HOUSTON, April 27, 2021 /PRNewswire/ -- MRC Global Inc. (NYSE: MRC), the largest global distributor, based on sales, of pipe, valves and fittings and related infrastructure products and services to the energy industry, today announced first quarter 2021 results.

The company's sales were $609 million for the first quarter of 2021, which was 5% higher than the fourth quarter of 2020 and 23% lower than the first quarter of 2020. Sequentially, all sectors experienced an increase in sales, except for gas utilities, which was lower due to an unseasonably higher than average fourth quarter. As compared to the first quarter of 2020, the gas utility sector sales were higher due to market share gains, and all other sectors and segments declined as the impact of the COVID-19 pandemic reduced customer spending.

Net loss attributable to common stockholders for the first quarter of 2021 was ($9) million, or ($0.11) per diluted share, as compared to the first quarter of 2020 net income of $3 million, or $0.04 per diluted share. 

Rob Saltiel, MRC Global's president and chief executive officer stated, "I am pleased with the solid first quarter performance that our team delivered. Despite a slow start to the quarter resulting from customer budget resets and extreme weather conditions, we were able to achieve a 5% sequential revenue increase, a stronger bottom line and continued cash flow generation, reflecting an improved business environment. 

"In my first few weeks at MRC Global, I have been very impressed with the caliber of our employees and the long-standing relationships we enjoy with our customers and suppliers. These strengths, along with our commitment to operational excellence and superior customer service, have allowed our company to become the leading PVF distributor and will support our growth ambitions in the years ahead," Mr. Saltiel added. 

MRC Global's first quarter of 2021 gross profit was $103 million, or 16.9% of sales as compared to the first quarter of 2020 gross profit of $148 million, or 18.6% of sales. Gross profit for the first quarter of 2021 includes $4 million of expense in cost of sales relating to the use of the last-in, first out (LIFO) method of inventory cost accounting as compared to the first quarter of 2020, which includes income of $3 million relating to LIFO inventory cost accounting. Adjusted gross profit, which excludes the impact of LIFO, for the first quarter of 2021 was $118 million or 19.4% of revenue.

Selling, general and administrative (SG&A) expenses were $100 million, or 16.4% of sales, for the first quarter of 2021 compared to $126 million, or 15.9% of sales, for the same period in 2020. Adjusted SG&A of $98 million for the first quarter of 2021 excludes $2 million of employee separation expense.

Income tax expense was $0 for the first quarter of 2021 as compared to $5 million for the first quarter of 2020. In the first quarter of 2021, the 0% effective tax rate is a result of tax expense on foreign income offsetting U.S. tax benefits on pre-tax losses. The company's rates generally differ from the U.S. federal statutory rate of 21% as a result of state income taxes and differing foreign income tax rates.

Please refer to the reconciliation of non-GAAP measures (adjusted gross profit, adjusted SG&A, adjusted EBITDA) to GAAP measures (gross profit, SG&A, net income) in this release.

Sales by Geographic Segment

Sales for the first quarter of 2021 as compared to first quarter of 2020 were adversely impacted by the COVID-19 pandemic and the related mitigation measures, which negatively affected demand.

U.S. sales in the first quarter of 2021 were $484 million, down $154 million, or 24%, from the same quarter in 2020. All sectors were down due to reduced activity levels related to the pandemic and related restrictions, except for gas utilities. Gas utilities' sector sales were up $10 million, or 5%, primarily due to market share gains and customers increasing activity levels in preparation for the construction season. Upstream production sector sales decreased by $71 million, or 51%, primarily due to reduced spending by customers and a 47% reduction in well completions. Downstream and industrial sector sales declined $52 million, or 27%, due to delayed or reduced maintenance spending from lower demand related to the pandemic. Midstream pipeline sector sales declined $41 million, or 37%, due to lower production levels and associated lower demand for infrastructure as well as the timing of project activity. Sequentially, midstream pipeline, downstream and industrial and upstream production sectors increased as market conditions improved.

Canada sales in the first quarter of 2021 were $32 million, down $18 million, or 36%, from the same quarter in 2020 driven primarily by the upstream production sector, which was adversely affected by the pandemic. The strengthening of the Canadian dollar relative to the U.S. dollar favorably impacted sales by $2 million, or 4%. Sequentially, Canada sales improved primarily due to the upstream production sector as capital spending increased in response to higher commodity prices. 

International sales in the first quarter of 2021 were $93 million, down $13 million, or 12%, from the same period in 2020 driven primarily by reduced spending due to lower activity levels associated with reduced customer budgets. Stronger foreign currencies relative to the U.S. dollar favorably impacted sales by $8 million or 8%.

Sales by End-Market Sector

Gas utilities sector sales in the first quarter of 2021 were $210 million, or 34% of total sales, an increase of $8 million, or 4%, from the first quarter of 2020 driven by the U.S. segment. 

Downstream and industrial sector sales in the first quarter of 2021 were $194 million, or 32% of total sales, a decrease of $57 million, or 23%, from the first quarter of 2020. The decrease in the downstream and industrial sector sales was across all segments led by the U.S. segment. Sequentially, downstream and industrial sector sales were up 11% as customers completed repair, maintenance, and turnaround work initially postponed in 2020 as well as recovery work related to inclement weather in February.

Upstream production sector sales in the first quarter of 2021 were $127 million, or 21% of total sales, a decline of $95 million, or 43%, from the first quarter of 2020. The decrease in upstream production sales was across all segments led by the U.S. segment. Sequentially, the upstream production sector sales increased slightly, driven by North America as customers increased spending for completions and facility construction.

Midstream pipeline sector sales in the first quarter of 2021 were $78 million, or 13% of total sales, a reduction of $41 million, or 34%, from the first quarter of 2020 driven by the U.S. segment. Sequentially, midstream pipeline sales improved 26% as customers reallocated resources to smaller pipeline projects and some increased valve purchases.

Balance Sheet

Cash provided by operations was $24 million in the first quarter of 2021. The cash balance was $132 million, long-term debt was $382 million, and net debt was $250 million as of March 31, 2021. As of March 31, 2021, availability under the company's asset-based lending facility was $395 million and available liquidity was $527 million. The company intends to make an excess cash flow payment of $105 million in April, in accordance with the debt agreement. Available liquidity, pro forma for the excess cash payment, will be $422 million, which is sufficient to support the business and capital needs of the company.

Please refer to the reconciliation of non-GAAP measures (Net Debt) to GAAP measures (Long-term Debt) in this release.

Conference Call

The company will hold a conference call to discuss its first quarter 2021 results at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on April 28, 2021. To participate in the call, please dial 412-902-0003 and ask for the MRC Global conference call at least 10 minutes prior to the start time. To access the conference call, live over the Internet, please log onto the web at www.mrcglobal.com and go to the "Investor Relations" page of the company's website at least fifteen minutes early to register, download and install any necessary audio software. For those who cannot listen to the live call, a replay will be available through May 12, 2021 and can be accessed by dialing 201-612-7415 and using pass code 13717293#. Also, an archive of the webcast will be available shortly after the call at www.mrcglobal.com for 90 days.

About MRC Global Inc.

MRC Global is the largest distributor of pipe, valves and fittings (PVF) and other infrastructure products and services to the energy industry, based on sales. Through approximately 230 service locations worldwide, approximately 2,600 employees and with 100 years of history, MRC Global provides innovative supply chain solutions and technical product expertise to customers globally across diversified end-markets including the upstream production, midstream pipeline, gas utility and downstream and industrial. MRC Global manages a complex network of over 200,000 SKUs and 10,000 suppliers simplifying the supply chain for its over 12,000 customers. With a focus on technical products, value-added services, a global network of valve and engineering centers and an unmatched quality assurance program, MRC Global is the trusted PVF expert. Find out more at www.mrcglobal.com.

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Words such as "will," "expect," "expected," "intend," "believes," "on-track," "well positioned," "strong position," "looking forward," "guidance," "plans," "can," "target," "targeted" and similar expressions are intended to identify forward-looking statements.

Statements about the company's business, including its strategy, its industry, the company's future profitability, the company's guidance on its sales, adjusted EBITDA, tax rate, capital expenditures, achieving cost savings and cash flow, debt reduction, liquidity, growth in the company's various markets and the company's expectations, beliefs, plans, strategies, objectives, prospects and assumptions are not guarantees of future performance. These statements are based on management's expectations that involve a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, most of which are difficult to predict and many of which are beyond MRC Global's control, including the factors described in the company's SEC filings that may cause the company's actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements.

These risks and uncertainties include (among others) decreases in oil and natural gas prices; decreases in oil and natural gas industry expenditure levels, which may result from decreased oil and natural gas prices or other factors; U.S. and international general economic conditions; the company's ability to compete successfully with other companies in MRC Global's industry; the risk that manufacturers of the products the company distributes will sell a substantial amount of goods directly to end users in the industry sectors the company serves;  unexpected supply shortages;  cost increases by the company's suppliers; the company's lack of long-term contracts with most of its suppliers; suppliers' price reductions of products that the company sells, which could cause the value of the company's inventory to decline;  decreases in steel prices, which could significantly lower MRC Global's profit;  increases in steel prices, which the company may be unable to pass along to its customers which could significantly lower its profit; the company's lack of long-term contracts with many of its customers and the company's lack of contracts with customers that require minimum purchase volumes;  changes in the company's customer and product mix;  risks related to the company's customers' creditworthiness; the success of the company's acquisition strategies;  the potential adverse effects associated with integrating acquisitions into the company's business and whether these acquisitions will yield their intended benefits; the company's significant indebtedness;  the dependence on the company's subsidiaries for cash to meet its obligations;  changes in the company's credit profile;  a decline in demand for certain of the products the company distributes if import restrictions on these products are lifted or imposed; significant substitution of alternative fuels for oil and gas; environmental, health and safety laws and regulations and the interpretation or implementation thereof; the sufficiency of the company's insurance policies to cover losses, including liabilities arising from litigation;  product liability claims against the company;  pending or future asbestos-related claims against the company; the potential loss of key personnel; adverse health events such as a pandemic; interruption in the proper functioning of the company's information systems and the occurrence of cyber security incidents; loss of third-party transportation providers;  potential inability to obtain necessary capital;  risks related to adverse weather events or natural disasters;  impairment of the company's goodwill or other intangible assets;  adverse changes in political or economic conditions in the countries in which the company operates; exposure to U.S. and international laws and regulations, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act and other economic sanction programs; risks associated with international stability and geopolitical developments; risks relating to ongoing evaluations of internal controls required by Section 404 of the Sarbanes-Oxley Act; risks related to the company's intention not to pay dividends; and risks arising from compliance with and changes in law in the countries in which we operate, including (among others) changes in tax law, tax rates and interpretation in tax laws.

For a discussion of key risk factors, please see the risk factors disclosed in the company's SEC filings, which are available on the SEC's website at www.sec.gov and on the company's website, www.mrcglobal.com. MRC Global's filings and other important information are also available on the Investor Relations page of the company's website at www.mrcglobal.com.

Undue reliance should not be placed on the company's forward-looking statements. Although forward-looking statements reflect the company's good faith beliefs, reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the company's actual results, performance or achievements or future events to differ materially from anticipated future results, performance or achievements or future events expressed or implied by such forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except to the extent required by law.

Contact:

Monica Broughton
Investor Relations
MRC Global Inc.
Monica.Broughton@mrcglobal.com  
832-308-2847

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SOURCE MRC Global Inc.