Earnings call transcript Q2 2023

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Operator

Greetings, and welcome to the MRC Global Second Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Monica Broughton, Vice President, Investor Relations and Treasury. Please go ahead.

Monica Broughton

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

call we and the Kelly On today, Youngblood, CEO; President Executive and and Vice President CFO. have Rob Saltiel,

of There will our mrcglobal.com, information XX, well as is call August by by until The webcast website, phone today's as XXXX. be on available in replay a dial-in yesterday's release.

also information Please our quarterly speaks of later information on it are accurate replay. will the be XX-Q note call report today, website. as advised longer our the Form file time of be on to only on expect today, reported and We this August that that available therefore, of no and as may X, you

In will today, our call we discuss measures. non-GAAP various

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

Unless EBITDA. references we adjusted refer in to EBITDA specifically this to call state otherwise,

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

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

factors You these forward-looking company's read more SEC risk the of are the concerning to in-depth statements. encouraged filings for review a

to Rob our And now, Mr. I to would CEO, like over call the Saltiel. turn

Rob Saltiel

today's Thank you, and Monica. everyone morning, to call. Good welcome joining

provide review the and before remarks second by brief our XXXX sector I followed with results with begin our detailed XXXX quarter of a of will results Kelly end will high-level and quarter recap. guidance, prepared our I overview a second outlook. performance, a

All PTI, or Transmission am on overall XXXX. year, Moving DIET, up both first Utilities months first each first and our of of growing up half financial in and our this the with approximately Gas half demonstrated Production revenue XX% Industrial revenue with of I our or Infrastructure, year-on-year three six growth the over sectors pleased with sector, the over performance results. Downstream, XX% our X%. healthy and and Transition to Energy

the in the bottom-line half is and we with second EBITDA point business year increase head improvement year as period XX% a strategies. performance a and XXXX we execute over our as to also same margins. EBITDA and last Clearly, improved the in XX profitability shape improve Our the in first basis of top- sector-focused into half of in continue great our

little compared second the revenue of came and Gas improvement of pause than with the taking X% the anticipated a quarter, quarter, same first experienced of XXXX. a second quarter million, three quarter. Both over $XXX X% DIET to with top-line sequentially versus PTI our lighter year, in sequential quarter an revenue our Specific turnaround but Utilities a sectors, of project in to and decline the two and this last growth, activity representing

first Other XX.X%, backlog that quarter XX% compared operations of adjusted and our for $XX grew quarter key we the strong the positive International segment from produced of to gross highlights flow by cash generated are million. margins

which quarter contracts gross that stabilized. we cost adjusted has points taken levels. Improving supply reflect inflation XX even normalized has quarter, product Our and the in be from updated the continue benefited current robust margins chain as second basis the to have over effect, first

XX% product to above remain levels. level, expect are at and margins gross we the pre-pandemic gross adjusted often project geographic mix both margins While well activity, average sensitive our to and

metric generation flow of earlier, leadership will expect for through inventory As for are the declines generated Cash cycle. levels an the team, the million cash operating to in in $XX quarter. due half cash of we generating remainder important the flow the focused business and year. I cash accelerate mentioned in we this on this And flow year, we generation back remains

million of of than the realized quarter. with primarily details anticipated, margins the $XX will X.X%, later. EBITDA lower due lower Kelly cover We revenue to for the

However, we enter as strongest year. typically we improve on EBITDA margins our next to higher of our quarter expect is into revenue what quarter the

adjusting Our capital, ROIC, XX-months was XX.X% or return on invested LIFO the trailing basis. on after impact of for a

and value increase expect in to this creation. for key shareholder metric see it We continue we driver to future a as years,

now performance. Turning sector to our

XX% pipeline fundamentals. our This infrastructure Our as improvement PTI of continues production to second geographic facilities expanded all three benefit business and across a the segments. over revenue business improving XXXX from experienced customers quarter their

PTI relationships oil business are to price we particular, of those thrive business Permian our than to as with operators the whose larger less sensitive players. moves strong continues In budgets smaller have solidified capital

the general industry. side, hampered business PTI by our customers gas that oil On is drilling flip climate and a regulatory in California has had permits the difficulties not favorable have to and our securing been that

we for quarter as customers' budgets the PTI to modest, growth second prices healthy year our sequential the this remaining in oil expect and supportive. in of remaining the second see half PTI was While strengthen CapEx we sector

Our improvement can the revenue DIET decline activity. quarters a in compared quarter, as to in larger this in we and last sector XX% lumpy by due projects experienced first experienced projects by similar timing the a same be The the quarter second year sequential turnaround evidenced followed sector the to quarter. X% the of decline in between

significantly low for DIET the expect and for will our year the watermark for quarter improve second this to We that here. revenue business be from DIET

LNG in over season. projects quarter, biofuels as and are are quarter Our drive increased XX% fall modeling fourth a down, resumes by winter several of higher revenue third second sequentially turnaround the strong seasonally but activity projects are winding and up the will we in we project into DIET backlog the U.S. quarters. and quarter, the several ramping followed Many next growth double-digit head and strong activity the

projects the well second X% other as of quarter as and meter and reliability over system business Our customers Gas growth environmental pipeline the sales quarter versus X% first implemented had Utilities growth XXXX activities. as integrity and upgrade

the we reliable move couple year product next reduce year, to into working are second we customers of times. levels quarters. large and chain moderate and last now As Several their have Gas we balances a much to of given associated the the more the in our inventory stock over Utilities expect over half supply lead that built revenue reduction an

We need rates advanced products by grew high of to revenue our that part keep in Gas growth purchases XXXX, in phenomenal in and Utilities XX% were customer critical short in mind in fueled that supply. were XXXX that and demand XX%

originally Gas rebalancing, much with the systems. second their year, customers revenue these half too inventory Due we in in the anticipated. of Utilities to levels be first the of expect product about lower some have year half Now the this to inventory of than even

to quarter, growth two into expanded averaging gas customers. anticipated annual product indicate two be agreements range X% key new X% this multiyear want I over utility growth utilities, the budgets other with that does clear to negatively the and business. the with intact we not CapEx longer-term customers impact remain fundamentals In of their However, we in entered that with our Discussions next years. contractual this second the few our offerings

our Despite maintain its gain to XXXX trajectory. share return in more will growth this long-term market Gas to typical believe and We strong growth Utilities road, sector. we and both bump this business share levels in the continue wallet in

customer half comments shown in a in are Singapore including activity, with both DIET performance for Kingdom, leading countries XXXX United which first few make the sectors. want XX% uptick of year, strong Several revenue about the this the Netherlands, impressive half Australia. compared our the including double-digit XXXX, improvement I and International the of to has segment, PTI the growth and to first

International growth to into energy date XXXX Europe. leading a this XXXX. half backlog by of positioning segment of has the the renewable International in is start for wind energy This more primarily going business this strong and and our Global's backlog for this has power subsector. levels, double-digit with pre-pandemic in returned revenue projects, MRC led majority way our than and to been year, transition revenue activity fuels in well transition also

our won plant for supply valve green customer. with hydrogen first order Europe a In we a fact, long-standing recently in

our Kelly. over I want summary XXXX to outlook a turning comments to on it business provide few before

upper the year year, are Our our half some growth of the revenue the softening timing seeing mentioned the around full in expectations the calling over earlier. single-digit we sector, of Utility as XXXX XXXX I for now primarily are back customer for Gas spending in as

double-digit expect growth the in our to continue single-digit We our year. high sector sector and DIET growth full in for PTI

year, cash adjusted strong generate did operations remaining two to expect from than especially higher annual and to in in XXXX. deliver we this quarters, flow EBITDA We the

our many the company than our previous expectations, growth guidance ahead. remain opportunities new outlook lower this multiyear bullish our and for Although is on we

call the over turn with I'll Kelly. And now that, to

Kelly Youngblood

Thanks, Rob, and morning, good everyone.

of focused XXXX today the comments sequential quarter results be stated. comparing quarter to My first the XXXX, of on will primarily unless second otherwise

second a for but decrease, were a increase. sales year-over-year company quarter the million, Total X% $XXX X% sequential

a second From sales Utilities to projects. for replacement the primarily increase period year, typical spending the seasonal quarter were by the million $XXX a construction million Gas driven activity. related the for integrity grew sector perspective, increase due modernization quarter, in Compared ramp-up last X%, Gas Utilities sector or same X% CapEx $XX upgrade to increased to and the

to next Utilities by for couple second our revenue quarters, we we half Gas then Rob, the levels return mentioned as the have we more similar moderate as experienced growth year, into of move As expect but of the to historically.

DIET decrease million, activity. projects $XX the XX% of timing million and was quarter or a second The of sector, to $XXX revenue turnaround due

to decline seen sector had contributed reminder, a this very As sequential strong quarter, this the first which quarter. a

which double-digit growth. sector a third quarter, can amount activity in a of project Notably, activity the with of For create quarters. significant a robust strong substantial has this very we expect between rebound variability level

revenue compared an the $X for an and sequentially X% experienced company quarter was quarter. same period XX% The the International we PTI last increase grown in has segment. our for and million this projects increase for to our XX% PTI as processing of second $XXX year, backlog the And million, or sector gathering

revenue million, Gas $XXX or X% to sectors, second or in $XX quarter up decline $XX and geographic million previous Utilities $X due partially perspective, our offset from segment which $XX PTI a U.S. a was From DIET in down the and was sector, the million were respectively. million million the by which quarter, growth XX%,

quarter, $X to due sequentially the $XX million project sector. PTI down Canada second million was the non-recurring XX% or orders in in revenue

up sector. the X%, driven beginning International for a increase backlog segment, We optimistic sector. the very in which in the revenue or the since our year, million million PTI by led the seen outlook remain PTI about the second XX% was $XXX of has quarter by $X International

margins. basis first XX.X%, or over quarter. to million gross was $XXX XX turning quarter the the a second improvement Adjusted Now profit for point

along segment year, of inflation a most other this from Although line and a stabilization increasing have due contract we with margins in seen gross successful mix, have business that margins. improved revenue we product our contribution margin International higher deflation our accretive pipe been overall is to company product lines, across terms to higher

Reported the business growth, SG&A sales XX.X% the or to along with for the million associated hiring benefit $XXX or to relates costs. driver The XX.X% second quarter. million costs, additional increase primary as resources of was of including higher $XXX quarter support compared employee-related for first to

The also adjusted the items. of We normalizing half quarter include excluding will a second million. XX% around expense, as the fees. SG&A of unusual for non-recurring IT-related the quarter any second percent And believe year, for was results SG&A average this revenue $XXX professional for

million primarily EBITDA a for first the a quarter of or quarter. revenue was lower basis $XX XX this of from X.X% the result quarter, the decline second point sales,

foreign of rates. of first quarter. in Tax The as rate tax an effective expense expense $XX quarter to rate with in was the due state million XX% tax $XX statutory and income non-deductible compared differing expenses difference is rate the to the in the taxes, million effective second and income

$X.XX normalizing on our For quarter, $XX average to to other income we basis, common expense diluted had stockholders net per common the per attributable million diluted items LIFO for was cost or net an share million share. or stockholders $X.XX of $XX and adjusted second and attributable income

the second half the operations inventory for in levels strong inventory in as the peaked the from generation the resulting we In the remainder cash $XX a cash And we to levels during year, year. second quarter, of from levels decline of flow quarter. second generated in expect million quarter

cash from Our net million full approximately revised generate flow $XX is target the operations for to year. of

liquidity Turning to and structure. capital

not available ABL the to including and $XXX plenty to half do liquidity our the on ABL is we that address cash, our to current capacity liquidity event under of refinance generation needed, continue Our to in the our balance use, to payment XXXX, in million XXXX, anticipated term and of expect of the Due matures availability have And in million. the expect $XXX maturity. cash that if of our September in we grow. loan total to before B we second XXXX of

to I loan the term will also one the address year. the our quarter on of next presentation balance end at the loan within want term technically of mature sheet when

term with the impact to we term existing long-term Given our as no the XXXX continue to using continue ability as sheet will outstanding. to the repay loan remains classify the balance on term will as long current designation assets, loan This debt. ABL loan the throughout

range. upper we percentage on finish single-digit current over to our our off margins the increase EBITDA mid-X% XXXX in XXXX the business, outlook with And to outlook, XXXX, given expect revenue in

have to the upper single-digit DIET Gas revenue now growth to as year. Utilities same perspective, From percentage, finally, be we we that range, the to and double-digit at a an sector low highest followed percentage sector expect by the level in PTI the rate approximately with revenue expect continue last

and view, mid-single-digit a translates From percentage and Canada. segment decline to the increase U.S. increase a for mid-teens upper-single-digit International percentage a percentage for for this

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

capital our line -- to expected expect million to million the there our previous $XX range. and expenditures, no to guidance be to change in with in be averages historical $XX Regarding is

sequentially two in in we digits, the quarters, upper seasonal cadence DIET And business in quarter the decline by increase driven look the the quarter. our third single as to of finally, before the a expect fourth we at next revenue

that, turn I And with it closing Rob would back like for to to comments.

Rob Saltiel

Thanks, Kelly.

opening continues the goals progress toward performance to demonstrate key and revenue generation. are These want I flow summarize Our improved the growth, for year our highlights Q&A. of half of for some before first cash the to profitability of

projected in growth Revenue is XXXX upper-single-digit up range. over XXXX be to in the

for continues growth. with outperform multiple opportunities segment to International Our

We expect in range. while in year, adjusted range be adjusted should XX% the gross the for mid-X% margins EBITDA margins to remain the

million is traditional our of $XX our with quarters. revenue targeting two-thirds the field. flow reduce two diversification over are as inventories And paying cash in the generated We off finally, we operating approximately in oil XXXX next strategy outside

the Gas DIET Our term. Utilities they offer largely longer prices each and independent prospects of and thrive commodity sectors growth over attractive

take now with Operator? that, And questions. will we your

Operator

Moll Stephens. question [Operator with comes Your Instructions] first from Tommy ahead. Please go

Tommy Moll

start to revenue outlook. wanted I the Rob, revised on

that there's You similar both mentioned previous. then but to at customer this this can And business, would for Gas on anything be the dynamic, around the you destocking year grow rates question us but Utilities lower DIET, PTI give changed visibility than and just and helpful. when guided

helpful, changed be quarter So, versus just frame could if too. last that what's you would there,

Rob Saltiel

Sure. Thanks, Tommy.

that the that the we the a third for of I translates end quarter, quarter And think year we when really what of space. had happens end strong to a everyone fourth last second of what as really from first really quarter quarter, season the knows, across and typically strong much see, the go space. is pretty into board. we and we utility we first of this And construction peak really the early gas certainly gas the kind build is that quarter a backlog utility which in saw

be wasn't of the for had forecasted was year. Utilities year those at second little basically backlog out fact, fact, going at of This the the quarter, we And build. it year to bit. beginning just strong clear spend was looked the We us first declined of we to numbers, was expecting pretty half the backlog that this And in flat, came in what to a the different. as reasonably a Gas

products were our if had of their we've inventory utilities our in we back systems, supply and were fabricators of of obviously, orderly for all, they out the were share the customers with work coming because not us of coverage with that need we market being no that the in here spending that operation And most, the our our the levels either the higher U.S., team, as basically some customers. what were or now lead we they on shorter, pandemic own pulling with of there that they major dialogue given on their maintain inventory telling the held. steady our Our was a time of had given versus inventory that chains some

customers the we'll for that a temporal this So are to we fundamentals it's inventory. of that business. of this thing through two-quarter work a see of impact remainder the going be really off working as kind the -- We to doesn't But what think the it thing major year. one-

have multiyear to continue the over CapEx utilities strong Our budgets cycle.

had their utilities, increase And recently. in products we share, picking market CapEx raised of fact, some with up new couple comments, In prepared the existing picking continue mentioned major a our I we've up new customers to as utilities.

a So I in Gas and not manifested had we just issue It's we growth really, itself XXXX. forecast this XX%-plus what this had it's Utilities really stark come But know in contrast into XXXX. quarter. the XXXX to past clearly

other Commenting are of both look, about these on question on businesses PTI really solid really, footing. DIET, and your

price suffer Our regulatory being big to growth IOCs produce in are the there. multiyear that with have significantly They independents. Basin drill kind PTI, some from players PTI and for Permian as in that's coming ones continue our market the significantly double-digit our That's faced Permian the in of a the we're Basin. business programs, seeing that on even out of we've vagaries as a challenges projecting those keep driver. our share really and we're business mind, increased and gas business positioned major oil through whole our California has all These of we're the investment benefited And are there, focus some large oil, and the customers. the and from in and the the well

some business in the So Sea, benefiting investments also the position. PTI a really good is North in particular. overseas It's from in

and Transition, for and be right? the we we're or seeing high project year, really a then, space, first in had growth in a single-digit that quarter. lot Industrial aided that's good And Energy So, lumpy, activity. Downstream, turnaround DIET, this business on that mind can Kelly a said, as by Keep

Second we're And in quarter fuel and but the on turnaround quarter season, of the third bullish refineries between were really the quarter that's for for was fourth and end gasoline pickup light we're jet maximum production as during the and and quarter season. travel why the a DIET first running orders seeing fourth now strong especially year.

So Kelly, hopefully, a that to add want do gives you sense. to you that?

Kelly Youngblood

Yes, Tommy, the in more this little in or color. very about going said add I third was the talked of growth We just script, for we quarter. to some DIET a robust strong

to to solid say When solid QX said, Rob robust, of maybe color in very give or quarter. but more a growth, that. kind that's a you going that get like growth Just type be as around should that as still not we And third maybe quarter. a the well, think fourth XX% we're here we more little very

the or and that And or either timing XX% double-digit that full lumpiness complete double-digit year, pushing to the the I tell single-digit the of But the Rob just DIET, we be depends range growth coming guidance to did the guidance, year, growth. single, we we saying on close think it's on even a number low high when double-digit to And some as coming for as call, going into of single sorry, double into really we're we I'm quarter, of me low that X% very our Last on let said it said, high we're high though up year. But initial year. really level you, said now -- work. growth. giving the kind

Tommy Moll

what's term to you, with could Is but who But the potentially that mentioned follow question. into What plus Certainly, a common? that art forward, intended given I address loan achieve? hope here? something the That's the a ends Thank I with both. expect helpful. refinance. the it to scenario up the where there on without converted to or preferred preferred retire capacity some do shareholder? up cash you path capital generation to all possible structure being Is need is what we the believe term else? of the the you the pun preferred wanted Kelly, your ABL outcome loan, here, that appreciate no of was flow there the you

Rob Saltiel

great Well, Tommy. it's question, a

what loan. a be amicable refinance balance I in hope sheet the our good potential for we would an with continue describe to would think the Look, business term achieve what I we used and settlement ABL disagreement we'll preferred our really our be the shareholder. and we as to feel don't of that describe about event to

million. A Kelly we million over current $XXX As number now, of easily said, liquidity. have could year that from $XXX be

mind term that the loan And And is that of $XXX September keep in amount million. under comes on in the XXXX. due

million you're typically cushion really ABL we that's call about So making million potential be the would a to But Again, right provide. We for. the what year from ABLs a shareholders. our on talking are sure focused got $XXX take we've point. $XXX for not that here to make now that

of years, today. more as a flexibility -- business position certainly business lot and And as shareholders go is lot getting to spent don't getting we're think want a dilution. us the And over We've see it our our we over through First secondly, our time this where financial shareholders skis. past gives few leverage of gives you that lot cycle don't that a not company. over-lever our a of us comfort want all, us

trust that would team that long-term going anything we to do way to next impairs this in again, just hope resolve this I the And an and this company's over quarters. few shareholder stay isn't think the management have a base to tuned in will prospects. So, amicable

Operator

go ahead. Jones Stifel. Nathan question, with Next Please

Nathan Jones

own rather $XX move typically from prepared to start the than missed you're cash lower it million, $XXX maybe off that scenarios down guidance where down I million-plus see inventories, your you the on down. up would to flow revenue wanted typically Just in and bringing comments operations from in

CFO just for shortfall on on year? there the any the So, color

Rob Saltiel

Yes. that I'll is the top-line in. and at adjusted Kelly comments part offer XX% biggest gross just here the of the in jump But let decline margin.

our forecasted, going inventory the to are have part reduction would other about little projections met. slower in to with would third basis. through the we utility just $XX then, growth space million of than we're is, that it the So, And flow lose that on given gas about anticipated, for that's be a difference. probably had inventory going not going some of to be of than we more the We're and running a

Kelly Youngblood

Nathan, add. not pulling hard I blip the if this in speed in of Rob said, decline just kind a we a of certainly mean bump. to longer-term business, more our But more lot on would generating is kind this back a and was temporary mind, a cash. be as inventory

that. reason do no to So

Nathan Jones

have going businesses, ordering wanted Gas of people and lot right? mean, outlook? going and extremely to changed then uncommon lot the be XXXX, not a the to And rapidly distributors up given Utility outlook confidence back by follow plus business, right unreliable. theme, year, I Got just that of the an the the is I that your wanted rightsized normal to then, chains just because Gas a inventory, the degree level return can has to other were This the in to degree Gas on there's of times any confidence business. forward? across the how the gain grow I inventories your Utility kind of of lead are in business, system. it. that stocking seen X% destocking a we've of it on and up base X% normal, And customers to getting if Utility the any more and from share gone destocking manufacturers out now in what parts supply Gas of end for And Utility we revenue of to get

Rob Saltiel

that think in chains, this ago when understand even obviously, by being service, all to the a their in year over conservative these that they they've the that I around natural Utilities need space that that so we there equipment had and got Gas a are think got sure And that make with their I for sense Well, other concerns supply Yes. two public a And conservative to projects. tendency we seeing they our they've just it serve was sectors. order. than more or we're nature

In Gas the inventory issues the the we fact, or Utility sector really same DIET anticipate seeing that space. in that PTI really we're don't has

say, are forward, about off. quarters level is this But is a believe what's from what cutting is, our the were as intact I destocking gas in we're thing our the this today. of think is to and budgets hearing going is of going a quarters, will utilities we're be itself that's "Hey, two that is pause. trend, confidence that budgets really what money If a the themselves your not we that question couple work much environment," supportive. told But that I'd or spend saying, being and temporal more This a basically, long-term not one customers taking Again, fact concerned. what we we're the

share that the range CapEx of think market last in the over we've with and growth really product anticipated, XX% being That's decade, our gains to reason get back X% reach. the been we this those and what averaging in to forward, levels there's XXXX. to typically coupled kind won't forward believe in no going that's we then that business going with And grows

Nathan Jones

and that we use which level inventory installations base little doing in should And you're a the bit some seeing 'XX, rate higher of than run the work that. destocking would mean they're 'XX is imply by utilities, I level? as

in Or is the base it where 'XX? is bit mean, really I 'XX XX% So little the right is right to base that grow X% a higher than to off?

Rob Saltiel

been. rate. off I right? an coming any compound do for to look mean, Well, years, I'm not XX% the that if grew precise -- almost than the again, this our really utility clearly two think the gas years, monster is space, you anomalous XX% sure XX% be it's We we business year two we've at more what over can last

growth. single-digit cadence at take we're we'll was was had it's and growth. that say Obviously, So is going a thing flattish and get to an that back on the it more we're look But normal XXXX natural XXXX, it think a to I that going forecasted pause. We important forecasting anomaly. in

Operator

Next question, go with Capital Ken Newman Please ahead. Markets. KeyBanc

Ken Newman

the guidance So back gross I know at year, maintained revenue with growth the the shift margin Rob, the current levels. on this you

you gross Just that? us can price biggest the through to in What's whether cost half, the walk contributor or back that's mix? curious, margins

Rob Saltiel

a it's is. both, it bit as Well, of always

implementing it, we've has over, lag inflation up always that call with we price there's we've get key our our or the then when between the our done of those course, updates seen of reflect cost excellent go job customers. before contracts into an said And a last that and two. team prices I think year to the

So, our of has great I done think that. job a team

And certainly that's of margins. supportive adjusted gross healthy so

the think product. about I mix as we But should talk both well, geographic and

instrumentation business. which expecting valve, when about we be the and our And to all, growth business our geographically, and second tends the significant accretive of in growth higher expecting two in really that our that. the segments. we're trajectory is based, First at We're other our half International valve we to our heavily on being of than talked growth margins. a business And look year, actuation, double-digit VAMI is measurement business, International

margins competitive. compressed. we're And in business actually line The at similar almost of our pipe business has declines The been pipe looking nature. gotten have line very a

of more products. for are industrial folks business that its vigorously. that seen and is pipe you've into OCTG now lot As A competing for applications, way demand finding less

that's supportive pipe in So And lower high of sales be to to sales that's we're we half. half in tends that, being going to the going that -- we second line primarily had -- margins because than the adjusted dilutive. line be gross obviously first think see less pipe

in VAMI, are in decrease those in increase increase and better the margins the XX% So then or level. line gross price pipe, at adjusted supportive International updates, of all

Ken Newman

back think Is is the the updated improve Or of continues pressure as the you there guide? that price level chain an a increased half? that that's adequately risk there in to into supply reflected do

Rob Saltiel

reflected the guidance. think We're not We it's that. expecting in

Ken Newman

here. whether utility I'm what the what a customer sector? But the similar within business, you talk of outside a confidence quarters? level What inventories a curious Okay. And bit inventories customer to not view going we've they then that fourth can what bit if of gas sector your obviously, third just about talked customer that or about traditional little markets decent inventories in the DIET and like? response And going and look oil the into your it's be and gas there's

Rob Saltiel

PTI Well, backlog. space, strongly, activity is the pretty look and so our the when at is we increasing

of So, the of lot that energy covers of of really see there any And chemicals It's DIET and to transition. course, is refining, expecting in LNG we're well. a there. things. as different course, not space the

work see don't inventory to for So, we got of call we in any really extraordinary that we've an those off. of build opportunities what areas would

want folks about to want And is key business. And to inventory. just continue way the these working rather their projects. service over their it's certainly really their conservative. and I remind and little in that to public And when too frankly, ordered, for inventory skis to you're through were now too over probably have that utility much space for than inventory got very have supplies they're they a gas logical, concerned a ability fully you their products bit they

say, this. impacted it's speed our I are as XXXX. think as a by way quarters. to our we And over in any to to we're a bump don't the say, But of couple through road our that, good way other We going going the of next on work businesses be

Kelly Youngblood

our data to had year-to-date, which the really The that, up XX%. backlog is talking about. X% space, And we decline is and at some Utilities we're on PTI Ken, is look just Gas behind you up DIET put if only

two not seeing in of we're sectors. the other any So, this

Rob Saltiel

in in competitive And really DIET. and more doing we're PTI it, are businesses frankly, markets, about And you if much Yes. those well. think extremely

the of practical spending We for very, to round solid customers our us from But obviously, have and in a corner as continue business And normal Gas very very benefits this is franchise see will return a XXXX. we as a see pause foundations. coming. we this cadence we that solid matter, the to didn't into is more Utilities. a on And

Ken Newman

more for just did you year? missed full I Probably color the one LIFO give year squeeze the on expect Right. for Kelly, this any in. what this, you expense

Kelly Youngblood

Yes.

it for kind financial numbers. think were stabilizing, just But not the the for statements. at modeling inflation impact be year, small going it's this full a of the to Ken, GAAP number. With a the I We're full material and very very to QX QX year, overall zero minimal point.

Operator

Becker with question, Doug Next Capital One. go Please ahead.

Doug Becker

projecting sequential you on sequential July the robust more -- You're color look? some a how provide growth third in the things Could quarter. little

Rob Saltiel

be typically of Tuesday. It quarter. of starting the with representative fewer the days tends not to holiday fourth third July is the billing and on that season July Yes.

to look, us, and So would gets say stronger the August seeing as would July, expect, for September than here. and coming we're into really that you I August down quarter

make predictions patterns to of this with seasonal kind our is and that. don't normal I We're point, So, consistent Doug. want guidance at seeing any

Doug Becker

encouraging. to reasonable decline mild what That's year X% Is the full XX%. you're say, lead than, the assumption say, to right towards that imply the seasonal now seeing? decline And that then revenue seems a Okay. on side, closer guidance XQ based

Kelly Youngblood

of we've It couple seen is be mild. years think Doug. the last pretty Yes, I

And we've modeling our now. that so of into kind right built

it And X% that higher exactly level. to right, level so, be that closer you're than will end

Operator

Thank you. turn to for questions. further no remarks. closing the would like Monica over There to I are floor

Monica Broughton

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

Operator

teleconference. This concludes the

you may time, at thank your for this disconnect participation. lines You your and

MRC Global (MRC) 8 Aug 232023 Q2 Earnings call transcript