MRC Global Misses on Q4 Earnings - Analyst Blog

By
A A A

MRC Global Inc. ( MRC ) reported disappointing fourth-quarter 2013 results. Adjusted earnings per share in the quarter came in at 32 cents, missing the Zacks Consensus Estimate of 42 cents by 23.8%. The adjusted earnings for the quarter also lagged the year-ago earnings of 55 cents due primarily to reduced margins.

On a GAAP basis, earnings per share for the quarter were 23 cents, which compared favorably with a loss of 6 cents in the year-ago quarter.

In 2013, adjusted earnings per share came in at $1.60, down from $2.02 in 2012. Reported earnings also missed the Zacks Consensus Estimate of $1.70 per share.


Revenues

MRC Global reported 2.9% year-over-year increase in revenues to $1,344.2 million, beating the Zacks Consensus Estimate of $1,310.0 million. The increase in revenues was primarily due to the contribution from acquisitions including Production Specialty Services Inc., Flow Control Products and Flangefitt Stainless Ltd.

Geographically, MRC Global reported 6% year-over-year increase in revenues in the U.S. to $1.01 billion. Revenues received a boost from the acquisition of Production Specialty and Flow Control Products. Also, sales in the gas utility and line pipe product lines increased.

In Canada , revenues generated were $189.3 million, down 10.6% from the year-ago quarter due to declining project sales and a weak Canadian dollar. Additionally, growth in Europe and Asia increased the International sales by 1.8% year over year to $143.1 million. However, revenues were pulled down slightly by a decline in the Australasia region sales.

On a sector basis, upstream sales increased 5.5% year over year to $606.0 million. Midstream sales increased 7.2% year over year to $392.2 million. Downstream sales in the quarter were $346.0 million, down 5.6% year over year.

In 2013, the company recorded revenues of $5.2 billion, down from $5.6 billion in 2012. Revenues were in line with the Zacks Consensus Estimate.

Margins/Costs

Cost of sales in the fourth quarter went up 6.7% year over year to $1,118.2 million and represented 83.2% of the total revenue, up from 80.2% in the year-ago quarter. Selling, general and administrative expenses, as a percentage of total revenue, came in at 12.4%. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $87.2 million, down from $99.2 million in the fourth quarter of 2012.

Balance Sheet

Exiting 2013, cash balance of MRC Global stood at $25.2 million, down from $33.4 million in the previous quarter. Long-term debt, net of current portion, declined sequentially to $978.9 million from $1,037.3 million.

Cash Flow

For 2013, MRC Global generated cash from operations of $323.6 million versus $240.1 million in the prior year. Capital expenditure incurred in 2013 totaled $22.1 million, versus $26.2 million in the year-ago period.

Outlook

For 2014, management anticipates revenues to range within $5.5-$5.8 billion. Adjusted EBITDA is predicted within $400-$450 million, while capital expenditure is expected in the band of $25.0 to $30.0 million. Also, MRC Global is expected to generate cash flow from operations in $175.0 to $200.0 million range.

MRC Global is a leading global distributor of pipe, valves and fittings, and related products and services to the energy and industrial sectors. The company currently carries a Zacks Rank #4 (Sell). Other stocks in the industry worth considering include The Middleby Corp. ( MIDD ), Altra Industrial Motion Corp. ( AIMC ) and Graco Inc. ( GGG ). All these carry a Zacks Rank #2 (Buy).



ALTRA HOLDINGS (AIMC): Free Stock Analysis Report

GRACO INC (GGG): Free Stock Analysis Report

MIDDLEBY CORP (MIDD): Free Stock Analysis Report

MRC GLOBAL INC (MRC): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: AIMC , GGG , MIDD , MRC

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Don't Pay Up to Play REITs
Don't Pay Up to Play REITs          

Stocks

Referenced

100%
100%
75%
100%

Most Active by Volume

100,376,898
  • $17.62 ▲ 0.51%
83,231,837
  • $25.62 ▲ 1.91%
75,739,329
  • $111.78 ▼ 0.77%
65,297,937
  • $36.37 ▼ 1.76%
59,053,093
  • $47.66 ▲ 0.29%
53,482,350
  • $2.59 ▼ 0.38%
51,504,284
  • $7.34 ▲ 2.37%
51,434,656
  • $8.14 ▲ 6.96%
As of 12/19/2014, 04:15 PM


Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com