MRC (US:MRC)2023-05-12 18:29Financial Data and Key Metrics Changes - The company reported revenue of $885 million for Q1 2023, representing a 2% sequential increase and a 19% year-over-year improvement [37][10] - EBITDA for the first quarter was $69 million, or 7.8% of sales, showing a 20 basis point improvement over Q4 2022 and a 130 basis point improvement year-over-year [23][10] - Net income attributable to common stockholders was $28 million, or $0.33 per diluted share, with adjusted net income of $27 million, or $0.32 per diluted share [24] Business Line Data and Key Metrics Changes - The DIET sector revenue was $278 million, a sequential increase of 12%, driven by LNG projects and increased turnaround spending [45] - The PTI sector revenue was $300 million, a slight decrease of 1% sequentially, but the backlog increased by 10% since year-end [46] - Gas utility sales were $307 million, a 4% decrease sequentially but a 13% increase year-over-year due to strong activity levels [18] Market Data and Key Metrics Changes - U.S. revenue was $740 million in Q1, a $20 million increase from the previous quarter, primarily driven by the DIET sector [20] - Canada revenue was $42 million, down 9% sequentially due to timing of pipe orders, while international revenue remained unchanged at $103 million [47] Company Strategy and Development Direction - The company is focusing on LNG projects and energy transition initiatives, which are expected to drive growth in the coming years [39][108] - A new sector called production and transmission infrastructure (PTI) has been created for reporting purposes, combining upstream and midstream businesses [9][36] - The company aims for double-digit sales growth and EBITDA margins exceeding 8% for 2023, supported by a solid backlog and customer spending alignment [13][75] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the 2023 outlook, citing strong first-quarter performance and a growing backlog [13][75] - The company anticipates continued cash generation, targeting $120 million or more in operating cash flow for the year [41][73] - Management noted that the gas utilities sector is resilient and largely independent of commodity prices, contributing to long-term growth prospects [40][57] Other Important Information - The company postponed its term loan refinancing due to complications arising from a disagreement with a preferred stockholder [42][61] - Total debt outstanding at the end of the quarter was $390 million, with a leverage ratio of 1.2 times, an improvement from 1.6 times in the prior year [26] Q&A Session Summary Question: Insights on revenue outlook for the PTI segment - Management confirmed confidence in the PTI sector, expecting mid-teens percentage increases despite some volatility in crude pricing [77][78] Question: Update on refinancing efforts - Management indicated ongoing discussions with preferred stockholders and emphasized the importance of reaching an amicable resolution [81][82] Question: Adjusted gross margin outlook - Management noted inflation in non-line-pipe categories but expects improvements in other product categories to offset this [90] Question: Strength in the DIET sector - Management confirmed strong performance in the DIET sector, with expectations for continued growth driven by LNG and energy transition projects [92][94] Question: Timing of gas utility spending normalization - Management reassured that gas utility spending is expected to return to normal levels in Q2, supported by a strong backlog [116]