MRC (US:MRC)2025-05-07 15:02Financial Data and Key Metrics Changes - Revenue increased by 7% sequentially to $712 million, with growth in each end market sector led by gas utilities [11][27] - Adjusted gross profit margins were strong at 21.5%, above the target of 21% [12][30] - Adjusted EBITDA was $36 million, or 5.1% of sales, an improvement over the previous quarter [13][31] - Operating cash flow from continuing operations was $21 million, reflecting strong working capital management [13][32] - Net income from continuing operations was $8 million, or $0.09 per diluted share, compared to a net loss in the previous quarter [31] 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 [28] - Diet sector revenue was $220 million, a 6% increase due to chemical project deliveries and mining activity [28] - PTI sector revenue was $219 million, an 8% increase driven by midstream customer projects [28] Market Data and Key Metrics Changes - U.S. revenue was $591 million, a 9% increase, with all end market sectors improving [29] - International revenue was $121 million, down 1% due to timing of project deliveries [29] Company Strategy and Development Direction - The company is optimistic about growth in the gas utilities sector, which is experiencing a resurgence [10][15] - A $125 million share repurchase program has been initiated, reflecting confidence in financial strength [10][11] - The capital allocation strategy focuses on maintaining a healthy balance sheet, targeting a net debt leverage ratio of 1.5 times or lower [11][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving strong sequential revenue improvement in the second quarter, supported by a growing backlog [10][25] - The gas utilities sector is expected to be resilient amid macroeconomic uncertainties, with a 26% increase in backlog year-to-date [15][35] - Management acknowledged potential risks in the second half of 2025 due to tariffs and lower oil prices but maintained the annual guidance [26][33] Other Important Information - The company is focused on navigating tariff impacts and supply chain challenges, with over 60% of U.S. product sales sourced domestically [17][18] - The mining sector is expected to grow at a compound annual rate of approximately 10% over the next three to five years [24] Q&A Session Summary Question: How is inflation tracking in the business today? - Management noted that tariff impacts are primarily seen in steel products and emphasized efforts to mitigate costs for customers [46][47] Question: Did inventory step up in the first quarter? - Management confirmed a strategic increase in inventory to prepare for tariffs and the upcoming construction season [51][52] Question: Any updates on opportunities in gas utilities? - Management highlighted growth opportunities in gas utilities, including market share expansion and new services through the MTech Services joint venture [53][55] Question: What is the outlook for the diet sector? - Management indicated that the backlog increase is primarily in refining and chemical spaces, with growth driven by turnaround activities [71][72] Question: How is the international PTI business performing? - Management projected growth in the international PTI space, particularly in the North Sea and Europe, driven by project-related revenues [91][92]