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 [10][26] - Adjusted gross profit margins were strong at 21.5%, above the target of 21% [11][29] - Adjusted EBITDA was $36 million, or 5.1% of sales, an improvement over the previous quarter [12][30] - Operating cash flow from continuing operations was $21 million, reflecting strong working capital management [12][31] - 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 [27] - Diet sector revenue was $220 million, a 6% increase due to chemical project deliveries and mining activity [27] - PTI sector revenue was $219 million, an 8% increase driven by midstream customer projects [27] Market Data and Key Metrics Changes - U.S. revenue was $591 million, a 9% increase, with all end market sectors improving [28] - International revenue was $121 million, down 1% due to timing of project deliveries [28] Company Strategy and Development Direction - The company is optimistic about growth in the gas utilities sector, which is experiencing a resurgence with a 26% increase in backlog [9][14] - A $125 million share repurchase program has been initiated, reflecting confidence in financial strength [9][10] - The capital allocation strategy focuses on maintaining a healthy balance sheet, targeting a net debt leverage ratio of 1.5 times or lower, and investing in growth opportunities [10][38] 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 [9][24] - There are concerns about macroeconomic uncertainties impacting the second half of 2025, but no significant changes in customer behavior have been observed [25][32] - The gas utilities sector is expected to be resilient due to limited exposure to tariffs and low commodity prices [33][34] 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 [16][17] - The company is targeting operating cash flow of at least $100 million for 2025, with capital expenditures expected to be elevated due to ERP implementation [36][38] 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 [44][45] Question: Did inventory step up in the first quarter? - The company strategically increased inventory in anticipation of tariffs and to prepare for the year [49][50] Question: What are the growth opportunities in gas utilities? - The gas utilities business has returned to growth, with opportunities to increase market share and wallet share through new services [52][54] Question: What is the outlook for the diet sector? - The diet sector backlog increased by 16%, primarily driven by refining and chemical projects [68][70] Question: What is the growth outlook for the PTI business internationally? - The company projects growth in the PTI space internationally, particularly in the North Sea and Europe [88] Question: How is the company positioned regarding upstream customers amid lower oil prices? - While lower oil prices may impact activity, the customer base is resilient, and no significant budget reductions are anticipated [77][78]