MRC Global Sales Down 9.5% in Third Quarter - Modern Distribution Management

MRC Global Sales Down 9.5% in Third Quarter

MRC Global's sales decline due in part to planned reduction in oil country tubular goods business.

Houston-based MRC Global Inc. (NYSE: MRC), distributor of pipe, valves and fittings and related products and services to the energy and industrial sectors, reported sales for the third quarter 2013 were down 9.5 percent to $1.31 billion.

The decline was due in part to a planned reduction in the company’s lower margin oil country tubular goods business, which represented 8 percent of sales in the third quarter compared with 12.8 percent of sales in the third quarter 2012.

Excluding OCTG, sales were lower across all sectors and segments. The decline in sales was partially offset by the acquisitions of Production Specialty Services Inc. and Flow Control Products, which together contributed $33 million of revenue in the third quarter of 2013.

Profit for the quarter was $38.8 million.

U.S. sales in the third quarter of 2013 were $1.02 billion and reflected a planned decrease in OCTG revenues of $83.4 million from the third quarter of 2012 as well as lower sales across other product lines due to lower activity levels and lower spending of some key customers. These declines were partially offset by the acquisitions of PSS and Flow Control.

Canadian sales in the third quarter of 2013 were $162.1 million, down 12.7 percent from the same quarter in 2012 primarily due to a decline in project sales in the oil sands region of northern Alberta as well as a weaker Canadian dollar relative to the U.S. dollar.

International sales in the third quarter of 2013 were $136.6 million and decreased 11.1 percent from the same period in 2012 due to weaker demand, particularly in parts of Australia that have experienced reduced customer spending in the mining and oil and gas sectors. In addition, nearly half of the decline can be attributed to a weaker Australian dollar relative to the U.S. dollar.

Upstream sales in the third quarter of 2013 declined 10 percent from the third quarter of 2012 to $588.1 million, or 45 percent of sales. The change in upstream sales is primarily attributable to the planned reduction in OCTG revenue and weak sales in Canada, partially offset by the acquisitions of PSS and Flow Control.

Midstream sales in the third quarter of 2013 decreased 6.6 percent from the third quarter of 2012 to $377.3 million, or 29 percent of sales. Spending from the company's transmission customers declined but was partially offset by an increase in spending from the company's gas utility customers.

Downstream sales in the third quarter of 2013 decreased 11.5 percent from the third quarter of 2012 to $348.3 million, or 26 percent of sales due to weaker market conditions, primarily in the international segment.

In the first nine months of the year, sales were $3.9 billion, down from $4.3 billion in the same period a year ago. Profit was $128 million.

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