MRC (US:MRC)2024-05-09 15:57Revenue Performance - Revenue for the first three months of 2024 increased by 5% sequentially from the previous quarter but decreased by 9% compared to the same period in 2023[73]. - Gas Utilities sector contributed 33% of total revenue in Q1 2024, with a 13% decline in revenue year-over-year[74]. - DIET sector generated 34% of total revenue, experiencing a 1% decline from Q1 2023, but is expected to grow due to energy transition projects[78]. - PTI sector represented 33% of company revenues in Q1 2024, with a 12% decrease from the same quarter in 2023[80]. - 67% of total revenue in Q1 2024 was derived from Gas Utilities and DIET sectors[73]. - Sales for the three months ended March 31, 2024, were $806 million, a decrease of $79 million, or 9%, compared to $885 million for the same period in 2023[97]. - U.S. sales decreased to $667 million, down $73 million, or 10%, primarily due to a decline in the Gas Utilities sector[98]. - International sales increased to $110 million, up $7 million, or 7%, driven by the PTI sector[100]. Profitability Metrics - Gross profit was $163 million, representing 20.2% of sales, compared to $179 million, also 20.2% of sales, for the same period in 2023[101]. - Adjusted Gross Profit decreased to $174 million, or 21.6% of sales, from $188 million, or 21.2% of sales, in the prior year[102]. - Operating income was $38 million, a decrease of $19 million, or 33%, compared to $57 million for the same period in 2023[105]. - Net income was $19 million, down from $34 million, representing a decrease of $15 million, or 44%[111]. - Adjusted EBITDA was $57 million, or 7.1% of sales, compared to $69 million, or 7.8% of sales, for the same period in 2023[111]. - Net income for Q1 2024 was $19 million, down from $34 million in Q1 2023, reflecting a decrease in profitability[114]. Operational Efficiency - The ongoing maintenance and upgrading of existing energy facilities is a critical driver for business stability across sectors[75]. - Average Rig Count in North America decreased to 831 from 981 year-over-year, indicating a decline in industry activity[94]. - Adjusted EBITDA for Q1 2024 was $38 million, compared to a net cash used of $30 million in Q1 2023, indicating improved operational efficiency[126]. Financial Position - Total liquidity as of March 31, 2024, was $791 million, consisting of $146 million in cash and $645 million in excess availability under the Global ABL Facility[121]. - The company plans to repay its Term Loan of $292 million in full during Q2 2024 using a combination of cash and asset-based lending[120]. - Net cash used in financing activities was $17 million in Q1 2024, a significant decrease from $40 million provided in Q1 2023, primarily due to net payments on revolving credit facilities[128]. - Capital expenditures for Q1 2024 totaled $6 million, mainly for the replacement of the North American enterprise resource planning system[127]. - As of March 31, 2024, the outstanding balance on the Term Loan was $292 million, with a required repayment of 50% of excess cash flow[117]. - The Global ABL Facility matures in September 2026 and has an accordion feature allowing an increase of up to $250 million[118]. - The company reported a net increase in cash and cash equivalents of $16 million for Q1 2024, compared to $7 million in Q1 2023[125]. Market Conditions - Brent crude oil averaged approximately $83 per barrel and WTI averaged approximately $78 per barrel in Q1 2024, impacting customer activity levels[80]. - The energy transition business is expected to grow significantly, driven by government incentives and commitments to net zero emissions from customers[79]. - The company serves approximately 10,000 customers through 214 service locations globally[70]. - The company offers over 300,000 SKUs from a global network of over 8,500 suppliers[70]. Credit Rating - The company’s credit rating was downgraded from B to B- by S&P Global Ratings on September 21, 2023, with a developing outlook[122].