Earnings Roundup: MRC, Beacon, DSG, Wajax & More - Modern Distribution Management

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Earnings Roundup: MRC, Beacon, DSG, Wajax & More

See the key financial figures reported by five major industrial distributors.
In the latest earnings reporting p

We’re in the midst of another quarterly earnings reporting period for publicly-traded industrial distributors and manufacturers. Read below to learn about the most recent sales and revenue numbers for companies MDM typically covers, including: Houston, Texas-based industrial PVF products distributor MRC Global; Herndon, Virginia-based distributor Beacon Building Products; Chicago-based industrial distributor Distribution Solutions Group; Toronto, Ontario-based industrial distributor Wajax Corp; and Tampa, Florida-based door manufacturer and distributor Masonite International.

MRC Global First-Quarter Sales Rise 19%

On May 8, MRC Global announced its 2023 first-quarter financials, showing slight sequential sales growth over 4Q 2022 but a healthy year-over-year increase compared with last year’s first quarter.

MRC Global reported 1Q 2023 sales of $885 million, a 2% increase from 4Q 2022 and a 19% improvement compared to 1Q 2022. Adjusted gross profit for 1Q 2023, as a percentage of sales, was 21.2%, an increase of 70 basis points compared to 1Q 2023.

Net income attributable to common stockholders in 1Q 2023 was $28 million, or $0.33 per diluted share, as compared to 1Q 2022 net income of $10 million, or $0.12 per diluted share. The company’s 1Q 2023 gross profit was $179 million, or 20.2% of sales, as compared to the 1Q 2022 gross profit of $136 million, or 18.3% of sales.

“I am very pleased with our strong performance in the first quarter,” said Rob Saltiel, MRC Global’s President and CEO. “The sequential revenue improvement of 2% was higher than anticipated due to robust MRO and project activity, especially with our refining, chemicals, and LNG customers. We also delivered outstanding profitability with adjusted gross margins of 21.2% and adjusted EBITDA margins of 7.8%. Our backlog increased 2% sequentially and has grown 14% compared to March of last year. We are very optimistic about the remainder of 2023 bolstered by the strong start to the year and our growing backlog. Our first quarter results make us increasingly confident in our ability to deliver double-digit revenue growth, EBITDA margins exceeding 8%, and operating cash flow of at least $120 million.”

Beacon 1Q Sales Growth Slows to 2.7%

Beacon on May 4 reported its 1Q 2023 earnings report, which included positive but slowing sales growth compared with the two previous quarters.

Net sales increased 2.7% (1.1% on a per-day basis) compared to the prior year to $1.73 billion, a “company record for net sales for the first quarter,” Beacon said. First-quarter sales increased compared to the prior year period driven by higher prices and the contributions of acquired and newly opened branches over the last four quarters.

The 2.7% increase is down from 12.2% in 4Q22 and 28.8% in 3Q22. Residential roofing product sales increased 0.4%, nonresidential roofing product sales decreased 7.8%, and complementary product sales increased 22.7% compared to the prior year.

“Record first quarter net sales demonstrated the strength of our business model and the multiple levers of growth we laid out at our Investor Day last year,” said Julian Francis, Beacon’s President & CEO. “Our growth and customer experience initiatives helped drive the 13th straight quarter of year-over-year sales improvement. We made strategic investments, both organic and inorganic, expanding our branch footprint and customer reach. Our strong cash generation in the first quarter provided the liquidity for us to repurchase additional shares under our recently expanded share buyback authorization announced in February. Our balanced allocation of capital demonstrates our commitment to creating shareholder value and confidence in our Ambition 2025 strategic plan. Looking forward, the fundamentals of residential and commercial re-roofing demand remain supportive, while headwinds related to new single-family residential construction and commercial contractor destocking are expected to persist near-term. More importantly, we remain focused on driving the initiatives that are within our control to deliver value for our shareholders and customers. I am pleased with the team’s achievements in the first quarter of the year and look forward to helping our customers build more as we enter a key part of the construction season.”

DSG’s 1Q Organic Sales Up 13.7%

On May 4, Distribution Solutions Group (DSG) reported 1Q 2023 earnings, which showed a significant revenue increase compared to 1Q 2022.

In 1Q 2023, DSG reported adjusted revenue of $348.3 million, an increase of 28.1% year-over-year. That revenue figure included $117.9 million that came from Lawson Products before its April 2022 merger with fellow distributors TestEquity and GexPro Services, after which the combined business rebranded as DSG. Without adjusting for the merger, DSG’s revenue increased 126% year-over-year. DSG reported 42.2% adjusted revenue growth in 4Q 2022.

The company’s 1Q revenue growth was driven by 13.7% organic growth, according to a news release. DSG’s adjusted EBITDA in 1Q was $39.4 million, or 11.3% of adjusted revenue, up 73.6% year-over-year.

“I am excited to report the continued strong financial performance of DSG,” DSG CEO and Chairman Bryan King said in the release. “We continue to watch the demand environment, and although certain end markets have moderated somewhat, we anticipate continued year-over-year revenue and profitability expansion as 2023 progresses with a focus on organic growth, strategic acquisitions and improved operational efficiencies.”

At the end of 1Q, DSG announced it had agreed to acquire Hisco, a Houston-based distributor of electrical and industrial supplies. DSG ranked as the No. 10 Fastener Distributor and No. 16 MRO Industrial Distributor on MDM’s Top Distributors list in 2022.

Wajax Industrial Parts Revenue Up 18.6%

On May 1, Wajax reported that 1Q 2023 revenue for its Industrial Parts segment had increased 18.6% versus the same period last year to $114.6 million (USD).

Wajax said 1Q 2023 total company revenue was $516.1 million, up 17.4% over 1Q 2022.

First-quarter adjusted net earnings were $17.8 million, up 13.2% over the same period last year.

“Our improved top-line performance this quarter was driven by strong customer demand across all regions, including continued positive momentum in central Canada”, said Iggy Domagalski, President and Chief Executive Officer. “Solid year-over-year growth in equipment sales was complemented by even stronger year-over-year growth in industrial parts and engineered repair services revenue, and we saw adjusted diluted earnings per share grow 13.1% to $0.80. Our robust backlog, largely in line with the same period last year and up 13.2% sequentially from the fourth quarter, as well as solid fundamentals across many of our key markets, supports management’s confidence in our prospects as we advance further into 2023.”

Masonite’s 1Q Sales Stay Flat

Masonite on May 8 reported 1Q 2023 net sales of approximately $726 million, the same figure it reported for the first quarter of 2022.

The flat year-over-year sales resulted from a 10% increase in average unit price and an 8% increase from the Endura Products acquisition, partially offset by a 16% decrease in volume and a combined 2% decrease from unfavorable foreign exchange and lower component sales, Masonite said.

The company announced Jan. 3 its acquisition of Endura, a manufacturer and distributor of door components based in Colfax, North Carolina. The deal is worth approximately $375 million.

“Total company gross profit was $170 million in the first quarter of 2023, a decrease of 7%,” Masonite said. “Gross profit margin decreased 190 basis points to 23.5%, as higher AUP was more than offset by the impacts of inflation, lower volumes, the dilutive effect of the Endura acquisition and targeted investments in strategic initiatives.”

Net income attributable to Masonite was $38 million in 1Q 2023, a 43% decrease from 1Q 2022.

“The early benefits from implementation of our 2023 Playbook initiatives allowed us to deliver financial results in Q1 that were ahead of expectations although down year over year given the exceptionally strong first quarter we had in 2022,” said Howard Heckes, President and CEO. “While end-market demand remains soft, trends are generally in line with our full-year planning assumptions. The continued execution of our cost actions, combined with strategic growth investments position us for accelerated margin growth as volumes return. Based on our proactive approach and successful execution by our teams, we remain confident in our ability to deliver on our full year 2023 outlook.”

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