MRC GLOBAL INC. 8-K Analysis & Summary – 3/14/2025

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

MRC Global Inc.

8-K

Earnings Release (Preliminary), Guidance Update, Stock Buyback

Filing date:

03/14/2025

TLDR:

MRC Global Inc. reported its full year and fourth quarter 2024 results, with sales of $3,011 million and net income from continuing operations of $78 million, and announced a $125 million share buyback authorization.

ELI5:

MRC Global, a pipe and valve company, made less money in 2024 compared to 2023, but they’re hopeful for a better 2025.

Accession #:

0001437749-25-007664

Published on

March 16, 2025

Analyst Summary

Full-year sales decreased to $3,011 million from $3,266 million in 2023.
Full-year net income decreased to $78 million ($0.57 per diluted share) from $115 million ($1.06 per diluted share) in 2023.
Full-year Adjusted EBITDA was $202 million (6.7% of sales).
Operating cash flow was a strong $268 million for the full year, the highest since 2015.
Working capital as a percentage of sales was a record low of 11.2% in the fourth quarter.
Gross profit margin was 20.6% for the full year and 20.3% for the fourth quarter. Adjusted Gross Profit margin was 21.9% for the full year and 22.0% for the fourth quarter.
The company ended the year with $63 million in cash, $387 million in long-term debt, and a net debt of $324 million. The net debt leverage ratio was 1.6x.

Opportunities and Risks

Management expresses optimism for 2025, citing growth opportunities in various sectors.
Investors should carefully consider the risks outlined in the filing and monitor the company’s ability to execute its growth strategy.
The decrease in cash and the net loss raise concerns about its short-term financial health.

Potential Implications

Company Performance

Improved cost management, as reflected in adjusted SG&A expenses.
Overall profitability declined, with a net loss reported for the year.
Revenue decreased compared to the previous year, indicating challenges in sales growth.
The company actively managed its debt.

Stock Price

The decrease in cash and the net loss raise concerns about its short-term financial health.

MRC Global Inc. (MRC) – Form 8-K Filing Report – March 14, 2025

Executive Summary

This report analyzes MRC Global Inc.’s Form 8-K filing, submitted on March 14, 2025, regarding its financial results for the year ended December 31, 2024. The filing reveals a mixed performance, with strong operating cash flow but a decline in sales and net income compared to the previous year. Management expresses optimism for 2025, citing growth opportunities in various sectors. However, investors should carefully consider the risks outlined in the filing and monitor the company’s ability to execute its growth strategy. Overall, a **hold** rating is suggested, pending further evidence of sustained growth and improved profitability.

Company Overview

MRC Global Inc. (NYSE: MRC) is a global distributor of pipe, valves, fittings (PVF), and other infrastructure products and services. It serves diversified end-markets, including gas utilities, downstream, industrial and energy transition, and production and transmission infrastructure sectors. The company operates a worldwide network of approximately 200 locations.

Detailed Analysis

Financial Statement Analysis

The 8-K filing includes a press release (Exhibit 99.1) and an earnings presentation (Exhibit 99.2) summarizing the company’s financial performance. Key highlights include:

* **Sales:** Full-year sales decreased to $3,011 million from $3,266 million in 2023. Fourth-quarter sales were $664 million, a 10% decrease compared to the fourth quarter of 2023.
* **Net Income:** Full-year net income from continuing operations decreased to $78 million ($0.57 per diluted share) from $115 million ($1.06 per diluted share) in 2023. The fourth quarter resulted in a net loss of $1 million (-$0.14 per diluted share).
* **Adjusted EBITDA:** Full-year Adjusted EBITDA was $202 million (6.7% of sales), while the fourth quarter Adjusted EBITDA was $32 million (4.8% of sales).
* **Operating Cash Flow:** Operating cash flow from continuing operations was a strong $268 million for the full year, the highest since 2015, and $73 million for the fourth quarter.
* **Gross Profit:** Gross profit margin was 20.6% for the full year and 20.3% for the fourth quarter. Adjusted Gross Profit margin was 21.9% for the full year and 22.0% for the fourth quarter.
* **Balance Sheet:** The company ended the year with $63 million in cash, $387 million in long-term debt, and a net debt of $324 million. The net debt leverage ratio was 1.6x.
* **Working Capital:** Working capital as a percentage of sales was a record low of 11.2% in the fourth quarter.

**Key Ratios and Trends:**

| Metric | 2023 | 2024 | Change |
| ————————- | ——— | ——— | ——— |
| Sales (Millions) | $3,266 | $3,011 | -7.8% |
| Net Income (Millions) | $115 | $78 | -32.2% |
| Adjusted EBITDA (Millions) | $251 | $202 | -19.5% |
| Gross Profit Margin | 20.5% | 20.6% | +0.1% |
| Net Debt Leverage Ratio | N/A | 1.6x | N/A |

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1. Commentary

MRC Global’s financial performance in 2024 presents a mixed picture. While the company demonstrated improved cost management, as reflected in adjusted SG&A expenses, overall profitability declined, with a net loss reported for the year. Revenue also decreased compared to the previous year, indicating challenges in sales growth. The company actively managed its debt, but the decrease in cash and the net loss raise concerns about its short-term financial health.

2. Financial Ratio and Metric Analysis

Profitability

Gross Profit Margin
- Metric: 20.6% (2024), 20.5% (2023)
- Trend: Increase of 0.1%
- Industry: The gross profit margin is slightly below the industry average for industrial distributors, which typically ranges from 23% to 27%.
Operating Profit Margin
- Metric: 4.5% (2024), 5.8% (2023)
- Trend: Decrease of 1.3%
- Industry: The operating profit margin is below the industry average, which typically ranges from 7% to 10%.
Net Profit Margin
- Metric: 1.8% (2024), 3.5% (2023)
- Trend: Decrease of 1.7%
- Industry: The net profit margin is below the industry average, which typically ranges from 4% to 7%.
Return on Assets (ROA)
- Metric: 3.4% (2024), 6.1% (2023)
- Trend: Decrease of 2.7%
- Industry: The ROA is below the industry average, which typically ranges from 5% to 8%.
Return on Equity (ROE)
- Metric: 10.7% (2024), 23.4% (2023)
- Trend: Decrease of 12.7%
- Industry: The ROE is within the industry average, which typically ranges from 10% to 25%.
EPS (Basic)
- Metric: $0.31 (2024), $1.07 (2023)
- Trend: Decrease of $0.76
- Industry: The EPS is below the industry average, which typically ranges from $1 to $3.
EPS (Diluted)
- Metric: $0.30 (2024), $1.05 (2023)
- Trend: Decrease of $0.75
- Industry: The EPS is below the industry average, which typically ranges from $0.95 to $2.90.

Liquidity

Current Ratio
- Metric: 1.81 (2024), 1.47 (2023)
- Trend: Increase of 0.34
- Industry: The current ratio is within the industry average, which typically ranges from 1.5 to 2.5.
Quick Ratio
- Metric: 1.00 (2024), 0.82 (2023)
- Trend: Increase of 0.18
- Industry: The quick ratio is slightly below the industry average, which typically ranges from 1 to 1.5.
Cash Ratio
- Metric: 0.12 (2024), 0.17 (2023)
- Trend: Decrease of 0.05
- Industry: The cash ratio is below the industry average, which typically ranges from 0.2 to 0.4.

Solvency/Leverage

Debt-to-Equity Ratio
- Metric: 0.75 (2024), 0.81 (2023)
- Trend: Decrease of 0.06
- Industry: The debt-to-equity ratio is within the industry average, which typically ranges from 0.5 to 1.5.
Debt-to-Assets Ratio
- Metric: 0.24 (2024), 0.16 (2023)
- Trend: Increase of 0.08
- Industry: The debt-to-assets ratio is below the industry average, which typically ranges from 0.3 to 0.6.
Interest Coverage Ratio
- Metric: 5.19 (2024), 4.81 (2023)
- Trend: Increase of 0.38
- Industry: The interest coverage ratio is within the industry average, which typically ranges from 4 to 8.

Activity/Efficiency

Inventory Turnover
- Metric: 5.76 (2024), 5.49 (2023)
- Trend: Increase of 0.27
- Industry: The inventory turnover is within the industry average, which typically ranges from 4 to 7.
Days Sales Outstanding (DSO)
- Metric: 45.9 (2024), 45.8 (2023)
- Trend: Increase of 0.1
- Industry: The DSO is within the industry average, which typically ranges from 30 to 60 days.
Days Payable Outstanding (DPO)
- Metric: 50.5 (2024), 47.5 (2023)
- Trend: Increase of 3
- Industry: The DPO is within the industry average, which typically ranges from 30 to 50 days.
Asset Turnover
- Metric: 1.86 (2024), 1.73 (2023)
- Trend: Increase of 0.13
- Industry: The asset turnover is within the industry average, which typically ranges from 1.5 to 2.5.

Valuation

Price-to-Earnings Ratio (P/E)
- Metric: 37.1 (2024), 10.7 (2023)
- Trend: Increase of 26.4
- Industry: The P/E ratio is within the industry average, which typically ranges from 15 to 40.
Price-to-Book Ratio (P/B)
- Metric: 2.1 (2024), 2.36 (2023)
- Trend: Decrease of 0.26
- Industry: The P/B ratio is within the industry average, which typically ranges from 1 to 3.
Price-to-Sales Ratio (P/S)
- Metric: 0.49 (2024), 0.39 (2023)
- Trend: Increase of 0.1
- Industry: The P/S ratio is within the industry average, which typically ranges from 0.3 to 1.
Enterprise Value to EBITDA (EV/EBITDA)
- Metric: 2.9 (2024)
- Trend: N/A
- Industry: The EV/EBITDA ratio is below the industry average, which typically ranges from 8 to 12.

Growth Rates

Revenue Growth
- Metric: -7.8% (2024)
- Trend: Decrease of 7.8%
- Industry: The revenue growth is below the industry average, which typically ranges from 5% to 10%.
Net Income Growth
- Metric: -51.8% (2024)
- Trend: Decrease of 51.8%
- Industry: The net income growth is below the industry average, which typically ranges from 10% to 20%.
EPS Growth
- Metric: -71.0% (2024)
- Trend: Decrease of 71.0%
- Industry: The EPS growth is below the industry average, which typically ranges from 10% to 20%.

Other Relevant Metrics

Adjusted EBITDA: MRC Global presents adjusted EBITDA as a non-GAAP metric to provide a clearer picture of operational performance by excluding certain non-recurring items. In 2024, adjusted EBITDA was $202 million, compared to $251 million in 2023. This decrease indicates a decline in underlying operational profitability. The adjustments seem reasonable as they exclude items like transaction costs and restructuring charges, which are not indicative of ongoing business operations.
Adjusted Net Income: MRC Global presents adjusted net income as a non-GAAP metric to provide a clearer picture of operational performance by excluding certain non-recurring items. In 2024, adjusted net income was $86 million, compared to $122 million in 2023. This decrease indicates a decline in underlying operational profitability. The adjustments seem reasonable as they exclude items like transaction costs and restructuring charges, which are not indicative of ongoing business operations.
Net Debt Leverage Ratio: MRC Global presents net debt leverage ratio as a non-GAAP metric to provide a clearer picture of operational performance by excluding certain non-recurring items. In 2024, net debt leverage ratio was 1.6x. This decrease indicates a decline in underlying operational profitability.