The third quarter has been a tough one for energy companies after oil prices slid more than 20% during the quarter. This forced producers to pull back the reins on spending, which trickled down throughout the value chain. MRC Global (NYSE:MRC) wasn't immune to this slowdown, which cut into its sales and earnings during the third quarter.

Drilling down into the numbers
MRC Global reported $1.071 billion in sales, which was 34% lower than the year-ago quarter, and 11% lower than the second quarter. Sales were weak across all three of its operating segments:

Revenue by Segment

Q3 2015 Actuals

Q3 2014 Actuals

Growth (YOY)

United States

 $865.4 million

 $1.21 billion

-28.2%

Canada

 $69.4 million

 $161.2 million

-56.9%

International

 $136.4 million

 $251.7 million

-45.8%

Data source: MRC Global.

Sales in the U.S. were hit hard by reduced customer spending, especially with the upstream sector, which saw a $227 million reduction in sales. The upstream sector in Canada was also very weak, with sales down $81 million year over year to those customers.

Meanwhile, the strong U.S. dollar affected revenue by another $14 million in Canada. Finally, international sales fell due to lower project activity and the deferral of maintenance, repair, and operations expenses, especially in Europe, Norway, and Australia. Further, like Canada, the strong U.S. dollar had a negative impact on sales, resulting in a further $30 million year-over-year decrease in revenue.

Despite this significant drop in revenue, MRC Global still reported a profit of $10 million, or $0.10 per share -- though that's well below the $50.1 million, or $0.49 per share, it earned in the year-ago quarter. The company really did a solid job controlling its costs, reducing sales, general, and administrative costs by 15% year over year.

Further, the company is generating strong operating cash flow, which totaled $481 million year to date. It used some of that cash, plus its recent preferred stock offering, to significantly reduce its total debt, paying down $790 million in debt, and bringing its net debt balance down to $631 million at the end of the quarter. Because of that balance-sheet strength, MRC Global has initiated a $100 million share-repurchase program to opportunistically repurchase shares.

Key contract awards
In addition to controlling its costs and significantly improving its balance sheet, MRC Global recently announced several key contract renewals and wins. In September, it announced a five-year contract to supply pipe, valve, and fitting products and services to refiner Phillips 66 (NYSE:PSX). That agreement is an expansion of its existing North American contract with Phillips 66 to now include its refining operations in Europe. It's also worth noting that refiners like Phillips 66 actually benefit from lower oil prices, so this agreement will not only grow international sales, but help mute some of the impact of weak sales to upstream oil and gas producers.

Speaking of upstream producers, MRC Global also announced major contract awards with Norway's Statoil (NYSE:STO). The contracts are for Statoil's Johan Sverdrup project, which is a multi-platform offshore oil and gas development that is the largest project in the North Sea. MRC will supply pipe, fittings, and flanges in what is the largest signal award in the history of MRC Energy Piping.

In addition to that, it will supply instrumentation products for all of Statoil's platforms throughout the lifetime of the field. As a result of this, Statoil will become one of MRC's top 20 customers 

Investor takeaway 
MRC Global is clearly being affected by the challenges facing the energy industry. However, despite these challenges, it made significant strides in reducing its costs. This has enabled it to generate strong cash flow, which it used to reduce its debt so that it is now in a position to buy back stock.

Further, it was recently awarded two major international contracts, which extend its relationship with two very important customers. While the company's challenges still remain, there were several bright spots that bode well for its future.

Matt DiLallo owns shares of Phillips 66. The Motley Fool recommends MRC Global and Statoil (ADR). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.