MRC GLOBAL INC. (MRC) Q2 2025 Earnings Summary

Executive Summary

Revenue of $798M rose 12% sequentially and was roughly flat year over year; adjusted EPS was $0.25 and adjusted EBITDA $54M, with margins expanding 170 bps q/q on operating leverage .
Revenue and adjusted EPS modestly beat Wall Street consensus for Q2; management expects sequential revenue and adjusted EBITDA growth in Q3 and reaffirmed full-year guidance issued last quarter, but suspended future guidance due to the pending DNOW merger .
Sector mix improved: PTI sales +26% q/q and Gas Utilities +10% q/q; DIET was up 1% q/q; backlog ended Q2 at $589M, down 2% q/q on PTI declines partly offset by DIET and Gas Utilities .
Share repurchases of $15M at an average price of $12.35 were executed in Q2; the buyback program is now suspended given the merger process with DNOW anticipated to close in Q4 2025 .

What Went Well and What Went Wrong

What Went Well

Sequential momentum exceeded guidance: revenue +12% q/q to $798M; adjusted EBITDA +50% q/q to $54M; adjusted gross margin expanded to 21.6% with strong operating leverage .
PTI-led rebound: PTI sales +26% q/q (+$57M), driven by U.S. midstream pipeline projects and International project deliveries (Middle East, Norway); Gas Utilities +10% q/q on seasonal construction and project wins .
CEO tone constructive on merger and trajectory: “We delivered a strong second quarter, with revenue rising 12% from the first quarter... Adjusted EBITDA surged 50% sequentially... We expect sequential revenue and adjusted EBITDA growth in the third quarter” (Rob Saltiel) .

What Went Wrong

Year-over-year compression: gross profit margin declined to 18.9% vs 21.2% in Q2 2024; adjusted gross margin down to 21.6% vs 22.5% a year ago; adjusted EBITDA declined to $54M from $65M .
SG&A elevated: reported SG&A was $130M (16.3% of sales), with $6M of non-recurring legal/consulting costs related to the DNOW merger; adjusted SG&A was $124M (15.5% of sales) .
Operating cash flow usage: cash used in continuing operations of $(46)M in Q2 (ERP timing and supplier payments); backlog ticked down 2% q/q to $589M on PTI declines .

Financial Results

P&L and Margin Metrics (oldest → newest)

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($M)	$664	$712	$798
Gross Profit ($M)	$135	$142	$151
Gross Profit Margin (%)	20.3%	19.9%	18.9%
Adjusted Gross Profit ($M)	$146	$153	$172
Adjusted Gross Margin (%)	22.0%	21.5%	21.6%
SG&A ($M)	$123	$124	$130
SG&A (% of Sales)	18.5%	17.4%	16.3%
Operating Income ($M)	$12	$18	$21
Net Income from Continuing Ops ($M)	$(1)	$8	$13
Diluted EPS - Continuing Ops ($)	$(0.14)	$0.09	$0.15
Adjusted EBITDA ($M)	$32	$36	$54
Adjusted EBITDA Margin (%)	4.8%	5.1%	6.8%
Income Tax Expense ($M)	$4	$1	$5
Effective Tax Rate (%)	133%	11%	28%
Backlog ($M)	n/a	$603	$589
Cash from Ops - Continuing ($M)	$73	$21	$(46)

Segment Sales by Sector and Period (oldest → newest)

Sector Sales ($M)	Q2 2024	Q1 2025	Q2 2025
Gas Utilities	$287	$273	$299
DIET	$256	$220	$223
PTI	$256	$219	$276
Total	$799	$712	$798

Geographic Sales Mix (Q2 2025)

U.S.: $658M (down $19M y/y, −3%); sequentially +$67M (+11%) .
International: $140M (+$18M y/y, +15%); sequentially +$19M (+16%) .

KPIs and Balance Sheet (oldest → newest)

KPI	Q4 2024	Q1 2025	Q2 2025
Net Debt ($M)	$324	$308	$374
Net Debt Leverage (x)	1.6x	1.7x	2.2x
Cash ($M)	$63	$63	$75
ABL Availability ($M)	$460	$507	$499
Liquidity ($M)	$523	$570	$574
Share Repurchases ($M)	—	—	$15 at $12.35 avg price

Consensus vs Actual (Q2 2025)

Values marked with an asterisk were retrieved from S&P Global.

Metric	Q2 2025 Consensus*	Q2 2025 Actual
Revenue ($M)	784.8*	798
Adjusted/Primary EPS ($)	0.243*	0.25 (Adjusted EPS)
EBITDA ($M)	50.2*	54 (Adjusted EBITDA)

Values retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance (Q4’24/Q1’25)	Current (Q2’25)	Change
Revenue Growth YoY	FY 2025	Low to upper single-digit growth	Reaffirmed	Maintained
Adjusted Gross Margin	FY 2025	~21% avg	Reaffirmed	Maintained
Operating Cash Flow	FY 2025	≥ $100M	Reaffirmed	Maintained
CapEx	FY 2025	~$45M; FY 2026 ≈ $15M post-ERP	Reaffirmed	Maintained
Effective Tax Rate	FY 2025	26–28%	Reaffirmed	Maintained
Net Debt Leverage Target	FY 2025	≤1.5x by year-end	Reaffirmed	Maintained
Q3 Outlook	Q3 2025	n/a	Sequential revenue and adjusted EBITDA growth expected	New
Share Repurchase Program	2025	Authorized $125M program	Suspended due to merger	Lowered
Forward Guidance and Q2 Call	2025	Provided in Q1	Future guidance withdrawn; no Q2 call/webcast	Withdrawn

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24, Q1’25)	Current Period (Q2’25)	Trend
Tariffs & Inflation	Management expected inflation tailwind; tariffs could raise line pipe and carbon steel pricing; modest inflation baked into margin guide	No call; commentary focused on sector growth; margins expanded q/q despite LIFO	Inflation tailwind likely; margin sensitivity remains
Gas Utilities recovery	Backlog up sharply; sector resilient; 2025 mid-single-digit spend growth expected	Gas Utilities +10% q/q; y/y +4% to $299M	Improving
PTI midstream vs upstream	Midstream outpacing upstream; strong U.S. natural gas projects and international upstream projects	PTI +26% q/q; y/y +8% to $276M	Strengthening midstream; solid international
DIET (chemicals, mining, turnarounds)	Chemicals and mining initiatives; DIET backlog up; refinery turnarounds expected	DIET +1% q/q; y/y down 13% due to less turnaround/project timing	Mixed: int’l wind/mining supported; U.S. lag vs 2024
International projects	North Sea, Norway, Europe driving valves/projects; accretive margins	International +16% q/q; PTI and wind projects noted	Positive
Inventory/ERP & controls	Leaned into inventory ahead of tariffs; ERP capex elevated; controls remediation underway	Cash used in ops due to ERP and supplier payment timing	Transition effects near-term
Capital allocation	Target ≤1.5x leverage; initiate $125M buyback	$15M repurchased in Q2; program suspended pending merger	Pause due to merger
DNOW merger	Announced all-stock combination; synergies target $70M within three years	Reiterated; suspended guidance/call	Integration planning; regulatory/closing in Q4’25

Management Commentary

“We delivered a strong second quarter… PTI with 26% sales growth… Gas Utilities… 10% sequential revenue growth… Adjusted EBITDA surged 50% sequentially… We expect sequential revenue and adjusted EBITDA growth in the third quarter” — Rob Saltiel, President & CEO .
“We are also reaffirming our full-year guidance provided last quarter but will not be providing future financial guidance due to the pending merger with DNOW” — Rob Saltiel .
“During the second quarter of 2025, the company purchased $15 million of its common stock at an average price of $12.35 per share… Due to the pending combination, the share repurchase program has been suspended” .

Q&A Highlights

No Q2 earnings call was held due to the pending DNOW merger . Key themes from the prior Q1 call that underpin Q2 trends:

Tariffs and inflation: management expects tariff-related cost pass-throughs and potential margin dollar benefits; leaned into inventory ahead of tariff volatility .
Gas Utilities: backlog up 26% YTD through April; resilient budgets; opportunities to expand meter business via IMTEC JV .
PTI: midstream strength; upstream exposure more sensitive to WTI; international PTI driven by North Sea projects .
DIET: backlog gains from chemicals and refinery turnarounds; mining initiative gaining traction .
Capital allocation: leverage target 1.5x; buyback execution planned systematically and opportunistically .

Estimates Context

Revenue beat: $798M actual vs $784.8M consensus*; Adjusted/Primary EPS beat: $0.25 actual vs $0.243*; Adjusted EBITDA exceeded consensus ($54M vs $50.2M*), with quarter-over-quarter margin expansion. Values retrieved from S&P Global.
Implication: modest upward revisions to near-term revenue/EPS could be warranted given Q3 sequential growth commentary and sector momentum, while full-year margin assumptions should reflect LIFO/tariff dynamics and higher SG&A due to merger costs .

Key Takeaways for Investors

Sequential acceleration with sector breadth: PTI and Gas Utilities drove the q/q beat; management guides to further sequential gains in Q3, supporting near-term momentum .
Year-over-year margin headwinds persisted (LIFO, mix), but adjusted margins stabilized above 21%; watch gross margin trajectory as tariffs/inflation flow through .
Backlog dipped 2% q/q to $589M on PTI; monitor PTI project timing and DIET turnaround cadence for H2 conversion .
Cash usage in Q2 tied to ERP transition and supplier timing; liquidity remains strong ($574M) with ample ABL availability ($499M) .
Buyback suspended pending DNOW merger; near-term stock reaction likely driven by merger milestones, synergy updates ($70M target) and Q3 trajectory confirmation .
Estimates likely to drift up slightly for revenue/EPS; margin forecasts should incorporate non-GAAP adjustments and potential LIFO/tariff variability .
No Q2 call: rely on Q1 narrative for themes; expect limited forward guidance until post-merger clarity .

Values marked with an asterisk above were retrieved from S&P Global.