MRC (MRC)2022-05-10 19:34Revenue Performance - Revenue for the three months ended March 31, 2022, increased by 8% sequentially from the previous quarter, outperforming initial expectations[67]. - The gas utility sector accounted for 37% of total company revenue, with a 29% increase in sales compared to the same period in 2021[68]. - The downstream, industrial, and energy transition (DIET) sector generated 30% of total revenue, growing 16% from the first quarter of 2021[71]. - Upstream production revenue increased by 24% year-over-year, while midstream pipeline revenue rose by 12% in the same period[73]. - The company expects double-digit revenue improvement for 2022, driven by increased customer spending levels[67]. Sales and Profitability - Sales for the three months ended March 31, 2022, were $742 million, an increase of $133 million, or 22%, compared to $609 million for the same period in 2021[87]. - U.S. sales increased to $618 million for the three months ended March 31, 2022, from $484 million for the same period in 2021, reflecting a $134 million, or 28%, increase[88]. - Gross profit was $136 million (18.3% of sales) for the three months ended March 31, 2022, compared to $103 million (16.9% of sales) for the same period in 2021[91]. - Adjusted Gross Profit increased to $152 million (20.5% of sales) for the three months ended March 31, 2022, from $118 million (19.4% of sales) for the same period in 2021[92]. - Operating income was $29 million for the three months ended March 31, 2022, compared to operating income of $3 million for the same period in 2021, an increase of $26 million[94]. - Net income was $16 million for the three months ended March 31, 2022, compared to a net loss of $3 million for the same period in 2021[99]. - Adjusted EBITDA was $48 million (6.5% of sales) for the three months ended March 31, 2022, compared to $24 million (3.9% of sales) for the same period in 2021[100]. Market Conditions - Inflation and supply chain disruptions have led to significant increases in transportation costs, impacting overall profitability[78]. - The average Brent crude oil price during the first quarter of 2022 was over $100 per barrel, while West Texas Intermediate averaged approximately $95 per barrel[76]. - Average Commodity Prices for WTI crude oil rose to $95.18 per barrel for the three months ended March 31, 2022, compared to $58.09 for the same period in 2021[85]. Growth Potential - The compound annual growth rate for the gas utility sector since 2010 is 11%, indicating steady growth potential[70]. - The company is well-positioned to benefit from the growth of liquefied natural gas (LNG) infrastructure as Europe seeks alternatives to Russian gas supplies[77]. - The energy transition segment is expected to grow as pressure to decarbonize the economy increases, with low-emission valves representing 94% of valve revenue[72]. Financial Position - The backlog as of March 31, 2022, was $667 million, up from $520 million as of December 31, 2021[84]. - As of March 31, 2022, total liquidity was $545 million, consisting of $31 million in cash and $514 million of excess availability under the Global ABL Facility[106]. - Net cash used in operating activities was $13 million for the three months ended March 31, 2022, a decrease from $24 million provided in the same period of 2021, primarily due to increased working capital[111]. - The company had capital expenditures of $2 million for the three months ended March 31, 2022, compared to $1 million in the same period of 2021[112]. - The outstanding balance on the Term Loan as of March 31, 2022, was $297 million, with no excess cash flow payment required for 2021[104]. - The Global ABL Facility was amended to provide $705 million in revolver commitments, maturing in September 2026, with an accordion feature allowing an increase of up to $250 million[105]. - The company used $6 million to pay dividends on preferred stock for the three months ended March 31, 2022, consistent with the prior year[113]. - The company is not required to make an excess cash flow payment if the senior secured leverage ratio is less than or equal to 2.50 to 1.00[104]. - The company’s credit ratings are below investment grade, which may impact future borrowing costs and ability to raise funds[107]. Operational Metrics - Average Rig Count in the U.S. increased to 633 for the three months ended March 31, 2022, from 393 for the same period in 2021[85].