MRC - Earnings call transcript Q3 2021

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Operator

Greetings and welcome to MRC Global’s Third Quarter 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 turn the conference over to your host, Monica Broughton of Investor Relations.

Monica Broughton

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

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

In will it will expect information XX-Q references state information and percentage, therefore, We profit and the speaks EBITDA may that refer of to file later today, website. today, our net adjusted and remarks report our reported adjusted of Unless including measures, EBITDA. are net time X, adjusted November discuss specifically as call call non-GAAP SG&A, the adjusted be the Form on gross otherwise, adjusted we also debt, income. no margin, in EBITDA Please to quarterly this adjusted only that longer this on EBITDA, as advised of replay. accurate you to XXXX, profit, available various today adjusted note on gross be our we

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

management current MRC statements These management the laws. United the of within reflect federal the by Global of contain statements this meaning States made comments forward-looking of team of the addition, the the call during Global. In may forward-looking MRC views securities

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

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

Rob Saltiel

absolute will dollar the financial of some results, team. years, compared begin and a third Focus management X.X% improved before is our revenue we percentage On you, an on have both year year-to-date, for profitability Thank the today’s key an call quarter and call. and will performance joining a from a from detailed achieved from EBITDA year-to-date absolute highlight cover on welcome well to turn XXX of recap. basis, year review drivers as X%. two business for last to $XX influencing Good everyone our the a quarter outlook. I remains $XX the with points at over to at in on million. as morning perspective X.X%. then as $XX Kelly seen I for EBITDA Monica. key highlights to highest basis, last bottom-line providing priority million our brief key $XX this has The that a million EBITDA of we basis the to margins million improved to last a Compared our

cost have the related structure month remainder for previous record Canada our we being experience despite on U.S. the gross delays related Ida's quarter. cost our SG&A on Furthermore, Hurricane we while impacted of keeping our and relentless Although achieved an the our A supply to and chain the similar that growth. was strong margins control the U.S. focus of delays portion businesses, quarter. Coast was achieved business, levels activity this delays to some coupled margins relatively international with activity that our associated experienced shifted profit our did without not levels In revenue would into our with fourth Gulf in of quarter, our at been flat. we September, adjusted revenues impact

is as off in seasonal experience case move We as full as we've decline Typically, October come seen good and already usually the as a year higher revenue the neutral for a to our November start we we expect not to issues the these this into quarter. than be well. net is September fourth

As XXXX on for from will year We due SG&A to similar revenue including a the third anticipate company. this costs current and our XXXX margins to increase anticipated to expect earnings despite working further our value our levels. higher double-digit billing should quarter, guidance permit and We for to our Profitability and in days call. our we fourth our is increases plan versus margins result, shareholders be to reduced our our to quarter us plan full on the February XXXX provide now optimization revenue target we holidays. maximizing continue for vital EBITDA

As we areas strength before, focus. and balance sheet flexibility key financial of also stated are

the at $XXX the million, debt debt million. was while was quarter net of end long-term Our third $XXX

ratio range. is higher was leverage X.X and while within it preferred the operating Our than quarter, our times slightly well second

from cash ratio of million but We $XX we this with third cash last expect approximately guidance by end $XX to of times in are Consistent used approach our the this year-to-date, million. quarter, we quarter, year. by still two positive the

we position As growing to are increasing our our mentioned inventory quarter, support last business.

expected and improving our Looking the macro-economic drive in in for optimism forward, customer our conditions business. spending, growing growth increases backlog,

was of and the in the been backlog of XX%. is led was which sector, the the the sector, quarter, XX% XX% gas upstream up at which backlog U.S. utility The the highest October Our up second was end it years. two production from up by has end

utilities, continues Our well. very perform gas to sector, largest

which the sector customers business the on rise housing oil their have into activity which meter largest revenue, increased larger their market. hookups and our impact gas The is Our we operations, into generally line programs activity why utilities prices coming production Increased year. fields, finish upstream uplift our replacement and the gas through international levels and U.S. integrity, This prices had typically translate two thought crude This the year have year. and higher a this this has and not the new programs, business. U.S. we significant modernization year, as this is a billion oilfield this than customers activity from of oil in years $X restraint earlier and capital year to seen is at who in might expected approximately IOCs suggest. exercised in upstream positive comprise independents share our upstream robust in

international our prices both year with that U.S. set be aligned to a capital above next we activity and for spending with benchmark barrel, mix. by completions $XX see crude double-digits However, customer is to expect and product our E&P budgets with significant up

which lagging give in us a the or near-term upstream increases, confidence around data quarter as well production transmission Our as These gathering for positive more benefits two outlook points sectors. midstream pipeline business activity generally by new includes systems completion these as also two.

our earnings business, I to and the As renamed noted of transition for growing to reflect or in call, sector our DIET industrial the energy downstream sector industrial short. our the we better and downstream transition last importance energy to

benefiting industrial business this increased MRO is that portion and in downstream of activity delayed Our pandemic-related been from had turnaround to restrictions. due

to increase our activity markets. this international both year, and expect U.S. for next We

resources energy this and evolves. our Although pursue our we new revenue investment aggressively starting their transition from allocated dollars the portion opportunities to decarbonization space. and customers as expect plans and is this to energy a is continue market of new sales it to trend and execute small growing this added green customers dedicated are We've base, rapidly as

customer and product have supply a and strong chain advantage us we growth. give clear relationships, for intend existing management skills, which to which expertise, proven We use

are will key than where We in Similar the of discuss is to petroleum across groups since transition undertaken varying continue drivers that being October expected of the of quarter, a the near-term. see these traditional XXXX. product where particularly One opportunities. see participating and inflation as now by growth the we Global last are the fields Energy our several focused business. immediate key most larger with There be those steel impact refiners. actively more still have for we is most few growth line to underway all degrees. were we more projects experiencing of strategic doubled area more capturing and MRC carbon products, I we a biofuels to and impact prices pipe inflation on projects in our

As have plus our we've generally is cost business, especially discussed arrangements. for before, good inflation when we

our pricing reflect higher working to to our costs. is team with product customers sales Our update our diligently

adjusted We expect the supporting current of near-term, levels our for margins. to gross continue inflationary pressures

on to I mitigate minimal points to in customer the increase Despite those in manage to more I'll costs financial leadership and thus our I our issues, well-positioned the an the to components overseas require enhancements platform assembly turn for amount our our in last now or to months, customers the with upgraded made in for of base. the we lead-times these over better increase have foreseeable of narrow as in We to with of market, digital and especially MRC or or here in impact in those Now, address delays, significantly products me of let start by grow the chain relationships while And than position overseas, on our issues the manufacture up strengthens assembled that, these access over are quarter. getting certain customers. airtime. Global's increases revenue challenges that we continue that at are products, preferential invite The to with a integration majority putting a will affected chain creates website the which saying integration experts we both we has supply and are supply of with invest disruptions. lot the root future, which are pandemic in is see currently our navigating cause is that providing competitors. for for than offering. total the and Digital minimal we them cover along suppliers provide another customers orders eligible help also we it percentage freight for basis results associated our and the highlights due has availability continue position gears, focused categories, was MRCGO we one to platform, Kelly and U.S. you dependency the and services in to purchase our call our the customers previous out e-commerce continues inventory us to expected Supply six our of our key This but reduce help efficiencies key chain building the the right list flexibility product we products with We've are increasing been to and the product suppliers, effectively. value-added the believe recent provide Switching the revenue a to coming mrcgo.com. of forward over With encourage to receive XXX continue stock. position quarters. us is To check year. far. to continue usage. a having financial the Digital to much supplier key inventory worked on expand we our manufactured

Kelly Youngblood

second Thanks in third Rob comparisons was today good sequential U.S. the the focused quarter XXXX comments the with unless XXXX our for offset were primarily morning, growth quarter consistent $XXX as otherwise by previous a of Total My will stated. international business. quarter million third to everyone. quarter decline sales and be the segment on comparing the in

to plans. for Canadian the Gas third XXXX, also compared upgrade quarter line million with third and higher their $XXX quarter. the previous were segment to utilities was was XX%. execute integrity as guidance revenue up or to Our third quarter our in $XX customers quarter, of the continued the X% relatively million in Compared on flat

segment. of our gas have quarter up by levels annual activity XXXX, total approximately $XXX come, prices, mentioned $XXX the to third Asia-Pacific, in sector now the of turnaround The and business. the revenue. MRO production to activity of this total and XXXX growth utility sales followed Upstream Europe Canada million, from and by of resulting quarter hit lower the X%, U.S. is discussed XX% year. previously, billion Rob, quarter, the in of revenue. by and third of an by for $X for other XXXX, maintenance is commodity XX% projects in to And X% decline end offset this we've to sector steady DIET non-recurring million sector X% many in refinery sales quarter the the biodiesel in sector of driven as is This XX% XX% represents sales, positioned our project increased helping parts revenue segment. our which revenue. business activity to of sector for represented due and expected were total were activity. This independent U.S.-based now years volatility our for project million This pipeline projects were Midstream total $XX a this sector, of represents additional as third now increase of primarily and

geographic quarter offset Canadian in sector, by Canada in X% refinery as increase in turnaround production the the $XXX International increased from an the U.S. quarter increases up with due revenue cover an of as due third activity, and project decline of was revenues by stronger maintenance all X%, and line the improved, a $X million prior upstream projects. net million effect a the million revenue activity in for driven The driven the was or $X XXXX, to of delayed dollar up as foreign in will upstream third revenue million activity. in as XXXX, segment. currencies. X% consistent where to sector project by levels well in of the sectors result by were the $XX quarter, and by revenue third was non-recurring DIET partially I a Now, increased non-recurring activity small new infrastructure. increase performance increase sector sales effect the downstream million sector, MRO sales of million or U.S. pipe XX% and $XX biodiesel in maintenance sales line projects. or net completion pipeline U.S. well midstream of stronger quarter X% offset $X sales projects in pipe with and

asked margins, and seen are LIFO and beneficial to We material rise and to material very we XX in quarter logistics XX% adjusted year, but the about result second margins, guidance than can expense not impact. expect these margin, points to segment, third we expecting through to also of ultimately near-term, inflation. turning often which In the fluctuations this many in recent increases profit puts a the in have quarter, Product managed quarter, In Now, there mix, include are XX% million the can see takes related years. which continue continue may current in near-term. prices highest cost a but we the the the for sector, well, to two was factors to into the in higher variables on in to get the margins or throughout further would described, just of to the gross our due and any Inventory translated inflation the influence XXXX. the pass percentage. part that Examples mix. product gross along impact $XXX basis related customer adjustments revenue, ability

quarter, million Although the difficult predict, to a our results. impact a this number LIFO GAAP-based expecting additional has expense significant very to incurred we're the amount currently an $XX million combined with of fourth accounting to already in which year, $XX

sales. was the was million expense expense, period a gross quarter. as severance in items. $XX basis, the XX.X% the benefits. For third LIFO normalized SG&A second for third of higher $XX in adjusted expense in activity to the and quarter quarter in same quarter was $XXX in adjusted dollar of of of certain second XX.X% other million quarter example, year-on-year in sales an expense absolute of result basis, of in levels a On adjusting reinstatement SG&A XXXX or the for XX.X% third result or compared The million XXXX XX.X% SG&A the increase On million or was to and of the $XX difference is profit XXXX. of which at came compared the

X.X% on our margins drove versus quarter. sales focus continued in of improved of XXX second cost X.X% adjusted and relatively as percentage sales million only our revenue, control EBITDA or Adjusted million the However, in adjusted the SG&A or XXXX and Stronger of million sequentially, $XX $XX a improvement. gross by quarter of increased adjusted the third $X was SG&A our flat. points basis

achieving Our ultimate businesses. higher through EBITDA EBITDA focus is accretive margins on

below For example, gas EBITDA sector, our utility company highest is despite adjusted margin margins having our business gross average. adjusted the

rate earnings tax XX% the mix global effective of the Our to was due for quarter.

XX% range. effective However, normalized the unchanged in XX% tax to our rate remains

net million loss a we share. loss $X.XX per to of quarter, shareholders the common For had or attributable $XX

per attributable However, quarter, our share. LIFO shareholders normalizing $X adjusted in recorded the or net million to $X.XX expense was for common income

deliveries at to working quarter the an of the from capital XX.X% better XXXX, of $XX cash flow fourth anticipation a quarter same We of third net operations of quarter was for our the of of before well sales cash significantly end averages to flow million a the percentage Depending in used cash from year. in operations ago. timing inventory half second in activity historical year inventory net somewhat the of the cash net Our than the increased and XXXX, XX.X% an compared the third end, on as levels, anticipate from quarter, resulting in from neutral of as in in improvement we due increase an receivables year resulting increase received in receipts. operations positive

the Our $XXX net quarter debt less XX% million of $XX long-term the was third of debt or was third at the This end outstanding last of XXXX quarter $XXX year. million than was million. and

significantly better last ratio than X.X of leverage of Our in third times times. our peak quarter was the X.X year

stated Rob ratio two be by times end of to this the the earlier, As expect we around year.

growth and our continued the our changes XXXX. to has previous which expect with our was also amortization future in was In liquidity leverage or make debt. reduce to credit interest the expenses quarter, $XX forward. our is material terms and to our the in are similar grow rate agreement signals million. net data going on build. cash We no September, The extended ratio third backlog interest to maturity with point ABL to There continues we and as refinanced and $XXX that million. improvement positive our At date progress of the We market $XXX as continue EBITDA ABL had continue facility end total the to we million to availability the recovery on

As backlog brings segments million, and sector DIET our October, midstream sectors of pipeline me across $XXX quarter perspective, the gas which up end Canada most are outlook. the from and and followed XX% led upstream the of to by was by sectors, over a our U.S. production and all the up second the our utilities

quarter quarters. expectation outlook normal based than to the This current position with growing backlog largely increased third seasonal better Our our the of fourth last decline over quarter, is few our be to revised on XX%. revenue is X% significantly for the much has that consistent

October points with In addition, our increased some of in quarter us is these revenue weather, Both inclement provide in always constraints data however, confidence level our than by fourth of budget Rob September. as seasonal mentioned higher delays. year-end to or other came risk guidance, related there

to to XXXX and our the our grow stages continues continues ahead a -- economy strengthen. we in optimism are cyclical beyond, are optimism to we recovery the that early that Looking of as

moderating our capital, customer there of as customer of mix, and encouraging discipline, improving next forces growth pressures, believe level the solid restrictions, dialogue customers a with this reinstatement While are capital positive double-digit year. pandemic a such performance suggesting we contribute outlook, all and backlog, year, possible inflationary to

over Now, I'll for back comments. Rob turn it to closing

Rob Saltiel

increased with as the our revenue the quarter the backlog on third position. stayed recap quarter. I few EBITDA margins and two quarter outlook growing Kelly. last even from highest over years before revenue percentage a today opening Q&A. during our our to based call results the a fourth for October We highlights and stable want Thanks achieved EBITDA for up strong the We've prior

revenue year, of gas earlier take originally us leading years this on confidence we recovery position. anticipated. hit advantage sector, fundamentals billion of are $X market with two give multi-year that track largest than our Improving utilities, Our in to increasing well-positioned is a to

the limited successfully and customers with challenges supply our disruptions. are We navigating chain serving

will now of that, years. our the sheet your strategic of which a consider coming stages opportunities, customers take we with liquidity business have to finally, with invest transition and growth opportunities. energy we significant inorganic believe become we We driver our will solid And the are And sufficient to organic with a Operator? on in in in questions. early balance working

Operator

conducting Research. now Thank Doug be Instructions] question-and-answer [Operator with Becker we question Benchmark Please from will you. Ladies proceed. first gentlemen, Our comes and a session.

Doug Becker

was particularly revenue struck third even the I'm off accretive. on the quarter and improved margins start Thanks. margins. typically that going that's EBITDA international in down with I

longer X% So, XXXX for want to fourth the high a get we but really the and a of, have seen in and a term? little really upper in kind new context single-digit base, means what quarter, that more target

Rob Saltiel

both Kelly as of addition us our his this, very Doug pleased morning. we assisted on, in you, we our at manage to and our combination two things very But to of SG&A costs try our pointed all we've $XX some course, that gross margins, as in EBITDA and in inflation can keep is years. that, which with seeing it's mentioned EBITDA And to of get the to classes, come when coming thank comments, closely, prepared growth out margins. product good reined margins in higher X.X% our allows in which elaborate million for EBITDA really were to We we're two have the in. Yes, quarter, continue in and to due questions experienced of that And that really highest way. you those of the

be Now, very should our us double-digit margins manage this EBITDA take in XXXX do, into position persist that, quarters are some be over think XXXX, will we're maintain in which our XXX to to that to inflationary we of we the for And extent -- times as we we two we the as are believe margins. where in go put healthy will XX gross position to or supportive basis three growth as they that likely next cost up future, good a revenues, result and a the points plan XXXX. we and that anticipating especially really about of as in to

are the fourth about XXXX declines, not our So, look optimistic just normal of bucking our for I'm quarter, there. excited margin we in about growth out, pointed trend you and the also we for just revenue, generation but very seasonal as as double-digit very

Doug Becker

a able to ask there that chain the it that? a supply some moving bit relax in bit, wanted be the to I of It's little offset in inflationary Or your issues, be we you'll directly. comments, enough margin? but degradation should kind implied expecting are little When pressures of of parts

Rob Saltiel

Yes, there's potential that. certainly for

I think as with that, we've year, we we've building to and one out I very been the building inflation been turn point closely continue our inventory high products. to this our want situation monitor thing even is inventory

So, is we in not XX% that us. even the sure that some we we're want chain supply as position could resolved, to in for relaxation to our move that of deflation, or bottlenecks make something believe level that Kelly, us. quarters. you event in that? there a inflationary a have really close even it's around But to through move that come this as some gross manages inflation, is are We to margin to takes that at chain certainly get But that less sustainable. do look want to supply in prices very north add inventory at and team further advantageous we

Kelly Youngblood

well, is accretive there's this are we'll to this business and sales the and in thing our stainless And have mix even dilutive that's obviously, margins the little obviously maybe that. We be our gross I'll against going overall it we over on an a pointed our bit improvement. as I to inflation just has or pointing you seem can helpful. we last it. so but to I the of going year, SG&A add that higher the But that of very international down work margins, we would it as supportive. very around less somewhat touched out. think to international is we that's utility that prepared margins. overall it couple results out Rob I of next And though into may margins And mention remarks to some last our other think the company, accretive requirements to Doug, gas products, business is it see are things. year, EBITDA quarters the Yes, -- then mean, covered you're but helpful help And valve product

is And well. so our helping EBITDA gas margins utility really something that's as

things lot So, direction. we've that inflation but is a right got it pushing a the component, other of are

Doug Becker

And year flow catch it that Got from it. the versus cash on half guidance, the of the year for I before. neutral operations cash then the properly? like sounded Did second

Kelly Youngblood

there. Correction Doug. no No,

of Second second the -- neutral the half for year.

year-to-date, we're includes QX. the million in burn $XX positive So, $XX million that that and had we

neutral that implies So, generate million million for second to in when kind know, the will neutral get the you half, at but $XX we expecting generate we or QX, second year. a -- full to least plus say number you cash should the half, for $XX which of be for

Doug Becker

Thank That's was hear. to you. what hoping I

Rob Saltiel

Thanks Doug. Great.

Operator

Jones Please Our next with question is from Stifel. Nathan proceed.

Nathan Jones

Good morning everyone.

Rob Saltiel

Morning.

Nathan Jones

XQ want just I XQ. to seasonally higher and used in than I XQ. XQ fairly more and being here think XQ revenue are shift between get some than to color the I XQ on mean, people then being lower

can you more already Ida, about that? us delay impact Hurricane bit into color you Have saw see this XQ? risks out kind of all that, some international give up slippage those on and below shipments? numbers some Canada caught the of a from international are talked in revenue quarter Canada, -- guess, in does So, I you delay of What account seasonal that in you next And year? the you especially first fourth for part that on of the

Rob Saltiel

Yes, as the over seeing company, where points. it we bucking would in from was, low one that And Normally, right, end trend. seasonal to of third second see Canada, a let's the say quarter is the quarter. mean, up you're the a significantly it dip things of is really gives I a backlog the the increase that at fourth from in particular, in and international confidence Canada is us we're quarter.

we're the in the news maybe lost and to of in net going is neutral I for think here the good revenue. press release overall that terms year be

have going what quarters up got in may fourth in two obviously, looking the those and to we make numbers October we lining And So, third at supportive position quarter. on basically of early we're even that's think missed the nicely. up that this very quarter, November, the are

we continue And finish be of off the the XXXX to, to sectors of guidance really -- really coming across is flat the that's then And good and our of outlook we very revenue nuts it. see kind the all and year, good. to a quarter off of fourth going of about So, believe positive that that. excited of the for for we're bolts

Nathan Jones

to that I think across. important get point Yes,

I on that's And the my stocks question to is reacting final think today. here what inventory.

about XXXX, has since that quarter dollars I products, of in inventory, of each up bit. but increasing the while quite talked run a gone levels assume your come certain the end You've of inventory inventories the high absolute down pricing

seem would in want? terms and in while are chain that you of reduced Or that here to get everything changes the related it you to supply Is here supply there inventory tunes? increasing able inventory is of structural volume, being more that So, growing. that you're not the XXXX, have

Kelly Youngblood

let Nathan, Kelly, me of some kind Yes, that. this was on give color

right. You're

decreasing, sheet. at inventory LIFO look $XX that which on the which So, year-to-date reserve, the on inventory value that net million basically balance sheet, lowers is booked inventory net the we've in you reserve, that the included slightly implies but okay? -- is includes If that inventory LIFO balance

actually inventory gross our have been purchases growing. So,

fourth grow misleading. net million the $XX effect that think, that and right, it distorts and I grew kind even if LIFO inventory, QX quarter. in about number we'll But I we remember of in in makes inventory more

Nathan Jones

a That in increase inventory makes So, of in growing maybe with revenue in XXXX? more sense. kind or inventory Would XXXX? you XX% in line anticipate

Kelly Youngblood

projections because grow that yes, next you're building revenue like about. as I of XX%. percentage quantifying we to below I but XX% been the with that this used And working year. exactly, the And capital line done a think we revenue, it think, gross quarter. to to keep it going if and Rob were mind, number pointed I But XX.X% be remember, of I a call, revenue in talked is of modeling spoke out certainly inventory we've and we lower, as year in that you hesitate in trending on inventory somewhat Nathan, I lot we've keep this double-digit It know just it more about.

continue we expect capital, working to that total it XX% So, under to level. keep

Nathan Jones

Can forward costs? many growth about back you you you intend talked add some dollar revenue give go each need us or guys for SG&A, to controlling last estimate of SG&A One SG&A kind back question we have of those here? as for sets on add to of how

Kelly Youngblood

Yes, question. Nathan good

years, If growth we've essentially $X.XX back fluctuated $X.XX of dollars. anywhere at periods between incremental previous you revenue go when had and to look it's

If the for you average $X.XXX it's periods. about take those different

-- so I And that's we forward. a pretty gauge move as probably good

Nathan Jones

taking questions. my for Thanks Great.

Kelly Youngblood

you. Thank

Operator

question with next is proceed. Please Lochridge Our from Stevens. Cameron

Cameron Lochridge

taking questions. Hey, good Thanks for morning. my

Rob Saltiel

Morning.

Kelly Youngblood

Morning.

Cameron Lochridge

start the expectations So, as on going was line and we forward. on hoping I could commentary top the

Anything it's maybe where constructive XXXX? help commentary, us would handling revenue to you supply some Well, expected, you against bit kind to help dollars sooner that some And backlog today. that the whatever on the or in that a guys that terms to those the side, stands could where do frame also I than it's So, us could constructive as hoping quantify or chain be extent in given perhaps, could that of was commentary, you helpful maybe of us seem at. then to Whether upside the provide backlogs, well. headwinds weeks give revenue be current of that? little environment? abate, on maybe

Rob Saltiel

about from sectors as numbers Yes, moved up backlog has $XXX I all of million September our comments, -- is said, all of and The across XX% it's it's in over up And end the of really across our end October, geographies. backlog. October. mean, June nicely, about to we prepared

results to current customers push opportunity some the extent we talk of up right to things will and third about that that the things all there's see serve good going a we the excited into come number I it our issue opposed position as loosening a the comment XXXX. given about that the we we The like we're into this supply Obviously, that, really the revenue gives we're is us chain to for making we've that to ultimately quarterly no So, sure to the chain, chain together. fourth us that say and as and forecasts confidence really turn question biggest quarters. us of but things on sales really put backlog lost because can shortfall lot had supply and would that headwinds make in always about focused it as supply said, head is in. quarter will a up more do with quarter it's in

some and supply when extent projects, in get that do on the kind that get things we will relief our chain for our back-loaded. challenges to can of keep we we customers it So, rather material need just than front-loaded

Kelly Youngblood

one Again just been XXXX September if continues XXXX, number it's back we between we about been the and even that of the perspective. U.S. XXth, $XX into it the okay? timing where -- so again, highlight supporting could strongest went it's revenues as And over highest a before I Rob getting and into we're year. next So, QX it's from backlog here since well, in is And end way to very okay, today at October, that we're million. talked go it And kind revenues. QX add or up August of the of COVID, The backlog supportive levels issue as November, the climb point just between U.S. backlog. the

Cameron Lochridge

That's great. Thanks, great. That's guys.

gas business, utility customer Thank how see this about then those forward go a the the forward pipeline you the And terms And bit have side of going? little add we how you. maybe going as in conversations, guys seen customers from have you in any point? customers of been talk those potential just -- more any maybe On project do conversations XXXX.

Rob Saltiel

look material X% and of on when customers their just us level. profitable integrity we Kelly continue of a successful years gas with our natural -- growth that prior of And with last -- our starts proud around systems. gas to then, revenue reached goal. a that for demand shining housing Yes, the it's rates fact look, distribution the years. for to forward And bottom-line per our as course, real business And be you. continues the continues be a goal and basis. for we're business Thank out, EBITDA been company as us. business $X We've utility set growing really very business light This two we a see on margin that to pointed for -- We XXXX, existing XX for billion a activity our that of year projects upgrade an certainly adds gas planned roughly XX, to over systems. number at we can we new business to a lot there, the have originally

look hearing we're very customers positive they the everything end So, from there. toward and as the projects XXXX is

some are customers, serving But there we utilities geographies terms haven't we of nice do don't a particular a cases, and the largest where share that have already of we market serve. penetrated utilities. are in of In there other fully handful currently

terms utilities very very work team actively that additional obviously experts we've a because gas sales that figured is in basically Our in really how we to supply chain they their manage outsource out way. this industry, seeking and effective as need and marketing them what us. for efficient in of And

need lower have they they the at is and it why which themselves, it. So, when could it they cost material have do they're getting they a much than outsourced

is from everything about XXXX growth space our hearing that be year and customers excited good in So this utilities. going that in we're gas suggests for very this we're another to

Cameron Lochridge

back. it turn I’ll guys. Thanks

Rob Saltiel

Thanks.

Operator

is Please from with Hunter question Our Cowen. proceed. Jon next

Jon Hunter

Thanks morning. for Hey, questions. taking my good

Rob Saltiel

morning. Good

Jon Hunter

quarter guidance it flattish XX% kind implies is, So of if use fourth the growth your looking year. consensus, you of the first one next at for revenues

about double digit You're growth. talking

part you're heard year. talk maybe be you And XX% America could gas that, were then of curious, larger companies mentioning spending next next about X%. utility of year? growth growth We've I'm XX% So growth OFS thinking some revenue is in that if kind upstream I just North as mean, of where

your your Just outlook? you. downstream curious versus gas and and most transition pipeline, about those upstream, energy moving segments. midstream Thank the between of grow maybe in the double-digit pieces utility Which the least

Rob Saltiel

or outlook to The revenue in fair middle certainly digit crystallizes double confidence year, the XX% next our a that right XX% in more of XX% would the say is basically Thanks. is improvement and range we towards Yes. XX% that range.

putting So We're customers our information and and is certainly sectors. segments number a together XXXX for for around the of feasible particular revenue still number growth. some XX%

than So number, double-digit we we didn't the reasonable be as to that more XX% forward. certainly, feel look we but definitive XX% is could

were XXXX. lot on of we in We're that seeing right mind in plus gas. being a the budgets a XXXX exactly levels. $XX is spending last different completely $X just when upstream especially where oil, a numbers, over natural with we're XX% are year we comment in for than keeping increase And plus today looking side Your toward were current set place

may which that by US oil optimism of and midstream there our And the have on that do the followed then we boost be at strong see our end and four we you the could gas the think -- view will just business gas we if downstream and the in the growth our our increases, share of midstream. confidence field. rates of revenue on higher is upstream utilities look sectors, in closely basis look the and expect the quite but forward, and So as that and upstream the not business, we

Jon Hunter

second next expect you part well you've of kind under here and Clearly, in doing your helpful. then is year. Rob. Thanks, got the thinking the are control be that of at are a than of of to That's And if incrementals, that incrementals EBITDA sales. XX% XX% just, kind margins about your look or I'm better a could do as a that little you right Or percentage bit bit curious, way XXXX? Thanks. below XX% in it? G&A

Kelly Youngblood

a great average We're better close to incrementals as kind kind Jon, that but we pushing year, question. think mid-teens a you of because control, good and more incremental marker. with Typically, do to costs So out. growth historical keeping in forward, historically that's here going mid-teens. do a rate at Yes, XX% under if period, our XXXX normal look right? be look progress if you margins at year-on-year, our of This we're least, those to versus cost year, tremendous forward, this achieving that than I all growth the in going took certainly go over XXXX, hopefully, we of

Jon Hunter

$XX capture, one earlier. then that carbon And is curious, it? that to XX about to looks right opportunity projects million and if Thanks like MRC. way could at if related for Thanks. all for be about talked the your as opportunities one talked about hydrogen set XX Kelly. opportunity follow-up thinking I'm XX unrelated new those biofuel, transition it's we energy the still what of changed Last you it call, biofuels be is relates opportunities, that just today, being

Rob Saltiel

But energy certainly millions. And quarter, in from backlog carbon mean lined the lot years, we've has But of say, in we are as for I current think in got we're much. the look I Even but are opportunities we you relatively transition of $XXX at, mean, be plan million really small. don't seeing look terms the plus our at biodiesel let's capture. on activity -- and up, a it's changed I mix already revenue. wind our if the very we've there really to that range in the revenues five tens of wind, that well. Yes, business of opportunities as offshore

been the transition to So make has energy develops. supportive of a come to climate this boost Technology opportunities renewables. we're gases, going Obviously, business. to in more see continues to stimulus renewable this whole to market further have and is to how Obviously, give going affordable. continues reducing tremendous that there's which very conference to support greenhouse

So excited this space. about very we're

our again, that gas puts great the about are capture to think just gestation and early go then things But involved. and be who with and period in to it's more players it's actual and positive, our position we're really all of and this existing going look, And have booking to space valves a be returns to in days have fittings, other that preeminent agreement fair because we -- are the to excited think but our to share. position with projects pipes, we a other there's us yet. is relationships early patient longer this project I revenue, in business, this, going from permitting industrial a than and oil

Jon Hunter

it back. that. turn I’ll Appreciate

Rob Saltiel

you. Thank

Operator

Please Ken is question with from Newman KeyBanc Capital next Our Markets. proceed.

Ken Newman

Hey, good morning, guys.

Rob Saltiel

morning. Good

Ken Newman

be line trying So quarter? that I'm of, sense sales pricing in help contributor much would better the your in there to expectations of to you -- agreements any XXXX. was get way just cost a particularly also can you a lag what moving a for how price into of is quantify, and terms be us helpful. the quarter there be the can pass-through so I that fourth know that, pieces for pipe, price with have, would help any adjustments some in on there

Rob Saltiel

by gross mean, some allocated and a took bit, the side, we all of margin compared cost will a expect inflation I slow-moving now efficiently support a inventory terms more very classes supported across that, no There's our though, gives we've we've that is think on giving pricing the of inventory. particular stream. in inventory have gross lot a the really that -- has is numbers. stream our efficient will to a a inventory. marketplace, that's it's inventory, helped certainly done, lot in revenue and revenue product took and quite that Yes, I continue do inventory question we us that we growing position thing level from got other to what the of be us of We stuff factor. pandemic much on the transformed us slow-moving is margins certainly given in margin now to active that certainly really to higher benefits during when the liquidate the now impairment our stuff very -- in think is we to We opportunity of as gross a a way company

forward, all going will higher for margins gross groups be will and us. of supported product supportive again, across that increases, be So by pricing margins

Ken Newman

what to then a Is you us last should months? the start. of any the you were think daily help good trending can about off And of November the quarter? above in those growth September, how October way there just And trend Okay. from we and sales end sequentially understand mentioned average of kind sales

Kelly Youngblood

it basis single-digit math about the you I month-on-month. Yes, in that's improvement. August are But you that's daily at let's both we higher quick, point. give daily of -- on talk if I'm say October actually We percentage trying too the in to look basis right, Ken. when what here is much I to a at -- -- think had trend do just it's my months, improvements, on these than revenue an kind type a this want average and detail But single-digit don't head September.

Ken Newman

Understood. consistent I backlog expect But And moving kind make mirror Just missed lastly, to think trying up quarter, if sequential think pieces of just kind you then basis? kind catching kind be of third all you the here? understand segments here across to we sure, forgive as of levels as the this. of me, us moving the similar about XQ we the for revenue all Would revenue and with about help on on pieces a I understand. to of kind

Rob Saltiel

delays expect revenue forecast project that on up, some quarter we from really see had if you're for surprise third quarter to in be about picking pick actually Yes, levels. quarter. to into Obviously, flat will Same US we we as in that and think us. impact international revenue And due could increase we but that third utilities, our Canada slightly might think up be slightly. business a if as US had some down fourth of fourth pushed said obviously, international some will gas up weather quarter, third versus backlog. our has down we dramatic patterns delays before, side, US the in -- the are But projects upside Canada we the from talking seen for to and we example. business well. and there international Canadian international

Kelly Youngblood

add a sequential just is from of the would a expectation. perspective, lot sector current is I that Ken, improvement drive to upstream going And

Ken Newman

squeeze could if more, One I Right. it just in here.

the you It bit you about opportunities and about flow still how manageable the talk cash You have in just capital think little pipeline pretty leverage free here. is deployment, conversion sheet. the for on and availability talked XXXX? balance a that Maybe the looks about just like M&A

Rob Saltiel

base. Yes. in Look lower last really our or revenue was the the balance our And year, year we've it cash really a being seven into that tough really quarters of with been six lot last sheet. a strengthening got to inventory line structure committed cost over we the and converted

improved has bit. ratio leverage a Our quite

a last net we've had of we lowest ever our our company. -- had have public debt as quarter, We some lowest

we balance for really because improve we sheet in that where to want I near-term, today. to is So, have like the as would as continue flexibility to we opportunities. inorganic balance can say the want sheet, much we

really to that's be And going of forward. capital our allocation form so going primary

relates for sense sense for will continue for opportunities to Global. to that businesses we make as MRC complementary it M&A, As and business that make today the we do that market are scan Opportunities our of mix. to what part overall

revenue So, earnings flexibility as and we shore are fortunes terms and meantime, company's for certainly can in on sheet possible. But transform focused the financial and is that. going we're the out everything an to up do in to inorganic to much the as we opportunity figuring balance have how certainly of

Ken Newman

Very helpful. Thanks.

Rob Saltiel

welcome. You’re

Operator

I back reached Monica any gentlemen, for remarks. we Thank closing you. of have And to end and question-and-answer like session. the would Ladies the turn Broughton to call the

Monica Broughton

good in again Have February. a to Thanks, everyone, joining we'll us you talk for today. day. And

Operator

This conference. concludes today's

your this may disconnect You lines at much very you Thank participation. for time. your

MRC Global (MRC) 9 Nov 212021 Q3 Earnings call transcript