MRC (US:MRC)2025-05-07 15:00Financial Data and Key Metrics Changes - Revenue increased by 7% sequentially to $712 million, with growth in each end market sector led by gas utilities [9][25] - Adjusted gross profit margins were strong at 21.5%, above the target of 21% [10][29] - Adjusted EBITDA was $36 million, or 5.1% of sales, an improvement from the previous quarter [11][30] - Net income from continuing operations was $8 million, or $0.09 per diluted share, compared to a net loss in the previous quarter [30] Business Line Data and Key Metrics Changes - Gas utilities revenue was $273 million, an 8% increase driven by normalized buying patterns and increased capital budgets [26] - Diet sector revenue was $220 million, a 6% increase due to chemical project deliveries and mining activity [26] - PTI sector revenue was $219 million, an 8% increase attributed to U.S. midstream customer projects [26] Market Data and Key Metrics Changes - U.S. revenue was $591 million, a 9% increase, with all end market sectors improving [27] - International revenue was $121 million, down 1% due to reduced diet sector revenue [28] - The outlook for the international segment remains positive, expecting solid revenue growth for the fourth consecutive year [28] Company Strategy and Development Direction - The company is optimistic about the gas utilities business, forecasting strong demand growth and a significant backlog increase [12][34] - A $125 million share repurchase program has been initiated, reflecting confidence in financial strength [8][39] - The capital allocation strategy focuses on maintaining a healthy balance sheet, returning cash to shareholders, and investing in growth opportunities [9][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving strong sequential revenue improvement in the second quarter, despite macroeconomic uncertainties [23][24] - The gas utilities sector is expected to be resilient, with a backlog increase of 26% year-to-date [34] - The company is monitoring macroeconomic conditions closely, particularly regarding tariffs and oil prices, but has not seen significant changes in customer behavior [32][80] Other Important Information - The company generated $21 million of operating cash flow from continuing operations, reflecting strong working capital management [11][31] - Capital expenditures for the first quarter were $9 million, above historical averages due to ERP implementation [30][38] - The company targets operating cash flow of at least $100 million for 2025 [37] Q&A Session Summary Question: How is inflation tracking in the business today? - The tariff situation is dynamic, with significant impacts on steel and aluminum products, particularly from China [48][49] Question: Did inventory step up in the first quarter? - The company strategically increased inventory in anticipation of tariffs and to prepare for the year [53][54] Question: Any updates on opportunities in gas utilities? - The gas utilities business has returned to growth, with opportunities to increase market share and wallet share [55][56] Question: What is the outlook for the diet sector? - The diet sector backlog increased by 16%, primarily in refining and chemical spaces, with growth in mining initiatives [70][72] Question: How is the PTI business performing internationally? - The company projects growth in the PTI space internationally, particularly in the North Sea and Europe [88][89] Question: What is the impact of lower oil prices on upstream customers? - Lower oil prices may impact activity, but the customer base is resilient and not indicating significant budget reductions [80][81]