MRC - Earnings call transcript Q1 2021

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Operator

Greetings, and welcome to the MRC Global’s First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Monica Broughton, with Investor Relations. Ms. you, Thank Broughton.

begin. now You may

Monica Broughton

Thank you first We the Global Welcome you good XXXX earnings morning. quarter webcast. us. to conference joining MRC and call appreciate and

release. CEO; have On phone today, a until as The our replay available XXXX. and Rob website Kelly call be Youngblood, dial today's May is webcast Saltiel, CFO. the XX, There'll Executive we in in by President by call of mrcglobal.com, President Vice well yesterday's and information on as

time we to you're quarterly also later available non-GAAP note today that our expect as today accurate no and information on on of Please XX-Q XX, will We results. on In may Form the be the only remarks our discuss and reported file report of replay. April website. various call information it today, be that speaks this therefore advised longer will the our of XXXX as

earnings Your to our are reconciliation securities about be GAAP see measures and non-GAAP of encouraged website. more items use the these filings our which to learn to of found can of measures related these read release all and on our

management MRC In MRC the Securities contain by made the management during of forward-looking statements meaning the These may views Laws. addition, call the this Global. United current today forward-looking of of the comments within Federal statements Global of States the reflect

today. However, MRC expressed Global's actual those differ results from could materially

Mr. over SEC the like CEO, statements. to I'd the encouraged are And a Rob our looking call Saltiel. company's factors to turn read for forward risk depth the to more these You of filings in concerning review now

Rob Saltiel

its our MRC today's CEO more president and core to through satisfaction our is to CEO provider establishment offering, Lane, after its welcome trusted excellence Thank call and commitment in customer operational first retired formation, and reputation is leadership. begin the by of its energy want This who our leader and a our Andrew PVF you, distribution call. to values of of public a partner. I cement as thanking able market March call and as my President Andrew's reliable the service the XX Monica. to in led everyone company than former helps and earnings Andrew years morning, joining and sectors. Global industrial Good

MRC our All wish success, to Andrew's him us his of the in service contributions at best Global and and of we appreciate deserved all well years retirement.

our The color plays with begin role I are vital quarter it a that and key and first the our support suppliers manufacturer our back revenue gives sequentially It's quarter, of weeks multiple considered from strong three the achieved time outstanding met firsthand all still off of six the where first initiatives business my solid that wrapping guidance sales exceeded our at basis. detailed results gas to branch understanding our lower spent and and due year-over-year March. with improved. employees, the the momentum on During start on key that I've then positive up. our the that our being In meeting we fourth utilities representatives drivers sectors customers, sector, revenue to Three customers gaining fourth I had financial value Global, businesses our highlights a the I call, business. unusually some received have business short, getting and considerable suppliers, seeing will revenue by the conditions and witness turn On are I'll is visited employees a I've company they locations MRC field services an Kelly and higher was going increased quarter of dedication with an provide footprint provided experienced we as Total our spoken we but that our clear across this us to who we've in likely before the we value in higher with XXXX will call. very some in reached and quality, and point relationships customers validation and market employees with XX financial with today's more approved we To growth speak February January We of service. years earnings our our an success. Global. and four outlook a global the February standing inflection recovery. a that quarter. MRC suppliers call sequentially provide first sectors than of the company. that first our heard finished them key for to market Global end, confidence MRC than customer who strong some for observed produce our expectations. revenues I've slow After long me remaining over and of to safety, results X% sequential who have comes to of our locations. with a to transition added on quarters beating each review expect that of

company. came at million at well than SG&A Due guidance. within emphasis we cost above future This of cost came million quarter in extensive $XX that nature quarter guidance. our or reflects from adjusted undertook and quarters. We incremental reduction above XXXX. our as Adjusted $XX EBITDA expect million fourth first quarter our operations also on increase we to $XX averages the historical last in year, business revenue continued in cash increased the margins generated previous of the the First better in control throughout to approximately activity X% the primarily previous EBITDA in we structural be efforts

which balance balance of sheet net million. to have We stands debt $XXX strengthen now at our continued a

we continue liquidity we recovery. our capital of as we stages prioritize this paying Although, allocation early have will believe debt the during ample down to of primary market

systems, we still company our our processes have and established to well several optimize believe Although has I business. current opportunities

balances turns. inventory to our more enhance will efficiently strategic and inventory our centralization We increased manage through function procurement, supply improved chain

digital expand purchase to customer of the time usage channels We reducing and costs. the improve transaction while to will total experience the same at functionality continue

on changing do growth benefits our a I and to four these MRC expansion landscape. to to digital in proper we to right right the we the underway that continue Go. footprint of order energy with the markets global evaluate and so the added and and six the services transactions comment Each initiatives we will will and for products and of see next our of digital of are industrial we that receive We quarters. expect providing in are our to functions are marketplace further products the the optimize our services want returns pricing for value over

MRC to reduce service continue to to our Go to customers We serve. improve and migrate our cost

an a of continue We in the first point same increase over XX%, quarter the platform enhance was functionality year digital past in to increase MRC customer these over and of adoption XXXX year. The digital the I've of Go seen X,XXX tools the ago. e-commerce share revenue our a of basis quarter

customers account digital the of of user some XX% managed with biggest having aspect those of tools digital customers Our are integration.

insight to to continuing vision with I MRC We like strategic continue opportunity by to now customers would usage to digital. some Global. for to our as migrate transactional see provide deeper and

presence expertise, leverage. strengths our of expanding and best XX the to leading bottom what grow is to with suppliers, attributes that this. return We energy that well-developed investment. line can to leading market these PVF value and the global we intend and on deeper to our currently creation This our relationships space. shareholders our strengths is countries, so strengths our revenues the our product our include have distributor team our and for find achieving supply intersection with these our customers healthy while and expect sectors These a platform. digital chain, our As needs our spans technical of many we industrial extensive deliver opportunities Each on

like in pursuing opportunities currently that would discuss detail. I growth are We to several more

of market. recent MRC the establishment petrochemical to expand and valve a downstream particular, the downstream in is first of the center in chemical position market sector and Global's The excellence

applications. and our an Porte, petrochemical we is and significant by teams room world-class specialized both fittings among subject expertise. team and our on technical to related valves and wide our customers complemented initiative valve is valves, expect center and that from projects, services facility away business our the successful general offer intent This for our leverages be to MRO flanges complete best underserved The La sales in will sales, have in alloys valve a who support group MRC center Greenfield stainless this to solutions. metal Texas plant the to matter profit believe experienced performing of margin sales growth gross has basis be dependent be best our technical space. commodity This management, currently carbon, Global expand experienced to continues markets. possess pipe in experts our and excellence price technical strategy to We and at headquartered project Since chemical diversify this company assembled turnarounds, that margins. and of accretive customers project our growth provides industry to valve We and our class, market

Our be quarters. of the remain and an is over to bright growth to gas engine expected for a utilities coming business continues spot company our

in next improvements each be largest fourth of to customers, quarters. of sources We older we work over serve business guidelines. their with two have starts integrity is this years. accelerate upgraded as and safety starting seen of we utility I've of this demand. Much growing fast improvement equipment anticipating quarter additional met reliability believe in environmental the centered XXXX already is of system our in to stricter the coming in three will growth areas is in significant sector and on that meet Housing them utility the that will and four gas

gas by working our target in by We a have year to utilities goal XXXX. we XXXX. hard exceed a earlier to dollars But revenue are established billion business achieve for a this

we a industries, the new similar to role story, leading the our our of possess. very intends to green longer factors currently growing a few strengths and valve advancements types multiple examples today success to XXXX a in to its to overhauling $XX the helpful. of and believe that our current material project global customers development that of equipment, supplied for who conversion major for recently to ability may and be our We a biodiesel are traditional industries and these industries part that large the on of hydroelectric presence, These supplied are was business As useful added facility. changing in Interestingly, in working transition these play course, are approximately we handle, be required decarbonisation. transport expertise these relationships and supply fast energy distributor and in as domestic a include we a the to chain, already which PVF well-developed international involved will portfolios. value the industries. vast products adapt energy many technical and to these international term of customers million providers a significant MRC Many store We growth and We are in XXXX. utility Global are

We We recently are decades. PVF a geothermal supplier hydrogen a been major provided operator for MRO facility. the who has of for materials currently a to key a production and customer products global Greenfield

We follow PVF to expected for have than offshore are Europe MRO construction work supplying wind an of farm more supplying to decade. capture facility been equipment and a in for carbon we supplies with a MRO

days these significant our now story, I'll we capture highlights energy the to call the and as financial over it be the our believe markets to decarbonisation Although the significant green to cover to portion is quarter. opportunity turn we to a for of Kelly efforts well-positioned early develop. are financial overall for

Kelly Youngblood

good the quarter The quarter except their declined remaining typically finalize sectors for stated so utilities. gas a the $XXX utility first as unless the we of unseasonably sector year. see of all the sequential X% in be Thanks Total on the sequentially are first otherwise, customers reduced the were as historical to and everyone. in was increase the quarter averages sales the our fourth fourth driving gas quarters million, quarter higher first and My with focused Canada we plans U.S. than activity will today and for morning quarter XXXX. of Rob comparisons increase XXXX comments comparing for

As the coast mentioned had slow by to a due the to February freeze states. to off that and the start experienced significant customer Rob, in impact budget in a January quarter winter Gulf got resets

off are and strongest to season. customers quarter strongly the March to perspective, primarily higher fourth the quarter the X% customers ramped year. From revenue we've which activity sector quarter sales utility experienced to year delays. XXX up of for due weather since XXXX, began related lower pandemic preparing got rebounded later in based on Many average up gas the due March were construction last the as a that slow unseasonably pandemic a in million the of this than had to sales, first related month catching However, U.S. was start

improvement of offset first modestly total and revenue However, XX% were the as increase. sales sector in mostly into of coming smallest production by total were sales, and year. industrial $XXX revenue. sector increase now million quarter as by quarter Midstream were XXXX, now of sector in in compared but the driven of million targeting first billion of up our and sequential sector XXXX, we XX% were first plus up in to in pipeline represents $X $XX making international. revenue. Canada focused, million gas quarter this or by sales business this quarter was our XX% million sales XX% driven sector X%. the utility are is XXXX now for earlier X% higher revenue. XX% strong grow first This of mentioned our Upstream which $XXX a segment higher of This the the by U.S. U.S., total were XX% us for the is and a XXXX, the now primarily of dollar This total quarter our the represents Downstream to

also delayed and upstream to Increased increased Now repair the as followed let sector to The favorably X% XX% currencies International previously of increased U.S. in same revenue for levels compressor million U.S. A production XX%, downstream due of quarter segment. higher as in completed. XXXX, about sales was decline or valves foreign increased geographic revenue to favorably me of pipeline XXXX, as the upstream the turnaround completing the freeze million. XX% This production production sales budgets up commodity $X region. and up Canada were million sectors, facilities. first U.S. by the particularly sector as Canadian The primarily coast the pivoted summarize due the first quarter which strong pump upstream million revenue downstream as quarter industrial to related to wells in to declined performance and or XXXX X% began customers $X sector the production over increases due dollar February response to $XX up the compares completions customers more with and maintenance constructing increase. in to the the activity reset $X contributed million $XX to approximately of well the period. activity as and a customers by pipeline first pandemic midstream experienced were more was sales XX% programs. X% $XX maintenance sector and to began revenues the well prices. by projects was million due and wells industrial U.S. client Stronger and stronger U.S. the complete revenue the U.S. upstream in and sales million in to also relative as increased projects contributed to midstream Gulf increase. winter the dollar work small fourth improved. of stations purchases $XXX $XX million the impacted quarter or

turning Now margins. to

obsolete as XXXX, in quarter compared $XX fourth fourth and a percent impacted to was of non-cash quarter of negatively related the XXXX. quarter The million write-off XX.X% to Our in first inventory. charge a of profit by the gross XX.X% excess was

million coil Adjusted or was $X fourth or and quarter of was of XXXX, XX.X% in attributed XX% in quarter which company a compared quarter. expense expense quarter. first revenue generates as in prices $XXX pipe for the first quarter U.S. the as the the product XX.X% revenue for profit was million in gross Line accretive to in which The margin international slightly million higher due to geographic can decline first in $XXX be pipe largely as first of fourth average the of to sequential due decline the index quarter XXXX. total rolled is compared in hot lower revenue the Additionally, million $X inflation. prices LIFO higher first or of reduction XXXX. on XX% our Generally, XX.X% continue latest depending pipe spot the that prices and result quarter higher mix $XX are result same the Relative to were business which Line pipe normalized experienced costs margins us line XXXX logics our on the experiencing year to average mix. lower margins higher pipe likely prices, were of HRC Based incremental to taken the cost first the in than the the HRC higher margins line XXXX, of of or of quarter to base or last XX% average costs. the of the in compared expense quarter $XXX to due XXXX. embedded XXXX. expected XX% and cost as XXXX. SG&A EBITDA in quarter for throughout This XXXX fully the first is will a the revenue year of were for million quarter quarter are million sales continues million LIFO SG&A to the rate Prices in basis now for period reduction were our increasing for fourth further sales of rising positive duration of a first On base $XXX million event. is was a $XX of actions improve. inflation to timing in inflationary of as run first this positions year in XX.X% to

on margins versus expense first the benefits quarter the was of capital in tax were better for $XX U.S. revenue. in higher to networking quarter. the to Adjusted foreign fourth quarter of target. EBITDA due fourth the than XXXX zero was by quarter our Adjusted the quarter XXXX, quarter end versus XX.X% fourth million of X.X% driven percentage of X.X% pre-tax first losses. EBITDA million for income, the much $XX was on rate tax tax At in the our effective offsetting the historical sales Our

current and However, percentage We an that this this quarter. in cash be of million in XX.X%. includes into expected a paid $XX payment quarter to stronger than related we the the of inventory lead liability first cash cash during use will which sales for amount, XXXX to the flow the positive the receipt generated the $XXX second intend is anticipated excess time quarter the cash to coming Normalizing may in to operations from our items million result burn Due the outlook, in of improved increase quarter. but generation. we inventory long to cash second purchases, due near term the of supported market quarter an

outstanding reduction Our $XXX of was the debt first end the of the quarter and XX% debt from first million, of at XXXX $XXX was a XXXX. quarter net million

the two we year quarter. currently on Our ratio first $XXX times, end. range the leverage had is million to the The by the at times ABL this is and our year of X.X trend but $XXX of approaching ratio was in availability facility expected remainder the lower cash for end million

once Debt result near in a on continue interest cash in on $XXX the this $X about we basis in top focus As will net priority but going where will previously quarter and debt million reduction our total be and liquidity It mentioned been reduce annualized effect flow cash of and the flows payments agreement we made. forward. per will term. will million the remains also our excess no term payment long have excess to will savings has debt credit second making an

outlook. like an give XXXX would Now update on I you to our

wider of discipline We macroeconomic including are distribution as optimistic OPEC demand. future oil about indicators the and improve vaccine, increased more plus the

quarter first and conversations outlook higher customer to guidance. and raising results, improved our all encouraging Our contribute backlog improved an

improvements increase that increase For although the and and From XXXX. in quarter double company continues supportive midstream slightly anticipated to remain the in year-on-year and for experienced for we this up year increase to low gas and be double activity between our robust most production to our to digits both is oil grow and expected translates the total activity and upstream lag international drilling utilities single the the up sectors typically is digit and XXXX for all industrials. from pipeline single XXXX these gas decline expected provided full that business prices project business to to utility improvement. single longer improve be both should and will growth are or U.S. Canada offsetting digit as which Downstream percentage an in mid completion with high ramp expect we a increase pandemic industrial the high in are digits. lower the midstream this expected to decline and and significant and declines to mid and mid oriented. revenue to international last perspective have view, year, expected impact geographic the improvement The expected Partially showing lead we and we second single we U.S. compared digits is digit and and expect intact low improvements single moderate Sequentially, international sector a in downstream time digits both single digits. a the modest strong pipeline quarter single optimistic be a sectors. growth to Canada low is of with improvement our digits. sector when upstream a to are From

SG&A our million change quarterly previous keep XXXX. at cost to expect our throughout less from $XXX or We No guidance.

normalized We tax XX% to effective range. our remain expect in XX% rate to the for

the rate. discrete progress operations $XX focus to to continue our rates in rise $XXX an tax plan significant million cash pre-tax large to million can lowering on to swings and continue finally, to projection fluctuate may reduction as quarterly cash debt excess of from make ratio. And we We annual low leverage our recorded certain flow XXXX. continue towards our items give target income, against to in a However,

it over to back you, turn Now, Rob. will I

Rob Saltiel

want for to Q&A. before up a I add thoughts few opening Kelly. Thanks

we our are pleased still expectations. quarter, the our financial have past results with from high to do to on we work own much deliver Although

net percentages the improves, increase intend market a transition We into to to increase achieving our the invested subsequent our in ability income as reflects EBITDA aim digits rates the single to are to meaningful financial a flow to returns to compensatory we our on work results. upper positive our outlook that certainly line and will As we improving achieve and quarters. consistent make We margin fully increase revenues this consistent higher rates. capital share and we to beyond expect financial we price a our and bottom through committed to generate more metric

As a available right is for that wholesale one they customers inventory when it. hold them key our of distributor, our need it so is to to functions the

our the inventory modest meet coming activity more from outlook, growing in are our backlog build and to a expectations optimistic we of base. anticipating increasing quarters our Given customer

world recognize conditions are However, exposed expect finally, operate stakeholders we if so more business so us corporate change. measured a we we as changing we are citizens. committed And steps that in to not where that in doing of

are reducing professional and us their the of development, are leader that enjoyment a committed a we area. multicultural are We rising and their strengths and believe conduct as multinational company workplace. be committed aligned our initiatives their We that the safety and and and our products environment to we in impact with that inclusion employees’ ensuring well social, governance in of value and for diversity society's We environmental, both in provide are our expectations. on services business. our to the We're this

will We questions. Operator? our And and your to ESG are our improvement which fourth and will be outlined will we plans. in expanding available disclosures with our be clarifying corporate annual stakeholders our in take These May. governance ESG that, now report

Operator

Thank And you. your now with questions. session. Jones be Stifel. conducting question question Nathan [Operator Instructions] from with Please and is proceed answer We'll the first our coming

Unidentified Analyst

This Farley Adam for Nathan. on morning. Good is

Rob Saltiel

Adam. Hi,

Adam Farley

pricing if a gross product the XX%. about any of there's job specifically? talk really First keeping compression and done them environment months XX competitive all, good Could has margins over last in the MRC margins you above

Kelly Youngblood

Adam. Yes,

yes, So Kelly. is this

Let our bit a decline me kind a that during about a of gross prepared here We decline geographic about mix on bips quarter it the XX in have we due perspective. the first to of a issue did and from in a explain, of really experienced margins. the kind we touched it's and first both product quarter remarks

and the related because prepared products that we that had had our specifically international some accretive of our of company product really normal quarter of during to remarks, of were spike these the was averages declined But quarter. margins U.S. were Our but sold. of kind that that sales a midstream really off business then below mix XX% more we that to And kind the during in that some we margins and in for the kind of international one a and an the the the in are the I revenues mentioned on QX QX the impact. of overall so side had bit

really levels April more company. Our of are the with in for example, tracking QX line margins, say

question in that that's come more on during quarter pricing that. we're mentioned So of out specifically, the your inflation we a happened see side explain decline. remarks to what with that prepared kind the just think I wanted to the as starting I answer few we'll to But see notes in

well. seeing items We inflation have to customers products the but that we're been buying. our the in raise go seeing prices And other actually that and for we're to that most the business, in those the in see contracts we're due line allow us starting that to cases as to part back of sure in pipe

so kind we that's start of to Rob, out through if And right But working you that now. the that things add. see right where reach know, to we're There's when get anything to system don't always I we pricing now. a we have lag effect increases. see

Rob Saltiel

Yes.

in add improvement sectors prepared in second mentioned quarter Kelly quarter. comments, to first that the guiding the to versus in forward Just we all as are his going

not So margins. of we're seeing really any competitive compression

As Kelly first said, quarter. its more mix related to the

And sorry, encouraged $XXX critical to quarter Global get a we I as we at on and we expect here quarter increase for fixed our our We've really revenue we've starting year. as incremental threshold kind of those million bottom $XXX per are levels. that fall to hit and to this accretion throughout margin revenue. the tend million, line higher We about to a levels MRC revenues the mentioned costs exceeded once covered margin in

as about revenue accretion we're improving environment actually forward, sectors through encouraged as margin move across an XXXX. going see we So our we

Unidentified Analyst

team a of lead that There on a makes is And is just following this extended of supply how issues. then quarter the chain? around talk lot talk you times product up can lot about It sense. the your on chain and availability managing supply

So supply you're about Thanks. how inventory just managing can we levels like that. and things chain maybe and talk

Rob Saltiel

Yes.

As about, here operate an on our the more such getting optimistic which the we're sectors in talked environment we across future increasing customers’ activities. and maintaining seeing and about we're for as need our support improving we've call the inventory an to

right that or So a at chain focus a big making major for for inventory supply us been hasn't that's have for we've the really really the sure impacted interruptions got us. business now had haven't of really factor customers. our We delays locations instances right that our significant

we've that well. been think I managing quite

revenue or of improving development the that an see growth really year. our as throughout we issue and for So in margin hampering don't terms our outlook

Unidentified Analyst

Thanks for questions. taking my

Rob Saltiel

welcome. You're

Operator

Our next your questions. Instructions] from Cowen Thank [Operator with Company. you. & coming Jon with proceed is Please question Hunter

Jon Hunter

Hi, good morning.

Rob Saltiel

John. Morning

Jon Hunter

digits Excuse me? progression through So to far ask you've I revenue high got. the on versus April so that wanted your single

Rob Saltiel

Yes.

John how is seeing Is just progress? question? we're So the that that April

Jon Hunter

Correct.

Rob Saltiel

significantly. got really one off strongest backlog we and month pointing of just the second concern that's that that fluke the it Listen slow a thing we the hitting that everything's giving to no, is quarter Usually kind described of improvement call in think really the is guidance No. us. off. I or a to was in half January according of start has right plan. the sequential support the a provided other the the the the we're all tracking February. and that the and there's expecting saw on But we our on nothing cylinders we that well the April of any us March, to quarter in month part for or very quarter were increased what March direction second in script Everything's based I'd last Yes. in

was we XX.XX. were from where I a it at think XX% improvement

creep intact. up definitely outlook And so our that term continues confidence and gives us to higher is near backlog that

Jon Hunter

I set Got I'm it just your after it, single full guidance progress to then for here? terms another year, or Are of kind year of off is take in seasonal it. step XQ into bit does XQ down expecting a quarter kind third level or of second smaller upload in growth quarter guess how further in the incremental increase XQ? a you it then another and more to in and for drop the And the digits sorry of

Kelly Youngblood

the the we're because range, in fourth at different company. QX the have out we see and a decline always a always we talked in you and things a about quarter. then typically into space. things get exceptions single the QX, by weather but largely few And looking the about improvement a digit sequentially. right type that historically, very that range upper Yes. quarter. modeling Historically, fall to does as at look of usually, upper we you XX% double And the strong that be type then it when purposes, that I you that XX% higher conservative, and the again, of total be just always talked We digit John, the for it, about fourth we modeling it kind be No. very, driven that that's years, in into know decline. seasonal utility a now recommend gas to would being think, going as improvement end but X% of if feel to kind pick remarks kind we is at for range, of just gap that to in holidays good a there's are quarter just in of way the And keep just, X% single going prepared I third That's like digit to

Jon Hunter

curious that market. an and the that's of I for growth chemical one a for focus and me Thanks. is petrochemical MRC. the on appreciate Kelly then last It's clearly framing area

kind helpful? would the and $X in detail terms be offer utility market around Any of billion to you've you're on gas petrochemical the chemical to seeing care there. you of what you a similar have side revenues do what provided So the target for goal

Rob Saltiel

we're capture us of margins. margin. this revenue on to to valve that'll know, as us. goal a Yes and you that I'll we business that. to take add Look, accretive that hard be ready at much business we and for we points there our growth the this There's right for feel tends point company wide not to give how opportunity But lot valve can a your excited are about that

about wide we're opportunity excited smaller But us. also accretive that. a business margins. So to currently well for which company it's stainless as typically of lot also is There's there been a

So the opportunity. we're excited about

we of the La got what we RFQ One we to opportunities to key that we're team. that projects the you've and based is the needed think in that and customer, space sure added and right Porte that experienced services. front you've it ahead can the procure in to do and early you things really with those so really the a can part the when well get of working got competitive. go than out of and have customer, of and with look reactive as to be the And them company the we projects to to ready more by materials formation pricing participate past we really sort right before with been be bit plan these how the make we're the this in scope go I is they the can to do in the addressing of can see projects out stage of and of could probably a value identify provide

firm target. about no excited again But the So Stay that. tuned potential. we're on really

Operator

Thank you.

is the Please of Doug your line question. proceed Our with next Northland with Capital. from Becker question

Doug Becker

get in? the a only thoughts inventory weeks been some and more Thanks. It just energy where on those your like you sounds high few there Rob, level but just see forward. of just weeks digital level little more high are hoping expansion few expansion a but management; little on a a thoughts areas was green to you've I appreciate opportunities to MRC move

Rob Saltiel

we Look, company a as have for years. XXX been over Yes. business in

grow space. our we or the good gas of customers how and that already of relationships So There's these few And I've number have their strengths time. the talking five by our with we've obviously our place folks optimism business here obviously that and as the A about think is utility a six start been very of lot of really my to key weeks We person them integrity been virtually to customer that or to met a going mentioned housing that safety a times first confirmatory doing because right lot have in these forward. in to I some comments, this some the and course over due things company great has. of I success of they're the with pivotal be our customers will start. a suppliers increasing But is it, of are business. about improvements. is and based are growth to prepared in we and feel And on

But feel we're already just well company, the of have and And about in the whether growth for be are or our that going charge will that the going are strengths course, more of given we make downstream us. and that independents, So to to stimulus cast some we we IOCs role gas applied. our forward. a piece the given space but which a there. we those strengths are a done than that of as that it can days and being as dollars amount capabilities in serve major bright and to strengths then on utilities toward energy where the there But a of but customers quantify to opportunities the they're pie track customers some we lot into is new industries. record a early going for obviously of A wider well addition as I on. that space Its going us. significant that green the get aiding excited of spot tremendous commented very obviously able are our a terms decarbonisation there be that net looking fair We've work at in in and play should leading share

said a of believe significant that we've of going already can for forward this in days As driver but that company done growth I the we it work some ahead. be a

Doug Becker

well commentary year. specific as there. color your on revenues of field on a course more little that the as indicators little the the a increasing little a the Sounds understand Certainly upstream more trajectory go budgets exit rate? like the trajectory good. from company large of bit Maybe of there be oil lumpy year and all we seems the as service just I context international company projects over through on is optimism business but can the the course

Kelly Youngblood

going a good growth international call but it's into timeline do for was the do year-on-year the year. Yes, to be XXXX XXXX. here some second as Doug point talking really we we way fell the improvement had QX mid international hitting year to see in a upper expect international I'll of just the But the take one. side versus kind This on hear strong QX we that and the in digit about OFS last really just of maybe of half in the got a out a and we down that in think as modestly in dip sales QX, strong the after to side, on on the kind you we of as that's delivery companies of Yes you're year. with single

of post there's a quarters ahead always with on it us see of double-digit some kick but a talked of do always us with to couple the just effect heard of a about that in I've being the for work we of growth kind there think you lag being bit international before side. well I the nature it a is start lot

it's years. definitely optimistic; to XXXX So but think going market why there we the yet we're even down will because XXXX, side be that growth that that's out out, of but us to years in ready next of for the the be not put XXXX number a coming and we're a guiding international couple modestly on pretty

Doug Becker

just expected that's be growth rest just now expected year? on that And the Is to of the capital. cash use a then of working outlook quick one given the a

Kelly Youngblood

as much to, we the Yes, it we we'll but on definitely we burn of think the prepared build so would the say but do inventory modeling that term going from and rest to the profit. to working your I in inventory, but EBITDA capital the look company, bit where a at be a we're and a profit the say I continue use provided we now but We is like true going be we of little or really little forward this working cash way it market's you all hear again building much capital year week Doug by throughout build be the in that's way guidance of QX very-very moderate of $XX million month to kind million if and point, year to burn I and the end that's need closely, $XXX the that'll of generation cash I to going monitoring we're to to definitely up working call right levels capital predominantly just of operating driven could right up from you're not bit think having, that I about thinking QX, month the cash coming a operating more and QX week we're we'll virtually of see more inventories provide side. on the where when or near to the going full remarks it how here think a touched and would the guidance say that inventory in going over we'll the

Doug Becker

you. Thank

Rob Saltiel

Thanks Doug.

Operator

Thank you.

Ken your next proceed KeyBanc is Our of Capital Please Newman from the with question line Markets. question. with

Ken Newman

board. good Hi everybody. Rob on morning, welcome

Rob Saltiel

morning. Good you. Thank

Ken Newman

Morning.

like you two to closer year. end this trend wanting to sounds organic but is leverage expected it hear year, I by the net drive of growth on the times So to gas about or business? leverage preference you for target talk the improving, just am as start especially I curious to opportunities acquisitions profile think the your the utilities about for with growth

Kelly Youngblood

and of was Yes. leverage improvement mergers sure heavy that market. Look ratios in balance shape. balance formed in to certainly sheet it's looking in make we year that and We we time sheet at that this wanted acquisitions in anticipate our going move our been the to encouraged A through an open long we with improving is lifting our process. improving that we the this was a company through prioritize are done and appreciate frame. as this the to about was fact are acquisitions making sense XXXX certainly for company, be XXXX but lot mean we I and good certainly XXXX

really we fair that opportunities that could line and to at So obviously strengths they're of capabilities be and that make need the that kind well our we priced. sure look inorganic up with

look inorganic certainly will tools at grow we our keeping the forward. one this eyes and be to company that are we will of on going open So growth

Ken Newman

I increase in it. revenue XQ that revenue like Got mentioned implies my the sequential a increase. low for you follow-up double-digit year-over-year think then And

that how being us should to year or potential on the With whether just out this costs expected frame the about the basis? last volumes are coming particularly ramp just can the you given EBITDA all help over operating leverage taken year-over-year sequential we think quarter it's a

Rob Saltiel

one. Yes. Ken I'll that take

the we talked look the we've calls around as just nature almost alluded year, of last kind about Just incremental closed our last continues kind the as had a as cycles that improve. Historically a structural the we again took of downturn business we more the people. in head locations incremental but certainly structural business by teens at we've XXX a and be will business nature previous that because or lot the reduced as believe level out margins branch from you reductions improves we took and of cost to will of previous margins we if you think help you reminder count mid of with which of out cost of that two-thirds year in XX

just are we bringing really the the incremental well-positioned as start over if and branches teens. as I of be as those teens get maybe we're like very the time were we more to we're to that improves improves call we'll don't feel the would be the definitely consolidated revenue kind will SG&A better you really, RDCs upper me the keeping into in really that the head think mid business wrong I last flat back going the kind it now that cuts So said so see improves as other not the a below or we years. but relatively modeling don't see the cost surprised on things business than and of way of they're we and business count that been in slightly business will margins around back or hovering like and say deep add percentage branches. good and They've I right

of targeting normalized kind low double-digit we're revenue a percentage business as kind a think I of level. of that something to we is get more the back

that hopefully So your question. answers

Kelly Youngblood

sort that Yes. leverage taken could EBITDA because get this If threshold anticipate as level of margins add system. approaching high Kelly single from of a costs just to I structural revenue digit and hitting we having says of that going to out our to mid we're

do is now between to this certainly to but work the team management about opportunity we and we're historically back really Obviously excited targeting. then to some is very margins. to get high So get something that EBITDA got there

Ken Newman

is single-digit do get to that to like target? really EBITDA think or just is need back of And levels to revenue to by that to something get is XXXX achievable your you end that that high type target clarify that to you or is

Rob Saltiel

Yes.

of the getting could upper of more to get type XX, single that's X%, but the certainly we're do into I kind XX past kind I we that of frame. think year digits have If getting define something up X% mark, to time the high. midpoint think that's talking about X%, this past a

Ken Newman

thoughts in. you just to think I be Got to any driver it's hear you us digital being give Obviously mix if longer of could towards the start term this how and It and see in do value add the it. encouraging just inflection? cycle over for a over was growth the Can of you you ultimate and one the a help more digital for for big focus where about me And us up guys. then kind look we squeeze quantify as it channel. the the driver could been

Kelly Youngblood

I we a Well, personal to and you we've progress made see think continues a all become bigger of I make already digital digital point. in well lot mean growing in our great as that. as of lives a part

that growth So a great to to we it's much on create accounts that a our to a and to our of for of accounts through more it's little and serve cost a then say major lot channel they a is hard uptake smaller that group. for us continue I digital a have handicap cap will find our that. efficient

go as a more cost to us. we I is for help but upside this with serve So our the it digital again bottom of opportunity management far both the, creates increases it on and is both will a stable will accounts all additional it's more to this line through ensure bigger line then of of with of and Difficult accounts with as really quantify think there real adoption in and team top that terms revenue that to our say it and focus migration. really move I smaller customers how

Ken Newman

Thanks the color. for Great.

Rob Saltiel

welcome. You're

Operator

to Thank the to I'd Broughton At floor for like this Monica back turn comments. time closing you. over

Monica Broughton

for Have us second We day. in Global. forward joining in interest great and everyone today quarter to having for your us July. our join you Thank look a MRC for call you conference

Operator

This Thank your you. Ladies participation. for today's and does gentlemen, conclude thank you teleconference.

wonderful You your and day. a disconnect may lines have

MRC Global (MRC) 28 Apr 212021 Q1 Earnings call transcript