MRC Global Inc.
) reported disappointing results for the third quarter of 2013
with year-over-year decline in earnings and revenues. Adjusted
earnings per share in the quarter came in at 40 cents, missing
the Zacks Consensus Estimate of 44 cents by 9.1%. The adjusted
earnings for the quarter also lagged the year-ago earnings of 61
cents by 34.4%.
On a GAAP basis, earnings per share for the quarter were 38
cents, compared with 54 cents in the year-ago quarter. The
year-over-year decline in earnings was a result of reduced
revenues for the quarter.
MRC Global reported 9.5% year-over-year decline in revenues
that settled at $1,313.7 million - almost in line with the Zacks
Consensus Estimate of $1,314.0 million. The decline was primarily
due to a planned reduction in the oil country tubular goods
Geographically, MRC Global reported year-over-year decline of
revenues in the
to $1.02 billion. The decline was a result of $83.4 million
decrease in the OCTG revenues. However, revenues got a boost from
the acquisition of Production Specialty Services Inc. and Flow
Control Products. In the
region, revenues generated was $162.1 million, a decline of 12.7%
compared with the year-ago quarter. Lower revenues were the
culmination of project sales decline in Northern Alberta's oil
sands region, along with weakening of the Canadian dollar.
Additionally, reduction in demand in Australia led to an 11.1%
drop in the
sales to $136.6 million.
On a sector basis, upstream sales declined 10.0% year over
year to $588.1 million, while midstream sales were down 6.6% year
over year to $377.3 million. Downstream sales in the quarter were
$348.3 million, down 11.5% year over year.
Cost of sales in the third quarter went down 8.4% year over
year to $1,075.4 million and represented 81.9% of total revenue,
up from 80.9% in the year-ago quarter. Selling, general and
administrative expenses, as a percentage of total revenue, stood
at 12.2%. Adjusted earnings before interest, taxes, depreciation
and amortization (EBITDA) totaled $96.4 million, declining 23.1%
year over year.
Exiting the third quarter of 2013, cash balance of MRC Global
stood at $33.4 million, down from $37.8 million in the previous
quarter. Long-term debt, net of current portion, registered a
sequential decrease to $1,037.3 million.
For the nine months ended Sep 30, 2013, MRC Global generated
cash from operations of $241.4 million versus $65.8 million in
the prior-year period. Capital expenditure incurred in the first
nine months of 2013 totaled $14.9 million, versus $21.0 million
in the year-ago period.
As expected earlier, reduction in the OCTG business as well as
lower demand in various regions including Australia and Canada
led to lower revenues in the quarter. Expecting these factors to
remain unchanged, management has maintained its guidance for
2013. For the year, management anticipates revenues to range
within $5.16 billion-$5.30 billion. Adjusted EBITDA is predicted
to be within $385 million-$415 million, while earnings per share
is expected in the band of $1.65-$1.85.
MRC Global is a leading global distributor of pipe, valves and
fittings (PVF) and related products and services to the energy
and industrial sectors.
Other Stocks to Consider
MRC Global currently carries a Zacks Rank #4 (Sell). Other
stocks in the industry worth considering include
Mueller Water Products, Inc.
). All of these carry a Zacks Rank #2 (Buy).
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MRC GLOBAL INC (MRC): Free Stock Analysis
MUELLER WATER (MWA): Free Stock Analysis
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