MRC Global 2025 Q1 Earnings Misses Targets as Net Income Falls 215.8%

MRC Global (MRC) reported its fiscal 2025 Q1 earnings on May 06th, 2025. MRC Global's revenue performance was slightly above expectations, surpassing analyst estimates by reaching $712 million compared to the expected $694.47 million. However, the company's net income from continuing operations fell considerably, showing a 60% drop from the year prior, resulting in a net loss attributable to common stockholders. The guidance for second-quarter revenues was optimistic, expecting a high-single to low-double-digit percentage increase, driven by strong backlog growth and improved visibility on project deliveries.

Revenue

MRC Global's total revenue decreased by 8.4% to $712 million for Q1 2025, down from $777 million in the same quarter last year. The Midstream segment contributed $273 million, matching the Gas Utilities segment's $273 million. Meanwhile, the DIET segment generated $220 million, and the PTI segment added $219 million, culminating in the overall total of $712 million.

Earnings/Net Income

MRC Global experienced a significant downturn in its earnings, swinging from a profit to a loss with EPS at ($0.26) in 2025 Q1 compared to $0.15 in 2024 Q1, marking a negative change of 273.3%. The net loss reached $22 million, reflecting a deterioration from the $19 million net income in the previous year. The EPS performance indicates financial challenges for the company.

Price Action

Post-Earnings Price Action Review

The approach of purchasing MRC Global shares following a quarter-over-quarter revenue increase and holding them for 30 days yielded a 26.62% return over the past five years. This strategy significantly underperformed against the benchmark's return of 83.12%. With a low Sharpe ratio of 0.28, the strategy demonstrated poor risk-adjusted returns. Furthermore, it experienced a maximum drawdown of -31.59%, underscoring high risk and emphasizing the necessity of effective risk management. This highlights the importance of careful investment strategies, considering the volatility and risks associated with MRC Global's stock performance.

CEO Commentary

Rob Saltiel, MRC Global's President and CEO, expressed confidence in the company's first quarter results, highlighting strong performance across key metrics. He noted a significant 13% year-over-year increase in backlog levels as of April 30, 2025, driven by gains across all market sectors. Saltiel emphasized that this backlog growth, alongside improved visibility on near-term project deliveries, supports an optimistic outlook for second quarter revenues, which are expected to increase sequentially by a high-single to low-double digit percentage. He also mentioned the initiation of a share buyback program, taking advantage of favorable market conditions to enhance shareholder returns.

Guidance

MRC Global anticipates that second quarter revenues will increase sequentially by a high-single to low-double digit percentage, bolstered by robust backlog growth and rising intake levels. The company is focused on executing its share buyback program, capitalizing on current market volatility to purchase shares at attractive prices. Saltiel's comments reflect a positive outlook for ongoing business performance and strategic positioning in the market.

Additional News

MRC Global has announced its intention to initiate a $125 million share buyback program in the second quarter of 2025, reflecting confidence in the company's valuation amidst recent market volatility. This strategic move is aimed at returning cash to shareholders and capitalizing on favorable stock price levels. Additionally, the company completed the sale of its Canadian business on March 14, 2025, as part of its ongoing efforts to optimize its portfolio and focus on core operations. Furthermore, MRC Global has seen a notable shift in its institutional investor base, with several hedge funds adjusting their positions in the company's stock during the most recent quarter, indicating heightened interest and activity in its shares.