MRC Global Inc (NYSE:MRC) 1Q2015 sales came at $1.292 billion, 1% lower than 1Q2014 and 14.5% lower than 4Q2014. The decline in sales can be attributed to a strong U.S. dollar against the other foreign currencies. The net income for 1Q2015 came at $0.28 per diluted share, compared to 1Q2014 net income of $0.23 per diluted share.
The management view
Andrew R. Lane, the Chairman and CEO of MRC Global said that 1Q results were in line with the expectations. The future plans of the company remains unchanged as the focus will be on reducing debt, generating cash and leading gains in market share. The company recorded $116 million cash flow from operations in 1Q and minimized net debt by as much as $105 million.
Lane further added that MRC Global expects to record $350 million-$450 million in cash from operations in FY2015. The upstream activity was adversely affected but that cost reduction efforts implemented in 1Q2015 helped the company to report 6.7% improvement in adjusted EBITDA margins.
The performance
MRC Global posted gross profit of $219.9 million compared to 1Q2014 gross profit of $232.1 million. The decline can be attributed to the impact of margin pressure and product mix changes in certain product segments associated with the drop in oil prices. The gross profit for 1Q2014 and 1Q2015 reflected a charge of $1.3 million and benefit of $0.2 million, respectively, in cost of sales pertaining to the utilization of the LIFO procedure of inventory cost accounting.
MRC Global Inc (NYSE:MRC) posted SG&A expenses of $159.4 million in 1Q2015 compared to $171.4 million for the same period of 2014. It included $1.8 million of severance and associated charges arising from cost reduction initiatives as well as incremental expenses worth $2.9 million. No such severance charges were recorded in the first quarter of 2014. The adjusted EBITDA came at $86.7 million compared to $84.0 million in 1Q2014.
