Houston-based industrial PVF distributor MRC Global recently announced its second-quarter 2017 results.
Company's sales were
Net income attributable to common stockholders for the second quarter of 2017 was $0 million, or $0.00 per diluted share, compared to a net loss attributable to common stockholders of $(23) million, or $(0.24) per diluted share for the second quarter of 2016. The second quarter of 2017 results include an after-tax charge of $2 million or ($0.02) per diluted share related to our previously disclosed litigation settlement with Weatherford Canada Partnership. The second quarter 2016 results include after-tax severance and restructuring charges of $3 million or ($0.03) per diluted share.
"Our strategy to build market share through contract positions with customers produced strong first-half results,” MRC Global President and CEO Andrew Lane said. “Sales were up 24% for the second quarter and 17% for the first half of the year as compared to the same periods in 2016 on strong growth in midstream and upstream sectors. Adjusted EBITDA for the first half of the year was $80 million, higher than the full year of 2016. I am pleased with our results and the solid contract position we have built, which we expect to deliver long-term shareholder value."
MRC Global's second quarter 2017 gross profit was $149 million, or 16.2% of sales, an increase from second quarter 2016 gross profit of $125 million, or 16.8% of sales. Gross profit for the second quarter of 2017 and 2016 reflects an expense of $5 million and a benefit of $1 million, respectively, in cost of sales relating to the use of the last-in, first out (LIFO) method of inventory cost accounting.
Selling, general and administrative (SG&A) expenses were $132 million, or 14.3% of sales, for the second quarter of 2017 compared to $135 million, or 18.1% of sales, for the same period of 2016. SG&A expenses for the second quarter of 2016 include $4 million of pre-tax severance and restructuring charges. There were no such charges in the second quarter of 2017.
Adjusted EBITDA was $44 million in the second quarter of 2017 compared to $15 million for the same period in 2016.
Sales by segment
U.S. sales in the second quarter of 2017 were $720 million, up $169 million, or 31%, from the same quarter in 2016. The increase is primarily due to increased customer spending and well-completion activity as well as ongoing projects with one of the company’s midstream gas-transmission customers.
Canadian sales in the second quarter of 2017 were $69 million, up $15 million, or 28%, from the same quarter in 2016 primarily due to the upstream business as a result of an increase in rig count and a milder spring breakup compared to a year ago. Canadian sales were unfavorably impacted by $3 million as a result of a weaker Canadian dollar relative to the U.S. dollar.
International sales in the second quarter of 2017 were $133 million, down $8 million, or 6%, from the same period in 2016. The decrease was primarily due to declines in the upstream and downstream sectors partially offset by a $25 million Australian line pipe delivery in the midstream sector. The decline in upstream was due primarily to the conclusion of a major project in Norway. The impact from changes in foreign currency exchange rates was a $3 million reduction in sales.
Sales by sector
Upstream sales in the second quarter of 2017 increased 22% over the second quarter of 2016 to $258 million, or 28% of total sales. The increase in upstream sales was in the company’s U.S. and Canadian segments as a result of increased customer activity.
Midstream sales in the second quarter of 2017 increased 44% from the second quarter of 2016 to $420 million, or 46% of total sales. Sales to transmission and gathering customers were up 83% while sales to gas utility customers were up by 14% over the same quarter in 2016.
Downstream sales in the second quarter of 2017 were flat with the second quarter of 2016 at $244 million, or 26% of total sales. Increases in the U.S. downstream sector were offset by declines in the international downstream sector.
Cash balances were $37 million at June 30, 2017. Debt, net of cash, was $373 million at June 30, 2017. During the second quarter of 2017, the company's cash from operations was a net use of $46 million.