MRC GLOBAL INC. (MRC) Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 results: sales $0.664B, diluted EPS attributable to common stockholders -$0.40; adjusted EBITDA $32M, with adjusted gross margin 22.0% and working capital at a record-low 11.2% of sales .
• Sequentially softer revenue across all sectors and U.S. segment; International grew 14% YoY; adjusted gross margin improved sequentially vs Q3 due to mix and removal of Canada .
• 2025 outlook: revenue up low-to-upper single digits, adjusted gross margin ~21%, adjusted SG&A 15–16% of revenue, ≥$100M operating cash flow, leverage ≤1.5x; Q1 up low-single digits, Q2 double-digit sequential growth guided .
• Strategic catalysts: $125M share repurchase authorization, capital structure simplified (Term Loan B; preferred repurchase), and IMTEC JV to expand smart meter offering with potential tens of millions in incremental meter sales .
• Street context: analysts flagged Q4 revenue “a bit below expectations”; consensus figures from S&P Global were unavailable at time of analysis .

What Went Well and What Went Wrong

What Went Well

• International momentum: Q4 International sales up 14% YoY on Norway projects and Middle East/Asia activity; 2024 International revenue +14% with $254M backlog entering 2025 .
• Mix-driven margin resilience: adjusted gross margin improved sequentially to ~22.0% in Q4 vs 21.1% in Q3, aided by mix and Canada removal; full-year adjusted gross margin 21.9% (third straight year ≥21%) .
• Working capital efficiency and cash generation: Q4 CFO matched $73M, FY 2024 operating cash flow $268M, “highest since 2015”; net debt leverage 1.6x with liquidity $523M .
• Management quote: “We are optimistic about our business outlook for 2025… anticipate growth in all three business sectors in 2025 and for revenue to be up low to high-single digits” .

What Went Wrong

• Broad-based sequential revenue decline: Q4 sales $664M (-14% QoQ, -10% YoY), driven by DIET and PTI; U.S. down 16% QoQ; sector declines: Gas Utilities -14% QoQ, DIET -13%, PTI -15% .
• Earnings pressure: net loss from continuing operations -$1M (diluted -$0.14), adjusted EBITDA down to $32M from $48M in Q3 and $49M in Q4’23; effective tax rate 133% due to FX-related restructuring .
• Canada discontinued operations loss: Q4 discontinued ops loss -$22M; sale expected to close in March 2025 (per subsequent filing), accretive to margins longer term but a Q4 GAAP headwind .

Financial Results

Segment breakdown by sector ($USD Millions):

Geographic sales ($USD Millions):

KPIs:

Notes:

• Adjusted gross margin for Q4 is 22.0% per press release/call; a separate transcript source referenced 22.8%—management remarks and the non-GAAP reconciliation support 22.0% .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO on 2025 drivers: “Improving fundamentals for gas utilities… return to an inflationary environment… strong outlook for the midstream natural gas space… key growth initiatives… chemicals, mining, and data centers” .
• CFO on margins and SG&A: “Adjusted gross profit… 22.0% vs 21.1% in Q3… adjusted SG&A $119M… reflect cost discipline” .
• CEO on IMTEC JV: “Opens up a strong avenue to increase our gas meter sales by tens of millions of dollars… qualifies as a diverse supplier” .
• CEO on inventory remediation: “No adjustments… no restatements… remediation plan to ensure this never happens again” .
• CFO on 2025 framework: “Revenue growth low to upper single-digit… operating cash flow ≥$100M… adjusted gross margin ~21%… adjusted SG&A 15–16%… tax 26–28%” .

Q&A Highlights

• Revenue trajectory: Analysts probed Q1-to-Q2 step-up; management cited U.S. backlog +19% vs YE, bookings +11%, with double-digit sequential revenue growth in Q2 expected .
• Margin guidance sensitivity: Team acknowledged conservative ~21% adjusted gross margin; tariffs/inflation could drive upside .
• IMTEC JV economics: JV provides smart meter assembly service; primary upside from expanded meter sales into existing utility relationships; diverse supplier benefits .
• International backlog: Largest in many years; project-driven, valve-heavy mix accretive to margins .
• EBITDA margin modeling: Mid-6% (~6.5%) implied on guidance, with upside if tariff-driven inflation persists and international margins remain strong .
• Controls remediation: Enhanced oversight, consulting review, training, and Oracle cloud implementation to automate and tighten cycle count controls .

Estimates Context

• Attempted to retrieve S&P Global consensus EPS/Revenue/EBITDA for Q4 2024; data were unavailable due to access constraints. Values retrieved from S&P Global were not available for comparison at this time.
• Analyst context: “Fourth quarter was a bit below expectations” (Stifel), but without numeric consensus we cannot quantify the miss magnitude .

Key Takeaways for Investors

• Near-term setup: Bookings and backlog rising across all sectors; management guides Q2 double-digit sequential revenue growth—watch for order intake/backlog updates as catalysts .
• Margin upside optionality: Conservative ~21% adjusted gross margin guide could lift if tariff/inflation tailwinds persist and international valve mix stays strong .
• Cash returns + balance sheet: $125M buyback authorization with leverage targeted ≤1.5x by YE 2025; execution likely begins ≥Q2 and could support the stock on pullbacks .
• Secular adjacencies: Chemicals, mining, and data centers add diversified growth vectors; IMTEC JV may unlock meter sales “tens of millions” over time in Gas Utilities .
• Risk checks: PTI U.S. activity softer; election-year/project timing effects cited; monitor U.S. upstream/midstream activity and tariff policy stability .
• Execution priorities: ERP go-live and inventory controls remediation reduce operational risk; expect CapEx peak in 2025 (~$45M) before returning to ~$15M run-rate post-implementation .
• Valuation lens: With EBITDA guided mid-6% margin and improving mix/cash flow, estimate revisions will hinge on tariff/inflation realization and Q2 ramp; absence of consensus data limits beat/miss quantification this quarter .