host a conference call or webcast to discuss Q2 2025 results[28](index=28&type=chunk) [Company Information](index=4&type=section&id=Company%20Information) [About MRC Global Inc.](index=4&type=section&id=About%20MRC%20Global%20Inc.) MRC Global is a leading global distributor of pipe, valves, fittings, and other infrastructure products and services - Headquartered in Houston, Texas, MRC Global is a leading global distributor of pipe, valves, fittings (PVF) and other infrastructure products and services[29](index=29&type=chunk) - Serves diversified end-markets including gas utilities, downstream, industrial and energy transition, and production and transmission infrastructure sectors[29](index=29&type=chunk) - Operates from a worldwide network of approximately **200 locations**, offering approximately **200,000 SKUs** from over **7,100 suppliers** to over **8,300 customers**[29](index=29&type=chunk) [Forward-Looking Statements and Risk Factors](index=4&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This release contains forward-looking statements regarding the merger and future performance, which involve inherent risks and uncertainties - Statements about the DNOW-MRC Global merger, future events, plans, anticipated results of operations, business strategies, and expected synergies are considered forward-looking[30](index=30&type=chunk)[31](index=31&type=chunk) - These statements are based on management's expectations and involve a number of business risks and uncertainties[31](index=31&type=chunk) - Undue reliance should not be placed on forward-looking statements as actual results may differ materially due to known and unknown risks and uncertainties[34](index=34&type=chunk) [Risks and Uncertainties](index=5&type=section&id=Risks%20and%20Uncertainties) Key risks include merger-related approvals and timing, economic conditions, commodity prices, and supply chain issues - Risks associated with the merger include obtaining stockholder and regulatory approvals, timing of closing, and the achievement of expected benefits and synergies[32](index=32&type=chunk) - External risks include decreases in capital and other expenditure levels, U.S. and international general economic conditions, geopolitical events, and decreases in oil and natural gas prices[32](index=32&type=chunk) - Operational and financial risks include unexpected supply shortages, cost increases by suppliers, lack of long-term contracts with suppliers and customers, inability to attract and retain employees, and significant indebtedness[32](index=32&type=chunk) [Additional Information Regarding the Merger](index=6&type=section&id=Additional%20Information%20Regarding%20the%20Merger) [No Offer or Solicitation](index=6&type=section&id=No%20Offer%20or%20Solicitation) This document is not an offer to buy or sell securities or a solicitation of votes for the proposed merger - The document is not an offer to buy or sell securities or a solicitation of any vote or approval[36](index=36&type=chunk) - No sale, issuance, or transfer of securities will occur in any jurisdiction where it would be unlawful prior to registration or qualification[36](index=36&type=chunk) [SEC Filings and Investor Resources](index=6&type=section&id=SEC%20Filings%20and%20Investor%20Resources) Investors are urged to read the Form S-4 registration statement and other relevant SEC filings for important merger information - DNOW filed a registration statement on **Form S-4** with the SEC, including a definitive joint proxy statement/prospectus for the merger[37](index=37&type=chunk) - Investors and security holders are urged to read the registration statement, definitive joint proxy statement/prospectus, and other relevant documents for important information[38](index=38&type=chunk) - Free copies of these documents are available on www.sec.gov, MRC Global's investor website (https://investor.mrcglobal.com/), and DNOW's investor website (https://ir.dnow.com/)[39](index=39&type=chunk) [Participants in the Solicitation](index=6&type=section&id=Participants%20in%20the%20Solicitation) Information regarding directors and executive officers of both companies, deemed participants in the proxy solicitation, is available in SEC filings - MRC Global, DNOW, and certain of their respective directors and executive officers may be deemed participants in the solicitation of proxies for the merger[40](index=40&type=chunk) - Information about the directors and executive officers is available in their respective 2025 annual meeting proxy statements[40](index=40&type=chunk) - Additional information regarding participants and their interests will be set forth in the registration statement, definitive joint proxy statement/prospectus, and other merger-related SEC filings[41](index=41&type=chunk) [Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $1,774 million as of June 30, 2025, driven by higher accounts receivable and inventories Condensed Consolidated Balance Sheets (in millions): | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash | $75 | $63 | | Accounts receivable, net | $469 | $378 | | Inventories, net | $490 | $415 | | Total current assets | $1,078 | $921 | | Total assets | $1,774 | $1,624 | | Trade accounts payable | $438 | $329 | | Long-term debt | $445 | $384 | | Total current liabilities | $587 | $508 | | Total liabilities and stockholders' equity | $1,774 | $1,624 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 sales were $798 million, with net income from continuing operations declining to $13 million from $30 million year-over-year Condensed Consolidated Statements of Operations (in millions, except per share amounts): | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Sales | $798 | $799 | $1,510 | $1,576 | | Gross profit | $151 | $169 | $293 | $328 | | Selling, general and administrative expenses | $130 | $122 | $254 | $242 | | Operating income | $21 | $47 | $39 | $86 | | Net income from continuing operations | $13 | $30 | $21 | $50 | | Net income (loss) attributable to common stockholders | $13 | $24 | -$9 | $37 | | Diluted earnings (loss) per common share | $0.15 | $0.28 | -$0.11 | $0.43 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was $30 million for the first six months of 2025, a reversal from cash provided in the prior year Condensed Consolidated Statements of Cash Flows (in millions): | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | -$30 | $101 | | Net cash used in investing activities | -$2 | -$13 | | Net cash provided by (used in) financing activities | $39 | -$169 | | Increase (decrease) in cash | $7 | -$81 | | Cash -- end of period | $75 | $49 | [Supplemental Sales Information (Unaudited)](index=10&type=section&id=Supplemental%20Sales%20Information%20%28Unaudited%29) [Disaggregated Sales by Segment and Sector](index=10&type=section&id=Disaggregated%20Sales%20by%20Segment%20and%20Sector) In Q2 2025, U.S. sales were $658 million and International sales were $140 million, with Gas Utilities as the largest sector Disaggregated Sales by Segment and Sector (in millions): | Segment/Sector | Q2 2025 Sales | Q2 2024 Sales | 6 Months 2025 Sales | 6 Months 2024 Sales | | :--- | :--- | :--- | :--- | :--- | | U.S. | $658 | $677 | $1,249 | $1,344 | | International | $140 | $122 | $261 | $232 | | **Total Sales** | **$798** | **$799** | **$1,510** | **$1,576** | | Gas Utilities | $299 | $287 | $572 | $552 | | DIET | $223 | $256 | $443 | $523 | | PTI | $276 | $256 | $495 | $501 | [Sales by Product Line](index=11&type=section&id=Sales%20by%20Product%20Line) Valves, Automation, Measurement and Instrumentation was the largest product line with $294 million in Q2 2025 sales Sales by Product Line (in millions): | Product Line | Q2 2025 Sales | Q2 2024 Sales | 6 Months 2025 Sales | 6 Months 2024 Sales | | :--- | :--- | :--- | :--- | :--- | | Line Pipe | $94 | $125 | $166 | $238 | | Carbon Fittings and Flanges | $106 | $102 | $196 | $198 | | Total Carbon Pipe, Fittings and Flanges | $200 | $227 | $362 | $436 | | Valves, Automation, Measurement and Instrumentation | $294 | $284 | $571 | $563 | | Gas Products | $209 | $193 | $396 | $380 | | Stainless Steel and Alloy Pipe and Fittings | $34 | $35 | $74 | $73 | | General Products | $61 | $60 | $107 | $124 | | **Total Sales** | **$798** | **$799** | **$1,510** | **$1,576** | [Supplemental Non-GAAP Financial Information (Unaudited)](index=12&type=section&id=Supplemental%20Non-GAAP%20Financial%20Information%20%28Unaudited%29) [Reconciliation of Gross Profit to Adjusted Gross Profit](index=12&type=section&id=Reconciliation%20of%20Gross%20Profit%20to%20Adjusted%20Gross%20Profit) Adjusted Gross Profit for Q2 2025 was $172 million after excluding a $10 million increase in the LIFO reserve Reconciliation of Gross Profit to Adjusted Gross Profit (in millions): | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Gross profit, as reported | $151 | $169 | $293 | $328 | | % of Revenue | 18.9% | 21.2% | 19.4% | 20.8% | | Increase in LIFO reserve | $10 | $1 | $11 | $2 | | Adjusted Gross Profit | $172 | $180 | $325 | $350 | | Adjusted % of Revenue | 21.6% | 22.5% | 21.5% | 22.2% | [Reconciliation of SG&A to Adjusted SG&A](index=13&type=section&id=Reconciliation%20of%20SG%26A%20to%20Adjusted%20SG%26A) Adjusted SG&A was $124 million in Q2 2025, excluding $6 million in non-recurring merger-related costs Reconciliation of SG&A to Adjusted SG&A (in millions): | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Selling, general and administrative expenses | $130 | $122 | $254 | $242 | | Non-recurring other legal and consulting costs (merger) | -$6 | — | -$7 | — | | Activism response legal and consulting costs | — | -$1 | — | -$4 | | Adjusted Selling, general and administrative expenses | $124 | $120 | $245 | $237 | [Reconciliation of Net Income (Loss) to Adjusted EBITDA](index=14&type=section&id=Reconciliation%20of%20Net%20Income%20%28Loss%29%20to%20Adjusted%20EBITDA) Adjusted EBITDA for Q2 2025 was $54 million, reconciled from a net income of $13 million Reconciliation of Net Income (Loss) to Adjusted EBITDA (in millions): | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $13 | $30 | -$9 | $49 | | Net income from continuing operations | $13 | $30 | $21 | $50 | | Income tax expense | $5 | $12 | $6 | $20 | | Interest expense | $10 | $7 | $19 | $15 | | Depreciation and amortization | $7 | $5 | $12 | $10 | | Amortization of intangibles | $4 | $5 | $9 | $10 | | Increase in LIFO reserve | $10 | $1 | $11 | $2 | | Non-recurring other legal and consulting costs (merger) | $6 | — | $7 | — | | Adjusted EBITDA | $54 | $65 | $90 | $122 | [Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) from Continuing Operations](index=15&type=section&id=Reconciliation%20of%20Net%20Income%20%28Loss%29%20to%20Adjusted%20Net%20Income%20%28Loss%29%20from%20Continuing%20Operations) Adjusted Net Income from Continuing Operations was $22 million for Q2 2025, down from $33 million in Q2 2024 Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) from Continuing Operations (in millions): | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income from continuing operations | $13 | $30 | $21 | $50 | | Non-recurring other legal and consulting costs, net of tax | $4 | — | $5 | — | | Increase in LIFO reserve, net of tax | $7 | $1 | $8 | $2 | | Adjusted Net Income from Continuing Operations | $22 | $33 | $34 | $57 | [Reconciliation of Net Income Attributable to Common Stockholders to Adjusted Net Income (Loss) Attributable to Common Stockholders](index=16&type=section&id=Reconciliation%20of%20Net%20Income%20Attributable%20to%20Common%20Stockholders%20to%20Adjusted%20Net%20Income%20%28Loss%29%20Attributable%20to%20Common%20Stockholders) Adjusted Net Income Attributable to Common Stockholders was $22 million, or $0.25 per diluted share, for Q2 2025 Reconciliation of Net Income Attributable to Common Stockholders to Adjusted Net Income (Loss) Attributable to Common Stockholders (in millions, except per share amounts): | Metric | Q2 2025 Amount | Q2 2025 Per Share | Q2 2024 Amount | Q2 2024 Per Share | 6 Months 2025 Amount | 6 Months 2025 Per Share | 6 Months 2024 Amount | 6 Months 2024 Per Share | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net income (loss) attributable to common stockholders | $13 | $0.15 | $24 | $0.28 | -$9 | -$0.11 | $37 | $0.43 | | Non-recurring other legal and consulting costs, net of tax | $4 | $0.05 | — | — | $5 | $0.06 | — | — | | Increase in LIFO reserve, net of tax | $7 | $0.08 | $1 | $0.01 | $8 | $0.09 | $2 | $0.02 | | Adjusted Net Income Attributable to Common Stockholders | $22 | $0.25 | $27 | $0.31 | $34 | $0.40 | $45 | $0.52 | [Reconciliation of Long-term Debt to Net Debt and Net Debt Leverage Ratio](index=17&type=section&id=Reconciliation%20of%20Long-term%20Debt%20to%20Net%20Debt%20and%20Net%20Debt%20Leverage%20Ratio) As of June 30, 2025, Net Debt was $374 million, resulting in a Net Debt Leverage Ratio of 2.2 Net Debt and Net Debt Leverage Ratio Calculation (in millions): | Metric | June 30, 2025 | | :--- | :--- | | Long-term debt | $445 | | Plus: current portion of debt obligations | $4 | | Total debt | $449 | | Less: cash | $75 | | Net Debt | $374 | | Trailing twelve months Adjusted EBITDA | $170 | | Net Debt Leverage Ratio | 2.2 |

Financial Performance - Q2 2025 - Revenue for Q2 2025 was $798 million, a 12% increase compared to Q1 2025[18] - Net income was $13 million, representing 1.6% of sales[18] - Adjusted EBITDA was $54 million, or 6.8% of sales[18] - Gross profit reached $151 million, which is 18.9% of sales[18] - Adjusted gross profit was $172 million, or 21.6% of sales[18] Segment Performance - Q2 2025 - PTI sector surged by 26%[18] - Gas Utilities sector rose by 10%[18] - DIET sector increased by 1%[18] - U S segment grew by 11%[18] - International segment improved by 16%[18] Balance Sheet & Cash Flow - Net debt leverage ratio stood at 2.2x[19] - Liquidity was $574 million, including $75 million in cash[19] - $46 million was used in operating cash during Q2, primarily due to inventory purchases and higher receivables[14] Merger with DNOW - A combination with DNOW was announced on June 26, 2025[11] - The combined pro forma revenue on a TTM (Trailing Twelve Months) basis is $53 billion[18] - Estimated annual cost synergies of $70 million are expected within 3 years of closing[18] - The anticipated closing is in Q4 2025[18]

Core Viewpoint - MRC Global reported quarterly earnings of $0.25 per share, exceeding the Zacks Consensus Estimate of $0.23 per share, but down from $0.31 per share a year ago, indicating an earnings surprise of +8.70% [1] Financial Performance - The company posted revenues of $798 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 3.35%, although this is a decrease from year-ago revenues of $832 million [2] - Over the last four quarters, MRC has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Stock Performance - MRC shares have increased approximately 12.4% since the beginning of the year, outperforming the S&P 500's gain of 7.1% [3] Future Outlook - The company's earnings outlook is crucial for investors, with current consensus EPS estimates of $0.32 for the coming quarter and $0.87 for the current fiscal year, alongside revenues of $832.9 million and $3.04 billion respectively [7] - The estimate revisions trend for MRC was favorable ahead of the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Steel - Pipe and Tube industry, to which MRC belongs, is currently in the top 23% of over 250 Zacks industries, suggesting a positive outlook as the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Financial Performance - MRC Global reported second quarter 2025 revenue of $798 million, a 12% increase from the first quarter of 2025, with all sectors contributing to this growth [3][10][14] - Adjusted EBITDA for the second quarter of 2025 was $54 million, representing 6.8% of sales, compared to $65 million or 8.1% of sales in the same period of 2024 [11][61] - Net income from continuing operations for the second quarter of 2025 was $13 million, down from $30 million in the second quarter of 2024 [6][7] Sector Performance - The Production and Transmission Infrastructure (PTI) sector led the revenue growth with a 26% increase sequentially, driven by robust project activity [3][19] - Gas Utilities sector revenue increased by 10% sequentially, supported by increased construction projects [3][19] - The Downstream, Industrial, and Energy Transition (DIET) sector experienced a slight decline compared to the same quarter a year ago, but showed a 1% increase sequentially [14][20] Merger Agreement - MRC Global announced a merger agreement with DNOW Inc., which is expected to create a premier energy and industrial solutions provider [4][25] - The merger is subject to shareholder and regulatory approvals, with an anticipated closing in the fourth quarter of 2025 [25][26] Shareholder Returns - The company returned $15 million to shareholders through share repurchases at an average price of $12.35 per share during the second quarter of 2025 [3][24] - The share repurchase program has been suspended due to the pending merger with DNOW [24] Balance Sheet and Cash Flow - As of June 30, 2025, MRC Global had a cash balance of $75 million and long-term debt of $449 million [23] - The company's backlog was $589 million, a 2% decrease from the previous quarter, primarily due to a decline in the PTI sector backlog [22]

Core Viewpoint - The article emphasizes the importance of identifying and maintaining stock price trends for successful short-term investing, highlighting the utility of a specific screening strategy to find stocks with strong fundamentals and positive price momentum [1][2]. Group 1: Stock Performance - MRC Global (MRC) has shown a solid price increase of 23.9% over the past 12 weeks, indicating strong investor interest [4]. - The stock has also increased by 11.3% in the last four weeks, suggesting that the upward trend is still intact [5]. - MRC is currently trading at 81.8% of its 52-week high-low range, indicating potential for a breakout [5]. Group 2: Fundamental Strength - MRC holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises [6]. - The stock has an Average Broker Recommendation of 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term price performance [7]. Group 3: Investment Strategy - The "Recent Price Strength" screen is designed to identify stocks with sufficient fundamental strength to sustain their recent uptrends, making it a useful tool for investors [3]. - The article suggests that there are multiple stocks passing through this screening process, indicating a broader opportunity for trend-based investing [8].