MRC - Earnings call transcript Q2 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the MRC Global's Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Monica Broughton, Investor Relations. ahead. go Please

Monica Broughton

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

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

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

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

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

materially today. from results those actual expressed However, could differ

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

Robert Saltiel

providing I positive quarter bottom quarter second and double and a revenue then the will the did detailed were high-level line. prior welcome second significantly the we business. today's then opportunities will our to recap. our guidance a of call nutshell, before begin for our while we results, Monica. everyone call. quarter Kelly In our backlog outstanding a XXXX review and by brief outlook And results revenue quarter that more joining of over increasing our driving to review increased growth the to Good for a Thank our as morning, all this turn you, I with over of discuss to digits. while

punctuated double-digit previous was followed downstream XX% industrial quarter growth sectors. Gas sequential revenue to-date. this second $XXX business strong of growth midstream pipeline the Our and increase, production quarter's or by sequential sectors upstream four revenue our drove quarterly All revenue DIET more milestone by with experienced gas our hit and utilities our sequential by and second of million a transition led than XX% its utilities businesses, highest and quarter, a energy expectations. exceeding in new

a an and extent, from management of benefit increasing projects Our and to gas utilities number meter much business starts. upgrade to continues integrity housing lesser

this generated returning sequential on $X turnaround quarter's levels. to business of benefited is second track activity increased Our DIET year. and and in to a and maintenance sector pre-pandemic nearly improvement billion rapidly revenue the approach has revenue third from This is

we customers as our new experienced production expanded prices, In with pipeline in traditional and and upstream revenue sectors, quarter. also upstream investment persistently business in share grew up strong XX% midstream energy response traditional gas oil the sequentially customers. our two ramped to U.S. Our particular, improvements and our strong

our production of which benefited in midstream gathering new the require processing and U.S. gas and the turn geographic quarter. expansion both has oil New assets, and business oilfield in

international unfavorable the international despite U.S. XX% shaped by sequentially has recovery the business grew Historically, basis a for business weaker strengthening is international we've year-end, higher is lagged concentration of backlog impact as $XX foreign in our increased to revenues of of quarter. longer international since by lead increase XXX due our and underlying that The million this good time that currencies business business beyond. the implying points international projects. news Our stronger XXXX our

break-up to Canada Our X% due was down revenue spring the there.

significantly However, XX% in the expectations up back of growth supporting this backlog is strong has of our and year. since year-end, half grown the

and margin profitability revenue highest company for adjusted is today. very XXXX I'm emphasize of to This double the nearly and continue since was is second Global, EBITDA when quarter. proud delivering our MRC in achieved of the efficiency by team quarterly what We margins the at X.X% our it

more organization focused is are and and aided results. our we've much leaner greatly ever this been, than We a improved

businesses. grew $XXX to backlog increase as our in momentum the supporting four over addition strong at business geographic and EBITDA has XXXX, a to the first increase ended sectors well, three In the In quarter, positive XX% second of the across our continued and and revenue million, performance backlog all our outlook and growing half quarter. in all the segments our first

a of for higher June our than is to our figure, XX XX, further second of July confidence half our X% XXXX. the adding As backlog

in on $X.X XXXX, revenue. about lower $XXX at we than but and Our represents million full approximately revenue year EBITDA This of million of $XX million guidance EBITDA. billion more in generated remains $XXX

guidance is also a XXXX XXXX. improvement Our a point EBITDA over X% XXX yields which basis margin,

our not we a our performance. bias upside believe to there are for is we the changing guidance, full year Although

look each four highlight term in to future, to term. areas longer has we the our want I growth story, for both near us. specific end of growth market and sectors As a the strong

reconfiguration to subsector growth tremendous This petroleum this and transition. especially is the we waste a energy with of year, to have organic the produce seen process fuels. refineries where renewable First, feedstocks

are $XXX the experience Europe and visible backlog developing expertise and advantage and wide three York. a within farm generate this hydrogen significantly offshore both approximately playing of includes is relationships, we the Global XXXX. in transition us the carbon horizon. PVF figure announced we project that Our we major expect a Multiple first-mover of be revenue, importantly, transition, variety energy many technology New in to provides This MRC exceeded this including expect transition to million supplies energy wind in are role a driver in the be year space. to a transition projects, in years. energy and we for previously energy U.S. capture expect projects Most and the year, growth for

our like I'd expertise is unrivaled ago, tasked to About share. chemical strategy, chemicals gaining which team meaningful growing The opportunities identifying year our second with area assembled with a a traction. is highlight we market and

awards and markets. are U.S. we product our customers, mix won recent to serve contract with expanding have new major We and international

growth second the of is this is deliver subsector is and XXXX. as opportunity There chemical share. sequentially Global Our outlook strong gain XX% space expected North to American as industry chemical XXXX. in MRC The through versus very the grew for the quarter market expands up XX% significant positive XX% to in is capital and chemical grow quarter as we spending second market

production growth third The area highlight upstream to like is sector. I would the

our the customers smaller are Midland, leadership facility Basin serve there. in to product we the to sector, private Texas our to expanding our public and and and We've operators, largest our critical are position. energy We in opening PVF Permian by footprint offerings we better to enhanced retaining a are serve committed the distributor new

future, highlight LNG the for believe like picked as Global. transition well, XX%.We area energy market an year and part years finally, be role world blessed four global focus Among as of traditional MRC this demand upstream increased to exported production. with percentage achieve international security oilfield expanded And that growth Our supplies are for particular, cycle a expected to production driven Europe. gas the U.S. business worldwide is Natural energy multiyear increases in fuel and business a to approximately and the as in at of that safely upstream markets by economically energy in underinvestment, growth in lower abundant in due has our for LNG. a U.S. after the up can sectors, is to an highest logical is I'd on the we carbon to growth

expect regasification U.S. production in We help in consuming markets. energy the facilitate infrastructure that growth parallel facilities will the focus transmission of security increased and in of LNG

active the quantities large to approval projects in to PVF and projects, U.S., the gain we LNG years. are approved in supplying additional expect three to LNG next of Here we number of already in good a five

commend safely and operations, Lastly, to to supply I while our who chain, customers' addressing want service providing deliver needs. customers our teams our to in PVF superior and essential continue evolving timely, marketing products sales

our of call amid Global, that, for effort been Kelly. systems and to continue functions I'll our and over a market thrive support to to Our turn team provide challenging and the business MRC personnel up. stepping in grow very now conditions. I'm It proud has for total With capable people

Kelly Youngblood

on be good Thanks, Rob, morning, focused sequential will and comments comparisons. everyone. My today

So we improvement our for pre-pandemic Gas the DIET quarter midstream unless by followed previous returning gas XX%. our and All Total second upstream of an XXXX quarterly of comparing XXXX. the first $XXX grew by increase sales and second $XXX quarter $XX utilities million, revenue levels. of utilities otherwise, stated increase, and million, outperforming XXXX upper were of XX% to quarter expectations the are sequential a an single-digit the rate or were quarter sectors. to sales second late million sectors led double-digits,

accelerate customers our even market, which in experience the with to construction third expected strong continue in the further underway. We season is to with quarter this well growth

spending This by it our increased or business as rate DIET increase demand million the sector, this this or gas having upstream production as and was turnaround impact led work, to million chemical While mentioned utilities. base. upside decline revenue billion surprise biofuel on pandemic. customer of market mark million, Midstream second as renewable XX% the to driven existing also primary the $XX $XXX of client behind our maintaining growing post as projects and The energy transition new for interest well $XXX The quarter, Norway sales to continues anticipate the more as rise our increased largest second well $XX gas for activity million an generally second Australia in was upgrading in there or and do customer to energy increased by and increases, dedicated potential sector refinery is XX%. projects $XX up making with is the in this increase business approaching completion Rob, an sector U.S. budgets are utilities the XX%, as activity a second upstream by in home pipeline sector and continues revenue or quarter $X for this International quarter million were Also activity. of the $XX maintenance year, experienced sector significant U.S. not for primarily the million, to XX%. infrastructure. we

consistent production are as in driving additional gathering need the We improvement this processing gradually seeing for market and increase, infrastructure. levels

will million I geographic quarter, all sequentially, the up production Now by by second first revenue quarter, percentages. digits year. $XX result $XXX sectors back sector. as primarily backlog all a sectors a increase, also sectors was half the the the U.S. second quarter the the or $XX compared in U.S. quarter, this of outlook with was break-up XX% double cover segment. for in led in sales upstream of the with The supporting mid-teen X% seasonal utilities Canada revenue impact decline DIET million spring gas of our and performance increased the to million a

customers revenue half of all demand DIET The well sequentially, post-pandemic higher despite million foreign sector the second Netherlands in in backlog experienced project to energy this work second from an sectors New $XX responding geothermal The the $X and supportive sector increased from million XX% prices. up including was on Canada facility positioning work, in increase biofuels. as upstream production a a XX% Zealand the additional with in market However, International commodity the a headwind. from increased power project as activity improved year. quarter, currency for

ago, to history, the profit margins. an of the supply experience it million, time it to XX in of impact the as turning has basis gross basis of inflation, year sales Now the over second and quarter continue point preferred improvement for higher proactive company a higher positive $XXX and management. our been public we chain to is XX.X% revenue, our supplier XX%.Compared over Adjusted points first XXX quarter volume, was second benefit position the

to average As a an Therefore, reminder, it use of on adjusted benchmarking cost correct gross peers for results, company appropriate of inventory when Global an the LIFO more methodology. inventory most impact expense, numbers to cost MRC's public placing the average our our basis. is use profit

million from points XX.X% was in gross XX first to the increased was down percentage $XX the quarter, quarter. in expense, Before quarter of to in first second the were the million of quarter profit adjustments, sales $X million second the second LIFO quarter, or our $XXX basis for costs in due primarily which the and sales XX.X% $XXX compared XX.X% SG&A as quarter. or million first

and of support remain costs a As revenue, wage benefit sequentially enhancements count percentage points by sequentially, and XX $XX to talent. for requirements our increased increased and improved required improved SG&A million SG&A the points basis XX year-on-year. head outlook to basis Absolute growth driven marketplace competitive in by

addition, we in low a transportation the we percentage of expected cost, XX% year. fuel levels similar expense medical remainder sales And are In that expect to only full growth such overall to discrete we be as in going quarter. expect SG&A this year, range, moderate to the experienced for areas forward. for to with travel in SG&A increases of anticipated as the costs modest the and air Therefore, stabilize

However, it or was volumes. two to X.X% based may for quarters the X.X%. was the the EBITDA compared million which $XX fluctuate next or sales $XX previous million on quarter, quarter

mentioned, base, XXXX in of since much compared million have how the the and the losses. unbenefited nearly generated Tax streamlined or Rob of XX% tax in expense to cost margin demonstrating running $X revenue quarter, quarter rate due of second this structure percentage we the $X our more is highest foreign expense are million As efficiently. was first an resulting quarterly in company we've to effective the EBITDA half

net common stockholders diluted $X.XX to income per $X had attributable of For we or the million quarter, share.

our common cash increased $XX position from normalizing for million consumed second we stockholders $XX adjusted an inventory in activity net to expense LIFO quarter $X.XX million in our increase per operations income cost with projected on attributable share. Our average basis, as was the corresponding or We of levels. revised diluted

continue for use of cash levels into to building and operations relatively be the quarter inventory We expect from to third quarter. in our flat this

flow do expect a as company fourth in we historically which in the years unusual have cash we result to operations consumed revenue the for cash the for growth. of from generate in cash that positive significant However, should year, strong quarter full is net

the in Our a quarter total first million, outstanding debt at of receivable. the increased $XX and to due lesser the was quarter extent, purchases $XXX from increase end to growth accounts million a inventory

$XXX is on over leverage Our based when was improvement leverage our XX average million, months which ratio, net was the of debt times. X.X ratio an times, last X.X

We progress our during expected and quarter expect our continues ABL lower of of $XXX position and under total the facility of ended to million $XXX position for make a with generation availability debt further fourth million. cash as We on EBITDA to liquidity our cash net our with million quarter. leverage ratio we $XX grow, the

million, quarter position digits growth up health XX% momentum. backlog backlog This has the March one to the where is month, position XX. of $XXX the is an backlog double the growth strong and Our continues indication XXXX has July in increase been potential. a demonstrate solid future returning fourth levels. X% at In of another to business This grown to backlog our compared

our Now outlook. XXXX turning to

digits. a As we for by to pipeline. third From XXX double all increase Canada international about expect and strong very revenue ago, at month come are basis million geographic XX% we translates announced a digits a upstream double-digit year. about $XXX this exceeding approximately to perspective, EBITDA DIET a a for sales, and growth to expected U.S. point increasing midstream the From billion XX% and of with company projecting mid-single and decline view, utilities compared at of with to second revenue the or improvement last Sequentially, sectors digits or company X%. our total the a quarter fourth we compared to and to up in ranging range expect gas X% mid-single XX% $X.X be growth quarter we the from about XX% quarter to seasonally the followed in in improvement production

rate tax for from be due XX% to XX% to between but to effective fluctuate is year discrete normalized projected Our could items. the quarter-to-quarter

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

Robert Saltiel

highlights summarize for opening will few before I a Q&A. Kelly. Thanks,

first confidence in impressive XXXX revenue double-digit is fundamentals markets in grow of Each business expected percentages outlook. each combined Our backlog has rapidly performance, XXXX end strong four versus by a our our and growing in our sectors of our with half business to strong XXXX. increased

Our expected to percentages U.S. and Canada business are segments by double-digit to our digits. strong international grow expected and mid-single grow is

with company bottom We our on a line. unwavering an more are efficient focus

EBITDA peak we We billion and much or be margin EBITDA margin growth chemicals, will in lower finally, best for reaffirm revenues $X.X Global year, of MRC X% drivers in increase in your million sectors, innings EBITDA percentage that, and are we this would $XXX our our growth margins across and our business with We questions. we to transition are as achieve early revenue. utilities, particularly multiyear earning four our the EBITDA energy guidance on will take margins with grow further revenue Operator? that expected are traditional believe EBITDA since many XXXX.And energy. gas in we And now durable of which all

Operator

At with conducting we first question. this has proceed. Tommy Instructions] Please our Moll time, will session. question-and-answer a [Operator Stephens be

Thomas Moll

for taking morning, Good my thanks questions. and

Robert Saltiel

Good morning, Tommy.

Tommy Moll

Rob gas I start on to off utilities. wanted

mentioned customers? customer of potential this you quarter Thank I'm And existing on as talk deals pipeline basis. a record incremental was can you you. revenue or big in you curious, for a both to think adds look I the new forward, terms with

Robert Saltiel

sector did to utilities. set what we're have we lot Look, of We're to by large you're keep we say, space taking last in something with MRC doing and continues, the that a expanded gas And records. seeing one its that, business two our continued numbers. is And the fantastic years mind, penetrate we've in to business grown currently our gas they're over We and we've Global, organically really customers, Yeah. gas U.S. the And a and as for existing in-sourced largest of continues time, now in the outsourcing many do have XX is the that quarter same Tommy. record becoming are effects business offerings, at utilities in MRC utilities, product happy this you Global. utilities those for a to our to that be manifested

that serve the at forward, team developing Going where that number can lot gas myself, those cases, a continue have we way currently work, don't very And a we geographies utilities and/or but of the and bit products in there. in again, so a our serve what to activity. more, either on of small we we're little lot of competing we of against I've cover. we're can in number terms product expand business that still a a large or very all doing certainly we a and meetings active is do these in offerings been in-sourced of we those our is customers

in So Gas we're and this in pipeline to both very your excited in talked growth grow growing in you about June this a and from July. to the even that about Utilities of continued backlog, in the continues the to business. referred for quarter this Kelly reflects lot question. work us, growth really backlog

Thomas Moll

gears I appreciate Rob. Thanks, SG&A. it. to Shifting

implies assume some the you've at I would line look pressures on for XXXX, leverage you versus inflationary the If probably prior seen year. same notable time, expense there. the At guidance that it

you you just let's forward look creep for if is 'XX conversation, on could wonder just Can have and to which to not some or leverage assumption it's And that. the that then pressures into I today, challenging? to more I that to Thanks. on you're are guiding any your line those? inflationary talk you revenue the as just up, but So going be that to recognized assume there show a continue bit of sake started of

Robert Saltiel

Yeah.

our increased distribution color. you we that many inflation give we But to we've revenues inflation. certainly activity a But business, does increasing activity. to is some said course, me I'll seen personnel then have adequate And and that service that had in on friend. that, our increases Let context due have times in we've Kelly let add require margins in before that and the of XXXX look, this

times to growth market to had go continue our growing we're of know to of think the and the in to to level do wage, people the in At based paying we we on I expect be we've hire make in respect. responsive want that our sure that we've So and we we out in activity, continue terms all to we'll had same wages, inflationary so and a are backlog. serve and which fair really time, personnel,

part introduced performance wage improving to will as the that increases in with There's some improved So performance pay more going of of the we've coming as be discretionary some company. the well the be company. of

given gone quarter-to-quarter, up a from more that forward So things terms market in anticipated, this things and/or occurred moderate the had lot going were certainly in where SG&A number onetime the versus we that levels but of of probably wage than the we've has because really is. to quarter expect we our first, caught the up second

be see terms forward, to this of coming percentage a we continue us we more expect as modeling forward we revenue our beyond, down, SG&A into we're to scale as So to effects going around certainly efficient 'XX XX% revenue allow increase year, in Going and spend. the okay? of SG&A

quarter So over see reduced going forward. second the percentage costs want the we to we a terms Kelly, revenue to first think the a think I and color somewhat are moderate you of in that? we'll some on was continue think increase SG&A as quarter. We to as our do anomalous here, of add from go

Kelly Youngblood

continue percentage, even primary that Rob, compared efficient quarter, this our well, costs at think, always more much look peers. very the maybe our do company have it covered been, especially to expect I I be you that to revenue, to we We've of when to on SG&A, just is mean that so. I we point best-in-class as and a but want couple SG&A with percent higher of a You out things.

sequential that of Some change.

or did recorded out, in point we of of couple a credit Act. quarter first CARES as related have a benefit dollars the reminder, the million to QX, in to Just

quarter. that our that so business million. new brought revenue trajectory new But had down second with or the quarter, here up as mentioned, first artificially the then Rob in And of the in somewhat the SG&A $XXX forecast number went the forecast,

million. as EBITDA markets Rob EBITDA a we projections, in it expected had And were increases, then increases, premiums our introduced the to incentive that, for result $XX of of up accrual remain headcount bonuses. to change some of overtime increased location in competitive. kind hinted because certain went Our that And that causes a requirements

was year-to-date across not in claims normalize been you benefit And then a retroactive -- increases see quarter different travel We've cost the -- that that just of continue think the there there's So across all categories this point. future that we those up. that, insurance kind have the quarters. expenses, across board, will fuel, catch-up of premiums, went won't in will at

a forward. going expect of think and change we'll the XX% as so not have kind at quarters do increases type mentioned, remain kind low level. And that We modest coming of that Rob in

similar Although, out quarter, QX, would digit that fourth go lower little percent increases. because it I high think revenue the that -- of of but average revenue the that a we because quarter. lower it number projecting had as sorry, in just this could bit of a to a go then the above mid-single revenue that revenue than will And we're with higher

Thomas Moll

and back. turn it all the context, appreciate I I'll

Robert Saltiel

Perfect.

Operator

Please question. next Benchmark Our with Doug Becker with Research. your comes proceed from question

Douglas Becker

Thanks.

that still on at leverage down? net likely looks your those are trend track be thoughts like leverage share for year-end, increases So inorganic mentioned repurchase year. times on is come around What next this growth. as you statistics lower to a quarter, Last it X flexibility

Robert Saltiel

the we Doug. valued to gives strategic MRC committed us more And Well, a that flexibility investors did remind, quarter. it in cash Global. we we to said that, opportunities. at strong want maintaining are we as did quarter certainly question, second that as thanks sheet comments for your have by I our first in look do in balance and Look, prepared our believe in inorganic we the to consume is

year so operating relatively is the good and But year, currently will cash quarter, plan down, flow stand, do as that this continue we move to levels flat, balance do our next we'd the fourth our positive. improve the into a leverage rest to generate year. cash ABL quarter The third and going pay be we'd to we to probably early and levels for in through like have we like on we to that certainly be as of

I it's we to of as talk allocation we share any this for time, think continue premature and sheet bit look strengthens about balance opportunities. a revisit the to as will kind buybacks capital certainly but at outside inorganic

Douglas Becker

compared That makes transition chemical, sense. markets the LNG number do company a in And to then the in, of compare growth How end drivers. margins you highlighted average? say, energy

Robert Saltiel

doing chemical and there is valves the the to be I lot of alloys of amount good a we're be stainless fuels, and space also Those involved Those tends of in same tend Yeah. could lot businesses say accretive thing the for to well. about and a as us. energy that. tend renewable talk in you to be accretive what margins for us. a transition, to When about

So margins. areas are growth the company of for those accretive in a lot

levels, I healthy our that. in you've seen think supportive and at certainly come that gross of pretty margins is

Douglas Becker

you think margins. I to alluded this, as EBITDA to accretive gross as well but margins

Robert Saltiel

about I'm margins, absolutely. Yes. gross talking

Douglas Becker

of realistic year, of been given just so above some two margins are gross next prepared for say Perfect. alluded the quarters, remarks, XX%. margins were earlier? of this the but gross last product that to to in have it three And shift XX% early you too the adjusted Is you about then adjusted answering

Robert Saltiel

the be north of of XX%. that said year the we'd at Yeah. We beginning

right are being I they margins the been think we've where pleased gross with now.

certainly through make holding of I think it's of for margins 'XX, XX% this persist north year. gross the probably to to see too end we predictions but early

Doug Becker

you, Thank Rob.

Robert Saltiel

Thank you.

Operator

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

Nathan Jones

everyone. Good morning,

Robert Saltiel

morning. Good

Kelly Youngblood

morning. Good

Nathan Jones

on little that XQ margins. looking gross you does benefit bit of see the Do roll a of margins in be we're gross going some think at color on us year to start you impact forward of the from any The margins kind Another and and tend gross that perspective over. on costs of to inflation, bit question for business or to peak commodity an from gross have can some started a we margins? that give deflation

Robert Saltiel

saw of rapid great the periods deflation. It's business, inflation of because seen crisis, financial a think if look I the over time Yeah. of we've and around question we the this history you significant

currently And and something a impacts so and watch the our that is in in very more I terms stainless in the little probably gas a would that you products still inflationary our and groups. flattening our VAMI closely carefully in this carbon and of tell levels. inventory bit product certainly we manage of we see

of especially the kind our Ukraine as see But around saw we earlier war has the we this inflation year. of So in somewhat. product a move we across the bias maybe still through year, inflation early general toward least days that rapid subsided groups the at

of margins and through us. period north any see are what think don't intact the I think said, year, just make we -- much of sure that we that to holds too certainly that manage as But those flattening time. that of XXXX, XX%, watch pricing to seeing we our as the we are see we'll at remainder carefully XXXX when we terms gross we certainly But something in inventory as hold we've very of this continue of is we in we'll carbon much look for this to the then have manage. and to products, we're

Nathan Jones

month a you upside guidance ago. And quarter the that month upside think, trends Rob, you from numbers biased the brief confidence some when talk a I you've guidance, comment just seen or where And you preannounced month probably raised later. there's give to you're that Maybe might a here. even you made that the last about raised that to since from in the you that come maybe upside what guys

Robert Saltiel

it's a Look, Yes. question. great

I think just the it backlog. down right to really comes

our products of obviously provide We continue the in across a sectors. services recession very and geographies talk demand backlog been or we continue lot our strong a segments in of We're to to impacts. see and And seeing of of our customers. that sectors. any about grow we not there's all any business for all And any our that

we would hope our if the any us do to change certainly certainly again, the we're remainder we think this better. I but going upside, not feel and gives to bias good confidence the that of And in to guidance, So guidance. about year, there's

Nathan Jones

of the on do. Obviously, of the to you about revenue more for activity cycle, you move Can a international the in one a itself you've project side XXXX, later manifest lot increased for cycle XXXX, longer give businesses of it's that business. as that to it's other business? the what just than outlook longer-term terms later just side And in might and talk tends seen a

Robert Saltiel

think the of Sure. all to I'll upstream talk about develop two much or But elements understand of we I side, their given thereof more with upstream there. the markets, DIET energy are Europe, businesses. importation that or more Russian keen and what's the the The energy on downstream lack particularly own international supplies. happened

or of Sea. relates there, as we project -- platforms wasn't I lot to will, Europe say, We've it Sea. if the let's some upstream Norwegian go existing we're that we've the end ago, extensions So months of you through seen benefits on a on seen there. think side see there's even life So And and optimism, six seeing in the in projects North

seeing projects planned of far. On are been of in Central particular, forward, the lot for and and renewable in opportunities projects most going energy side, capture lots are in those recognized backlog energy as A we for have see the number and Europe. to some so carbon transition. hydrogen Europe being Central for transition, U.K. And that DIET of the to opposed continue our diesel actually -- of in we're a demand of

It but about very that XXXX. delayed. in international business. growth certainly the is excited of expectations focused, over project growth very Its in business we in we're that So have XXXX double-digit

Nathan Jones

you for Thank questions. my taking very much

Robert Saltiel

welcome. You're

Operator

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

Kenneth Newman

Hey. Good morning, guys.

Robert Saltiel

Good morning.

Kelly Youngblood

Good morning.

Kenneth Newman

opportunity bill the forward? early your I'm both portfolio and view Congress energy through tax is on working know I going to renewables traditional still it's have your just but be large days, an a if can curious how you

Kelly Youngblood

$X of that us. tax it's mean, income but to or the I have so have thing, hot doesn't press, off the Well, affect you Ken. higher, billion kind XX%, of there's minimum

Robert Saltiel

Yes.

Kelly Youngblood

infrastructure projects think think gets very from be us ones that, of opportunity for the energy that I that's of base, be as driven especially And benefit about kind point, Good us already transition going positive just well. then for a built semiconductor we're that out. primary pretty Rob. And I that general in that some are as space by to our Yeah. a that customer to areas, the good participate could that other something excited then in there's that's

So ahead, Rob. go

Robert Saltiel

the measures areas especially positive additional our business. it or market, Any our these create dominant in additional it activity. need are comes energy Global. Yeah. stimulus new does as we these is only investment, of activity And the incentives it to And really MRC markets areas of some creates to think most what can in U.S. that benefit business is and that for which

business, identify I but think it's Kelly us, to for it's how positive specifics said, no it a impacts as on our net early question.

Kenneth Newman

profile us to just think in to how what relative a about opportunity to Right. that higher operating sales I And then versus revenue XXXX. kind in help that, just earlier Rob, about million the opportunity for about going us as $XXX talked a think Any an higher for to means on higher said you 'XX that energy context. comment, significantly about you follow-on And remind back leverage in you can way size the transition in space significantly of volumes.

Robert Saltiel

think What just Yes. we say will transition XXXX at on our about we I is 'XX be look than energy stronger backlog, if the 'XX. would

around -- primarily a Again, to been how space. developments we're we're much projects, the that we kind continue capture bigger and on renewable think really bit a focused of of enquiries hydrogen in on out. to really be. lot more will around focused sense energy have projects diesel further give are But I currently, bit it's seeing but transition and field any that early a carbon

continue accretive much to these in is very puts transition on MRO. business we the tend very, energy look, think transition this we to sizes We Keep in around on order opportunities. of large very energy get space. mind, the projects. to today So And bullish very the we be leverage for us terms not way going is largely that get business. of extent project in activity. forward But the really to doing in with a MRO that us ongoing side, it We're project a position certainly great business the in

very involved business a to these think So said We're first-mover one that years in been in and come. really we end we're to continue we a be of my been lot EPCs we've advantage dividends excited work that think, for development think developing or with with we projects it's users. an very that as and we excellent It's I us and focused on comments, a about. will for pay

Kenneth Newman

Yeah. me. for One more

talk increase to for Just wanted about guide year. the the

else I the call of in I'll XQ that, in maybe flow-through. ask in you on a kind it think anticipated than originally earlier someone stronger came different way. the hinted but Obviously,

I think here the quarter. it was in high teens

or year-over-year versus versus operating for high guidance Any this I think prior the closer to like half, maybe of right? that in on Difficulty] the maybe the what's color back primarily kind the second is you the Is prior into talked the on just at lumpiness sense [Technical lower what's look the year, digits maybe I basis outlook? originally, baked any earlier that SG&A all year expectation double half? leverage the single digits. guidance about XH is 'XX implied driving on low When to implied

Kelly Youngblood

with is X% look have this the in But conservatism you being off. quarter, would a in, that one. built numbers. think type in you're be Ken, there, expecting be I hopefully probably think seeing fall Yes, take at it I'll if which Kelly. I more ends QX fall-through by what you Yeah. would of we kind what up fourth quarter

of drop to not be seeing is think at probably we XX% historically, off. to at be to anything QX don't at to X%. higher it that As X% a the -- around point going end that that's that it's We're kind have reminder, more going is this -- a going seasonality end, lower

bit hit in but remarks. just just I talked in case in that think Rob conservatism that margin to projection more revenue things base deflationary the prepared of Could trying probably little point. lower quarter we of about will there at some a that But we conservatism said fourth some seasonality. upside just that some to and around that the have out the of put the that, mainly be

Kenneth Newman

projections There's first that no you… the price half expectation versus cost falls that off

Kelly Youngblood

No, not. no, absolutely

Kenneth Newman

of missed if the into quarter? mention Maybe LIFO it reserves Kelly, I for expectation But I just one did I'm if sorry this. more squeeze could index? expect in, pretty elevated and And kind if you your I third Would lag sequentially to line they still look up be seem the pricing, the you at pipe or here. given flat in that just

Kelly Youngblood

of numbers our on environment peers. that's was how million are in That our remarks. it prepared much question. Yes. some have that GAAP QX at income, yes, a benchmarking for a our fairly level, that pure our That does great deflationary show margin even gross million should apples-to-apples everyone at out that's to around statements. half. second adjusted was year, remarks, $XX the modeling That's didn't LIFO give when you significant and the full one peer distort EBITDA in LIFO increase or the more in average I'll that. years impact, a can because when great million really the a expense you net And we're look of against really see cover whether really income is the it's the question. financial there in just context QX modeling numbers a in Ken, comparing results indicator the have we're So that that you level. that you we was the reasons so our We comparison group, prepared better GAAP numbers, We're the right what now, LIFO LIFO level, $XX we pointed but expense. $X and

Kenneth Newman

right. That's very All helpful. much. Thank you

Kelly Youngblood

You bet.

Robert Saltiel

welcome. You're

Operator

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

Monica Broughton

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

Operator

This conference. concludes today's

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

MRC Global (MRC) 14 Aug 222022 Q2 Earnings call transcript