Houston-based MRC Global, which brands itself as the largest global distributor of PVF products and services, reported its 2019 fourth quarter and full-year results on Thursday, showing a considerable drop off in year-over-year (YoY) and sequential sales.
The company — No. 6 on Industrial Distribution’s 2019 Big 50 List — reported Q4 sales of $766 million, down 24 percent YoY and down 19 percent from Q3. Sales declined across all business segments and end markets. MRC Global took a Q4 net loss of $24 million, compared to a $10 million profit a year earlier, while an operating loss of $10 million compared with a $23 million operating profit a year earlier.
"Customer spending levels in the fourth quarter were significantly lower than expected as budget exhaustion and capital discipline drove customer behavior,” MRC chief executive Andrew Lane said in the company’s Q4 earnings report.
Also in the report, MRC revealed that as part of reducing its selling, general & administrative expenses by $25 million in 2019, the company streamlined operations in alignment with lower activity levels, with included closing locations and other cost reduction efforts that resulted in reducing total headcount by 360, or 10 percent, including 130 employees during Q4.
By MRC geographical segment in Q4:
- US sales of $608 million were down 22 percent YoY, with Midstream down 21 percent, Upstream down 29 percent and downstream down 17 percent
- Canadian sales of $43 million were down 46 percent YoY. MRC noted the key driver being the upstream sector, which “continues to be negatively impacted by low Canadian oil prices and government-imposed production limits.
- International sales of $115 million were down 24 percent YoY. MRC noted a that key drivers were the conclusion of a major upstream project in Kazakhstan and the impact of weaker foreign currencies.
By MRC business sector in Q4:
- Upstream sales of $224 million were down 34 percent YoY
- Midstream sales of $298 million were down 20 percent YoY
- Downstream sales of $244 million were down 18 percent YoY
For the full year, MRC’s total 2019 sales of $3.66 billion were down 12.2 percent from 2018. Operating profit of $103 million was down from $127 million in 2018, while total 2019 profit of $39 million was down from 2018’s $74 million.
MRC said it expects 2020 activity levels to be lower than 2019 due to continued weakness in market conditions. It is forecasting 2020 total sales of between $3.2 and $3.7 billion.