MRC Global's (NYSE:MRC) fourth-quarter results had a lot of moving parts that muddled the numbers a bit. While the company reported a profit, that was entirely due to the recently signed tax legislation in the U.S. since a seasonal slowdown would have otherwise kept it in the red. That said, the overall trend is that the company's financial results are improving thanks to the continued recovery of the oil and gas market.

MRC Global results: The raw numbers


Q4 2017

Q4 2016

Year-Over-Year Change


$903 million

$719 billion


Net income

$29 million

($24 million)


Earnings per share




Data source: MRC Global.

Neat stacks of pipes facing one another with snow on the ground in between

Image source: Getty Images.

What happened with MRC Global this quarter?

A seasonal slowdown impacted results:

  • While MRC Global's revenue leaped versus the fourth quarter of 2016, it was 6% less than that of last quarter. The improvement in oil market conditions fueled the year-over-year change while seasonality, especially in the midstream sector, held back the quarterly recovery.
  • Sales to midstream customers, however, did lead the year-over-year revenue improvement, rocketing 40% to $375 million, fueled by transmission and gathering customers as they built new pipelines to support rising production.
  • Upstream sales jumped 27% to $277 million, led by a $35 million increase in sales to U.S. customers.
  • Revenue from downstream refining and petrochemical customers rose 8% to $251 million, primarily due to higher sales in the U.S.
  • Despite the return to profitability, it wasn't a clean quarter by any means. The changes in the U.S. tax law boosted earnings by $50 million, or $0.53 per share, in the quarter. That more than offset $14 million, or $0.15 per share, in severance and restructuring charges and a $6 million, or $0.06 per share, writedown of inventory after the company reduced its presence in Iraq. If we adjust for these one-time items, it would have lost $0.02 per share during the quarter. For comparison's sake, after adjustments, it would have made a $0.02-per-share profit in the third quarter, which shows the impact of the seasonal headwinds.
  • Underlying profitability as measured by adjusted EBITDA also took a slight step back sequentially, falling from $56 million in the third quarter to $43 million in the fourth, though it was still much higher than the year-ago period when adjusted EBITDA was $17 million.
  • MRC Global repurchased $50 million of its stock during the quarter, quickly putting its $100 million authorization from October to good use.

What management had to say

CEO Andrew Lane commented on the quarter by saying:

Fourth quarter results came in where we anticipated, sales were down 6% sequentially due to seasonality primarily in the midstream business and up 26% over the same quarter a year ago as a result of market improvements and solid execution, which resulted in Adjusted EBITDA of $43 million in the fourth quarter.

As Lane notes, the company anticipated that sales would slip in the quarter, not due to any new industry headwinds but from seasonality since it's hard for midstream companies to lay new pipes when the ground is frozen.

Looking forward

MRC Global expects its financial results to keep recovering in 2018. Lane pointed out that the company "continued to defend and gain market share including signing multi-year framework agreements with three integrated oil companies" As a result, "we are well positioned for double-digit revenue growth in 2018 with our customer contract positions in the improving oil and gas market," according to the CEO. In addition, because MRC Global is a U.S. taxpayer, Lane said that "the lower rate is expected to provide earnings and cash flow benefits in 2018." However, he also said that its "capital allocation plans have not changed" and that it "intends[s] to invest in the business for growth and return cash to shareholders as we continue to execute our share repurchase authorization."

Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool recommends MRC Global. The Motley Fool has a disclosure policy.