MRC Global Inc.
) reported mixed results for the second quarter of 2014, beating
the Zacks Consensus Estimate for revenues but posting in-line
earnings. Adjusted earnings per share came in at 42 cents, in line
with the Zacks Consensus Estimate. However, the results lagged the
year-ago figure of 43 cents by a penny. On a GAAP basis, earnings
per share came in at 38 cents.
Mrc Global Inc - Earnings Surprise |
MRC Global reported a year-over-year increase of 18.1% in
revenues to $1,497.3 million, beating the Zacks Consensus Estimate
of $1,418.0 million. The hike was prompted by a sales rise across
Geographically, MRC Global reported a 14.4% year-over-year
increase in the U.S. revenues to $1,116 million, primarily
attributable to a 13.9% organic growth. The line pipe product sales
grew 29.7% year over year.
Revenues in Canada declined 2.3% from the year-ago quarter to
$150.0 million, due to sale of the PCP distribution and servicing
business, which reduced sales by $14.5 million. Also, depreciation
in value of Canadian dollars negatively impacted the revenues.
However, growth in acquired businesses including Stream,
Flangefitt, Hypteck and MSD increased the international sales by
66.7% year over year to $231.7 million.
On a sector basis, upstream sales increased 29.1% to $700.1
million, while midstream sales rose 11.7% to $420.0 million.
Downstream sales in the quarter were $377.2 million, up 7.9% year
Adjusted gross profit margin was 19.0% compared with 19.7% in
the year-ago quarter. Selling, general and administrative expenses,
as a percentage of total revenue, came in at 12.4% compared with
12.1% in the second quarter of 2013. Adjusted earnings before
interest, taxes, depreciation and amortization (EBITDA) totaled
$106.2 million, up from $98.9 million in the prior-year
Exiting the quarter, MRC Global had a cash balance of $36.5
million, up from $30.1 million in the previous quarter. In the
reported quarter, long-term debt, net of current portion, increased
sequentially to $1,390.0 million from $1,306.3 million.
In the first six months of 2014, MRC Global used $51.9 million
in operating activities versus cash generation of $181.9 million in
the prior-year comparable period. Total capital expenditure
incurred was $4.6 million, versus $10.6 million in the six months
ended Jun 30, 2013.
Based on the current results, management has updated its
guidance for 2014. For the year, revenues are anticipated in the
range of $5.7-$5.9 billion, up from the previous projection of
$5.5-$5.8 billion. However, adjusted EBITDA is predicted within
$400-$430 million versus $400-$450 million range expected earlier.
Further, capital expenditure is expected in the band of $20-$25
million, down from the prior $25.0-$30.0 million range.
Also, MRC Global is expected to generate cash flow from
operations within $75.0-$100.0 million, down from the previous
range of $175.0-$200.0 million.
Other Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold). Some
better-ranked stocks in the industry include Blount International
), The Babcock & Wilcox Company (
) and Graco Inc. (
). While Blount International sports a Zacks Rank #1 (Strong Buy),
The Babcock & Wilcox and Graco have a Zacks Rank #2 (Buy).
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