MRC (US:MRC)2023-08-08 16:52Revenue Performance - Revenue for the three months ended June 30, 2023, decreased by 2% sequentially from the previous quarter but increased by 3% compared to the same period in 2022[73]. - Sales for the three months ended June 30, 2023, were $871 million, an increase of $23 million, or 3%, compared to $848 million for the same period in 2022[93]. - U.S. sales increased to $727 million for the three months ended June 30, 2023, from $717 million for the same period in 2022, reflecting a $10 million, or 1%, increase[94]. - International sales increased to $106 million for the three months ended June 30, 2023, from $91 million for the same period in 2022, a $15 million increase, or 16%[96]. - Consolidated sales reached $1,756 million for the six months ended June 30, 2023, a 10% increase from $1,590 million in the same period of 2022[113]. - U.S. sales increased by $132 million, or 10%, to $1,467 million for the six months ended June 30, 2023, driven by improvements in the Production and Transmission Infrastructure sector[114]. Sector Performance - The gas utility sector accounted for 36% of total company revenue, with an 8% increase in sales compared to the first half of 2022[74]. - The Downstream, Industrial and Energy Transition (DIET) sector generated 30% of total revenue, growing by 8% from the first six months of 2022[77]. - The Production and Transmission Infrastructure (PTI) sector represented 34% of company revenues, with a 16% increase from the same period in 2022[79]. Profitability Metrics - Gross profit was $175 million (20.1% of sales) for the three months ended June 30, 2023, compared to $151 million (17.8% of sales) for the same period in 2022, an increase of $24 million[97]. - Operating income was $45 million for the three months ended June 30, 2023, compared to $31 million for the same period in 2022, an increase of $14 million[100]. - Net income was $24 million for the three months ended June 30, 2023, compared to $14 million for the same period in 2022, an increase of $10 million, or 71%[106]. - Adjusted Gross Profit increased to $187 million (21.5% of sales) for the three months ended June 30, 2023, from $181 million (21.3% of sales) for the same period in 2022[98]. - Gross profit rose to $354 million (20.2% of sales) for the six months ended June 30, 2023, up from $287 million (18.1% of sales) in the same period of 2022, marking a 23% increase[117]. - Adjusted Gross Profit increased to $375 million (21.4% of sales) for the six months ended June 30, 2023, compared to $333 million (20.9% of sales) for the same period in 2022, a 13% rise[118]. - Operating income for the six months ended June 30, 2023, was $102 million, an increase of 70% from $60 million in the same period of 2022[120]. - Net income increased to $58 million for the six months ended June 30, 2023, compared to $30 million for the same period in 2022, reflecting a 93% growth[126]. Expenses and Financial Position - SG&A expenses were $130 million (14.9% of sales) for the three months ended June 30, 2023, compared to $120 million (14.2% of sales) for the same period in 2022, an increase of $10 million[99]. - Interest expense increased to $10 million for the three months ended June 30, 2023, from $5 million for the same period in 2022, primarily due to higher benchmark interest rates[103]. - Interest expense increased to $17 million for the six months ended June 30, 2023, compared to $11 million for the same period in 2022, primarily due to higher benchmark interest rates[123]. - Income tax expense was $23 million for the six months ended June 30, 2023, compared to $13 million for the same period in 2022, reflecting increased profitability[125]. Cash Flow and Liquidity - Net cash used in operating activities was $10 million for the six months ended June 30, 2023, a significant improvement from $63 million used in the same period in 2022[140]. - Total liquidity, including cash on hand and amounts available under the Global ABL Facility, was $630 million as of June 30, 2023[136]. - The company has $77 million in borrowings outstanding under the Global ABL Facility as of June 30, 2023[133]. - The company’s ability to generate cash flows is primarily dependent on product sales and margins sufficient to cover expenses[136]. Market Outlook and Risks - The company anticipates lower growth in the U.S. segment for the second half of 2023 due to a slower ramp-up in gas utilities sector sales[73]. - The company is well-positioned to benefit from new LNG infrastructure projects as Europe seeks alternatives to Russian gas supplies[82]. - The company is exposed to market risks associated with interest rates, foreign currencies, and steel price volatility[145]. - The company anticipates higher interest expenses due to recent debt market volatility and plans to refinance the Term Loan before its maturity in September 2024[135]. Backlog and Inventory - The backlog as of June 30, 2023, was $764 million, compared to $742 million as of December 31, 2022, indicating a positive trend in customer orders[88]. - The company has maintained a strong inventory position, allowing it to navigate supply chain disruptions effectively[83]. Credit Rating - The company’s credit rating from S&P was upgraded from B- to B on April 24, 2023, with a stable outlook[137].