MRC (US:MRC)2021-02-12 20:51Financial Data and Key Metrics Changes - In 2020, the company reported revenue of $2.56 billion and adjusted EBITDA of $97 million, reflecting a 16% decrease in revenue compared to 2016, but a 29% increase in profit [9] - Adjusted gross margin reached an all-time high of 19.7% for 2020, despite challenges, indicating successful profitability strategies [10] - The company reduced normalized SG&A costs by $113 million in 2020, achieving a normalized SG&A of $96 million in Q4 2020 [11][31] Business Line Data and Key Metrics Changes - The gas utility sector accounted for one-third of total revenue and experienced a 21% growth in Q4 2020 compared to Q4 2019, making it the largest sector [12][27] - The downstream and industrial sector saw a 6% sequential decrease in Q4 2020, while the upstream production sector increased by 7% sequentially [28][29] - Midstream pipeline sales declined by 16% sequentially, remaining the most challenged sector [28] Market Data and Key Metrics Changes - U.S. segment revenue was $448 million in Q4 2020, a 3% decrease from Q3 2020, with gas utility revenue increasing by 5% sequentially [24] - International revenue increased by 14% sequentially, driven by projects in Australia and the UK [26] - The company achieved a net working capital to sales ratio of 17.5%, significantly below the targeted range, indicating improved efficiency [34] Company Strategy and Development Direction - The company aims to achieve 20% plus adjusted gross margins consistently and grow its gas utility business to $1 billion in revenue [18] - A focus on e-commerce is evident, with 42% of North America revenue generated through e-commerce channels in 2020, targeting 50% in the future [14] - The company plans to evaluate accretive M&A opportunities while maintaining financial discipline [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a cyclical recovery expected in 2022 to 2023, driven by oil price recovery and vaccine distribution [37][38] - The company anticipates upper single-digit revenue growth in 2021 compared to the second half of 2020 run-rate, with gas utilities expected to grow in the upper single digits [39][40] - The first quarter of 2021 is expected to see a modest sequential revenue decline due to seasonal factors and ongoing pandemic impacts [42] Other Important Information - The company generated $261 million in cash from operations in 2020, significantly improving working capital efficiency [15][34] - The company ended 2020 with $119 million in cash and $432 million of availability on its ABL facility, with a leverage ratio of 2.7x [16][36] Q&A Session Summary Question: What is the expected cadence for top line growth in 2021? - Management expects a typical year with the first quarter being the lowest, followed by improvement in the second and third quarters, and a seasonal decline in the fourth quarter [48] Question: Can you provide insights on gross margins and G&A for 2021? - Management indicated that the $95 million to $100 million run-rate for G&A is appropriate, with expectations to maintain mid-19% gross margins [51][52] Question: How does the company view opportunities in clean energy? - Management sees limited immediate impact from clean energy investments but anticipates a larger portion of business in that area over the next 5 to 10 years [60] Question: What is the relationship between revenue and rig count? - The company tracks well completions closely, noting that while rig count impacts revenue, the relationship is more closely tied to completion activity [62]