MRC GLOBAL INC. (MRC) Q3 2025 Earnings Summary

Executive Summary

Q3 2025 was disrupted by U.S. ERP implementation issues, driving revenue to $0.678B (-15% QoQ, -12% YoY) and a net loss from continuing operations of $9M; adjusted EPS was $0.13 while GAAP diluted EPS was -$0.11 .
Results materially missed Wall Street consensus: revenue ($0.855B vs $0.678B) and EPS ($0.33 vs $0.13), with management attributing the shortfall to shipment and invoicing delays tied to the ERP rollout; backlog rose 4% YoY and U.S. backlog rose 21% YoY, positioning Q4 for sequential growth .
Gross margin was 18.4% and adjusted gross margin 21.8%; adjusted EBITDA was $36M (5.3% of sales), reflecting mix pressure and non-recurring costs (ERP and merger-related) .
Liquidity ended at $536M with cash of $59M and Net Debt of $417M (2.7x TTM adjusted EBITDA); share repurchases were suspended due to the pending combination .
Post-quarter, DNOW completed its acquisition of MRC on Nov 6, 2025 (exchange ratio 0.9489 shares DNOW per MRC), creating a larger, diversified distributor and setting synergy targets of $70M within three years—a key stock catalyst .

What Went Well and What Went Wrong

What Went Well

Backlog resilience and recovery: total backlog $571M (+4% YoY), with U.S. backlog +21% YoY, expected to release to revenue in Q4; CFO guided mid-to-high single-digit sequential revenue growth for Q4 2025 .
International segment held firm: Q3 international sales $128M (+1% YoY), with PTI benefiting from North Sea projects and DIET project activity in Norway .
Gas Utilities stability: $292M in Q3 (43% of total), down only $1M YoY and -2% QoQ, underpinned by robust market fundamentals and less tariff exposure .

Management quotes:

“Normalized performance has continued throughout the month of October.” — CEO Rob Saltiel .
“We anticipate mid-to-high single-digit percentage revenue growth sequentially for the entire company in the fourth quarter of 2025.” — CFO Kelly Youngblood .

What Went Wrong

ERP implementation headwinds: U.S. segment encountered significant challenges, delaying shipments and invoicing and pressuring revenues, profitability, and cash flow .
Tariff-induced cost effects and project delays: DIET sector revenue declined 17% YoY in Q3; U.S. DIET specifically faced postponed/canceled projects from tariff-driven higher steel costs and end-market softness (chemical/refining) .
Margin compression and higher SG&A: reported SG&A increased to $128M (~18.9% of sales); adjusted SG&A was $116M after $6M ERP costs and $6M merger-related legal/consulting; Q3 posted a $9M loss from continuing operations .

Financial Results

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Billions)	$0.712	$0.798	$0.678
Gross Profit ($USD Millions)	$142	$151	$125
Gross Profit Margin %	19.9%	18.9%	18.4%
Adjusted Gross Profit ($USD Millions)	$153	$172	$148
Adjusted Gross Profit Margin %	21.5%	21.6%	21.8%
Diluted EPS - Continuing Ops ($)	$0.09	$0.15	$(0.11)
Adjusted EPS ($)	$0.14	$0.25	$0.13
Adjusted EBITDA ($USD Millions)	$36	$54	$36
Adjusted EBITDA Margin %	5.1%	6.8%	5.3%

Segment and geography breakdown:

Metric ($USD Millions)	Q1 2025	Q2 2025	Q3 2025
U.S. Sales	$591	$658	$550
International Sales	$121	$140	$128
Gas Utilities	$273	$299	$292
DIET	$220	$223	$199
PTI	$219	$276	$187

KPIs:

KPI	Q1 2025	Q2 2025	Q3 2025
Backlog ($USD Millions)	$603	$589	$571
Cash And Equivalents ($USD Millions)	$63	$75	$59
Net Debt ($USD Millions)	$308	$374	$417
Net Debt Leverage Ratio (x)	1.7x	2.2x	2.7x
Cash from Operations – Continuing ($USD Millions)	$21	$(46)	$(36)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Sequential Revenue Growth	Q4 2025	None specified	Mid-to-high single-digit % sequential growth for Q4 2025	New
FY Revenue Growth	FY 2025	Low to high single-digit YoY growth (reaffirmed Q2)	Maintained; no numeric update in Q3 due to merger	Maintained
Operating Cash Flow	FY 2025	≥ $100M target	Maintained (no Q3 update)	Maintained
Capital Expenditures	FY 2025 / FY 2026	~$45M in 2025; ~$15M in 2026	Maintained (ERP-driven 2025 elevation)	Maintained
Share Repurchase Program	2025	$125M authorized; $15M repurchased in Q2	Suspended due to pending combination	Lowered/Suspended

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2025)	Trend
ERP implementation	Q1: ERP go-live expected Q3; payments pulled forward to support transition	U.S. ERP rollout caused shipment/invoicing delays, pressuring revenue, margins, and cash in Q3; normalized performance by late Q3/October	Improving post-issue
Tariffs/macro	Q1: Domestic sourcing >60% of U.S. sales; China-sourced <15%; supply chain mitigation plan	Tariff-induced higher steel costs postponed/canceled DIET projects (U.S.)	Pressuring DIET
Gas Utilities	Q1: Backlog up; defensive profile; momentum returning	Stable in Q3 (43% of sales); least impacted sector	Improving/stable
PTI (Midstream vs Upstream)	Q1: Midstream resilience; ~half PTI revenues/backlog midstream; upstream risk with low oil prices	Q3 U.S. PTI down on ERP and lower commodity prices	Mixed; midstream steadier
DIET (Chemicals/Mining)	Q1: Chemicals backlog +32% YoY; mining growth initiative	Q3 DIET down 17% YoY; project delays/cancellations (tariffs, market softness)	Softening
Merger/integration	Q2: Merger announced; guidance constrained	No Q3 call; combination anticipated Q4; completed Nov 6	Structural change underway

Management Commentary

“Implementation of our new ERP system in our U.S. segment encountered significant challenges that adversely impacted our revenues, profitability, and cash flows during the third quarter… performance improved dramatically by the end of our third quarter and… continued throughout October.” — Rob Saltiel, CEO .
“We expect that future quarters will release this backlog growth to revenue, and we anticipate mid-to-high single-digit percentage revenue growth sequentially for the entire company in the fourth quarter of 2025.” — Kelly Youngblood, CFO .
“We look forward to closing our merger with DNOW Inc., as this will be transformational for MRC Global.” — Rob Saltiel .

Q&A Highlights

Note: MRC did not host a Q3 call due to the pending combination . Key themes from the Q1 2025 call:

Tariffs and pricing/margin pass-through: Management emphasized domestic sourcing (>60%), limited China exposure (<15%), supplier negotiations, and cost-plus pass-through; said tariff impacts would be more visible in later quarters .
Inventory strategy: Leaned-in ahead of tariffs to secure advantaged pipe inventory while avoiding overbuild .
Gas Utilities growth and share gains: Backlog growth (26% YTD through April) with smart meter/IMTEC JV opportunities; resilient budgets .
Line pipe margins: Expect some recovery supported by strategic buys and tariff-driven price support .
Upstream investment tone: Larger E&Ps more resilient; upstream the most at risk with low WTI, balanced by midstream strength .
New verticals: Data centers ($10M+ booked; tens of millions under bid) and mining viewed as multi-year growth areas .

Estimates Context

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue Consensus Mean ($USD Millions)*	$710	$785	$855
Revenue Actual ($USD Millions)	$712	$798	$678
EPS Consensus Mean ($)*	$0.085	$0.243	$0.33
Adjusted EPS Actual ($)	$0.14	$0.25	$0.13
Beat/Miss	EPS/Rev: Beat/Inline	EPS/Rev: Beat	EPS/Rev: MISS

Values retrieved from S&P Global.*

Implications: Q3 delivered a significant miss vs consensus on both revenue and EPS due to a one-time ERP implementation shock; management expects sequential recovery in Q4 and backlog release, suggesting estimates may need to shift from a one-off disruption toward a normalized trajectory reflecting Q4 sequential growth guidance .

Key Takeaways for Investors

Q3 miss was operationally driven (ERP implementation) rather than demand collapse; backlog and October normalization support a Q4 sequential rebound narrative .
Gas Utilities remain the anchor (43% of sales), with minimal tariff exposure and resilient budgets—tilt exposure here while DIET faces tariff-related project delays .
Watch midstream-led PTI vs upstream sensitivity to low oil prices; midstream backlog helps buffer commodity volatility .
Margin path: Adjusted gross margin held at 21.8% in Q3; non-GAAP add-backs (LIFO, ERP, merger costs) were material—underlying margin quality looks intact .
Balance sheet leverage stepped up (Net Debt 2.7x TTM adj. EBITDA) as cash flow was pressured; look for collections normalization to improve cash metrics in 2026 per CFO .
Near-term trading: Post-close DNOW/MRC combination and $70M synergy target offer re-rating potential; exchange ratio set (0.9489 DNOW per MRC) and MRC delisting completed Nov 6 .
Estimate risk: Q3 miss likely forces near-term consensus downgrades, but explicit Q4 sequential growth guide and backlog release provide a path to partial recovery .

Additional Press Releases (Q3 Context)

DNOW completed the combination with MRC on Nov 6, 2025; exchange ratio 0.9489, MRC delisted, synergy target $70M within three years .
DNOW announced the future combined leadership team (Oct 13, 2025), including Kelly Youngblood as Executive Advisor and multiple MRC leaders in key roles .