MRC Global Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 9, 2023

There are 7 speakers on the call.

Operator

Welcome to MRC Global's First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. Question and answer session will follow the formal presentation. Please note this conference is being recorded. I'll now turn the conference over to Monica Bratton, Vice President, Investor Relations and Treasury.

Operator

Monica, you may now begin.

Speaker 1

Thank you, and good morning. Welcome to the MRC Global First Quarter 2023 Earnings Conference Call and Webcast. We appreciate you joining us. On the call today, we have Rob Saltiel, President and CEO and Kelly Youngblood, Executive Vice President and CFO. There will be a replay of today's call available by webcast on our website, mrseekglobal.com, as well as by phone until May 23, 2023.

Speaker 1

The dial in information is in yesterday's release. We expect to file our quarterly report on Form 10 Q later today, and it will also be available on our website. Please note that the information reported on this call speaks only as of today, May 9, 2023, and therefore, you are advised that the information may no longer be accurate In our call today, we will discuss various non GAAP measures. You are encouraged to read our earnings release and securities filings to learn more about our use of these non GAAP And to see a reconciliation of these measures to the related GAAP items, all of which can be found on our website. Unless we specifically state otherwise, References in this call to EBITDA refer to adjusted EBITDA.

Speaker 1

In addition, the comments made by the management of MRC Global during this call May contain forward looking statements within the meaning of the United States federal securities laws. These forward looking statements reflect the current views of the management of MRC Global. However, Actual results could differ materially from those expressed today. You are encouraged to read the company's SEC filings for a more in-depth review of the risk factors concerning these forward looking statements.

Operator

And

Speaker 1

now, I'd like to turn the call over to our CEO, Mr. Rob Saltiel.

Speaker 2

Thank you, Monica. Good morning and welcome to everyone joining today's call. I will provide a high level review of our Q1 results and sector performance followed by our 2023 outlook and conclude with comments related to our term loan refinancing. Kelly will provide a detailed review of the Q1 results 2023 guidance before I end our prepared remarks with a brief recap. I will begin by discussing a change in our sector reporting effective this quarter.

Speaker 2

As we have highlighted frequently over the last few years, we continue to diversify our business where today our traditional upstream and midstream sectors on a combined basis represent about a third of our company's annual revenue. 5 years ago, these sectors comprised more than 50% of our sales. These businesses have similar drivers relating to general oil and gas production activity and commodity pricing, and they share common customers who participate in production gathering and processing activities. In addition, These sectors have been managed at MRC Global by common business leaders. As a result of these factors, we have combined the 2 businesses into a new sector Call production and transmission infrastructure or PTI for short, which we will use for reporting going forward.

Speaker 2

Moving on to our financial results, I am very pleased with our strong performance in the Q1 as this provides us with increasing confidence in our full year outlook. Our top line was strong with revenue of $885,000,000 representing 2% sequential growth and a 19% year over year improvement. Compared to the same quarter last year, each of our 3 sectors experienced double digit revenue increases with diet and PTI leading the way. We realized EBITDA of $69,000,000 which was 44% higher than the Q1 of 2022 with EBITDA margins of 7.8%, A 130 basis point increase. This improvement is the direct result of our focus on cost discipline and higher adjusted gross margins driven by product mix and improved pricing.

Speaker 2

Our revenue backlog was 14% higher at the end of the Q1 2023 versus the Q1 of last year and up 2% sequentially, signaling continued strength across our business. Our profitability improvement is translating into improved returns on invested capital or ROIC. After adjusting for the impact of LIFO, our ROIC was 11.5% on a trailing 12 months basis. We expect this metric to continue to increase throughout 2023 and in future years and we see it as a key driver for value creation. Turning now to our sector performance.

Speaker 2

Our diet sector stands out as the primary driver for our company's sequential and year on year growth As revenues expanded 12% sequentially versus Q4 2022 and by 23% versus Q1 2022 levels. In both comparisons, higher turnaround and maintenance spending by refiners and chemicals customers along with increasing activity associated with LNG projects Led the revenue increases. We've had tremendous success with LNG projects this year driven by our expanded project planning and execution capabilities, Our early engagement with end users and our deepening relationships with EPCs and OEMs. Our project center of excellence maintains a growing backlog LNG projects that underpin our expectations for strong revenue growth. Our PTI business continues to benefit from improving fundamentals and our increased focus on Permian Basin Opportunities.

Speaker 2

This business experienced a 22% revenue improvement over the Q1 of 2022 As our customer base comprised primarily of IOCs and larger independent public companies continue to execute their plans. Despite the recent volatility in oil and gas prices, we continue to expect the PTI sector to have strong results this year. Our gas utilities business continues to perform well with 13% year over year sales growth as several customers implemented meter upgrade And pipeline integrity projects as well as other system reliability environmental activities. This business has achieved a 12% compound annual Revenue growth rate over the past 6 years and it continues to be an exciting growth engine for our company. Given that our gas utilities performance is largely independent Of oil and gas commodity prices, this sector is a highly resilient contributor to the MRC Global Investment Thesis.

Speaker 2

I want to now provide a few comments on our 2023 outlook. Our strong first quarter performance, Our solid and growing backlog and our strong alignment with our customers spending plans all provide us with increasing confidence in our 2023 outlook. We reiterate our previous guidance as we continue to expect double digit sales growth and EBITDA margins exceeding 8%. We expect strong revenue improvement across all three business sectors and geographic segments. And we continue to target generating cash flow from operations of $120,000,000 or more for the full year.

Speaker 2

Kelly will provide further details on our 2023 guidance in this section. Finally, I would like to address the postponement of our recent term loan refinancing. In April, we launched the refinancing of our 295,000,000 Loan B. As a reminder, this loan does not mature until September of 2024, but we attempted to refinance the loan earlier to take advantage of improving debt market conditions. Shortly after the launch of the refinancing, our preferred stockholder initiated a court action to prevent the refinancing from closing.

Speaker 2

This action complicated the execution of the refinancing on favorable terms, so we elected to postpone the refinancing efforts Before their conclusion, we are in discussions with our preferred stockholder regarding our capital structure and the disposition of the preferred shares. And we are hopeful that a resolution can be achieved. Any agreement we reach should be fair to all shareholders. I also want to remind our shareholders that we expect to continue to have ample liquidity under our global asset based lending facility, which does not mature until September of 2026 to repay the term loan debt in full should that be necessary. Our liquidity situation is solid and improving as we continue to focus on generating significant cash from our operations this year and into the future.

Speaker 2

And with that, I'll now turn the call over to Kelly.

Speaker 3

Thanks, Rob, and good morning, everyone.

Operator

My comments

Speaker 3

today will primarily be focused on sequential results comparing the Q1 of 2023 to the Q4 of 2022 unless otherwise stated. Total sales for the Q1 were $885,000,000 a 2% sequential increase, outperforming our original expectations. From a sector perspective, I will begin with our gas utilities and diet sectors, which make up approximately 2 thirds of our revenue and represent our more resilient, less cyclical business Lines. Gas utility sales were $307,000,000 in the 1st quarter, a $12,000,000 or 4% decrease Due to the timing of deliveries and projects in the U. S, compared to the same quarter last year, the gas utility sector grew 13% Strong activity levels associated with safety related modernization, emission reduction programs and continued infrastructure improvement projects.

Speaker 3

The diet sector 1st quarter revenue was $278,000,000 a sequential increase of $30,000,000 or 12%, Driven by LNG projects along with increased turnaround and maintenance spending for refining, chemicals and mining customers. This sector delivered 23% growth in the Q1 of 2023 over the same quarter a year ago, Again, on the strength of LNG project work along with refining and chemical customer turnaround and maintenance projects. The PTI sector revenue for the Q1 was $300,000,000 a modest decrease of $2,000,000 or 1% sequentially. In the U. S, our customer base, which includes the larger public E and P operators, were very active with completions activity in the Permian Basin, but offset by the timing of lower gathering and processing projects this quarter.

Speaker 3

We also saw the backlog for PTI, including gathering and processing projects, increased by 10% since year end. From a geographic segment perspective, U. S. Revenue was $740,000,000 in the 1st quarter, A $20,000,000 increase from the previous quarter driven by the diet sector, which was up $28,000,000 or 15%. Canada revenue was $42,000,000 in the Q1, sequentially down $4,000,000 or 9% due to the timing of certain pipe orders.

Speaker 3

International revenue was $103,000,000 in the Q1, unchanged from the previous quarter. However, the international backlog is up 16% since year end. Now turning to margins. Adjusted gross profit for the Q1 was $188,000,000 We're 21.2 percent in line with the 4th quarter. Although we have seen deflation in our line pipe business, we have been successful offsetting this headwind with other products such as BAMMY that are accretive to overall company margins.

Speaker 3

We continue to target average gross Margins of 21% for 2023, a step change from our historical averages. Reported SG and A for the Q1 was 100 and $2,000,000,000 or 13.8 percent of sales as compared to $123,000,000 or 14.2 percent for the Q4 of 2022. The 40 basis point improvement this quarter was a function of our strong cost control initiatives and higher quarterly revenue. For the full year SG and A, we continue to expect the average percentage of sales to be in the mid-thirteen percent range. As our revenue trends higher throughout the year, we expect to see the cost as a percent of revenue gradually declining.

Speaker 3

EBITDA for the Q1 was $69,000,000 or 7.8 percent of sales, a 20 basis point improvement over the Q4 of 2022 And 130 basis point improvement over the same quarter a year ago, evidence of the improved efficiencies that we achieved over the last few years, driving more incremental revenue to the bottom line. Tax expense in the Q1 was $13,000,000 with an effective tax rate of 28% as compared to $12,000,000 of expense in the Q4 2022. The difference in the effective rate and the statutory rate is due to state taxes, non deductible expenses and differing foreign income tax rates. For the Q1, We had net income attributable to common stockholders of $28,000,000 or $0.33 per diluted share and our adjusted net income attributable to common Stockholders on an average cost basis normalizing for LIFO income was $27,000,000 or $0.32 per diluted share. In the Q1, we consumed $30,000,000 in cash from operations, which is normal course of business for us as we tend to ramp up our inventory purchases earlier in the year In preparation for the seasonal highs that we typically experience in the 2nd and third quarters, we expect to generate cash in each of the remaining quarters of the year, Ultimately achieving our 2023 goal to generate operating cash of $120,000,000 or more.

Speaker 3

Additionally, we typically generate more cash in the second half And as we previously mentioned, generating cash consistently each year going forward in both years of growth and decline It's a key initiative for the company. Working capital as a percent of sales was 17.9% in the 1st quarter, Up from 16.2% in the Q4 of 2022, primarily due to the higher inventory build this quarter. This percentage is expected to gradually decline each quarter going forward due to a combination of reduced inventory and increased revenue. Our total debt outstanding at the end of the quarter was $390,000,000 and our leverage ratio based on net debt of Same quarter in the prior year when our leverage ratio was 1.6 times. Our availability under our ABL facility was 601,000,000 And we had $39,000,000 of cash for a total liquidity position of $640,000,000 at the end of the first quarter.

Speaker 3

This is nearly a $100,000,000 increase in liquidity compared to Q1 of last year. And as Rob mentioned, We continue to expect to have plenty of capacity under our ABL for use if needed to address the upcoming maturity of our Term Loan B in 2024. If we are unable to come to a resolution with our preferred stockholder. To finish off our 2023 outlook, as Rob mentioned earlier, Our solid Q1 results provide us with confidence in our 2023 outlook. We continue to target a double digit percentage revenue increase and expect to surpass the 8% hurdle for EBITDA margins.

Speaker 3

From a sector revenue perspective, we expect the PTI segment to increase the most Increase in the high upper single digits. From a geographic view, this translates to a low double digit percentage improvement in each of our segments. Our normalized effective tax rate for the year is projected to be 26% to 28%, but could fluctuate from quarter to quarter due to discrete items. And from a cash perspective, as activity levels continue to improve and our inventory levels decline from current levels, It is expected to translate into meaningful cash generation for the remainder of the year with $120,000,000 or more in cash flow from operations. And as mentioned earlier, we expect a higher percentage of this cash flow to materialize in the second half of the year.

Speaker 3

Excess cash will continue to be prioritized in the near terms toward further strengthening the balance sheet and growth of the business. Regarding our capital expenditures, we Those to be in line with historical averages in the $10,000,000 to $15,000,000 range. And finally, as we look at the cadence of revenue throughout the year, We expect the Q2 to increase sequentially in the low single digits driven by our gas utility business With continued growth in the Q3 before our normal seasonal decline in the Q4. And with that, I would like to turn it back

Speaker 2

to Rob for closing comments. Thanks, Kelly. Our stronger than expected Q1 financial results reflect strength across all three business sectors and are continuing focus on profitability and capital efficiency. These are some of the highlights I want to summarize before opening for Q and A. Our impressive Q1 performance and the growing backlog of business have increased our confidence in our 2023 outlook.

Speaker 2

We expect double digit revenue growth and EBITDA margins in excess of 8% for 2023. All 3 of our business sectors are expected to achieve solid growth rates. Cash generation from operations through the business cycle remains a priority, We are targeting in excess of $120,000,000 in operating cash flow in 2023 even with double digit revenue growth. Our diversification strategy is paying off with approximately 2 thirds of our revenue generated outside the traditional oilfield. Our gas utilities and diet sectors thrive largely independent of commodity prices and they each offer attractive growth prospects over the longer term.

Speaker 2

With that, we will now take your questions. Operator?

Operator

Thank you. We'll now be conducting the question and answer One moment please while we poll for questions. Thank you. Thank you. And our first question is from the line of Tommy Moll with Stephens.

Operator

Please proceed with your questions.

Speaker 4

Good morning and thanks for taking my questions.

Speaker 2

Hey, good morning, Tommy.

Speaker 4

Rob, I wanted to start on the revenue outlook for the year where it sounds like you've got increasing Confidence for 2023, specifically around the PTI segment mid teens for the year, Recognize that that's a new segment name, but it feels like it's essentially an unchanged outlook from before. That's in the context of a U. S. Rig count that's down slightly year to date. Maybe that was contemplated originally, maybe your customers have bucked the trend to some extent, but anything you could do to provide us some context On those two data points would be helpful.

Speaker 4

Thank you.

Speaker 2

Yes. Thanks, Tommy. You're 100% right. We continue to feel very constructive around the PTI sector, which comprised our former upstream and midstream businesses. And a big part of that, despite some of the volatility in crude pricing, natural gas pricing being depressed and The fact that the rig count has moved off a little bit is that we are heavily levered to the IOCs and the large publicly traded independents.

Speaker 2

These folks have tended to set their CapEx plans well in advance and tend to be less sensitive to Swings in commodity prices, especially in the most prolific basins like the Permian, where we have a concentrated position. So everything we're seeing in the market in terms of our activity, the customers that we're having, discussions we're having with customers, All suggest that our outlook of the mid teens percentage increases in the sector performance this year is intact.

Speaker 4

Thank you. That's helpful. As a follow-up, I wanted to pivot to the comments you made around the refinancing. And I certainly understand that you don't have perfect visibility here. However, from the outside, when is it reasonable do you think that we will Get an update here on the path forward.

Speaker 4

Is there any insight, even if preliminary on the range of options that Might be on the table here. Just anything you could do because I think a lot of folks listening today in the marketplace may not have Thought through these issues as deeply obviously as you have now. So just help us get up to speed here on what's going on. Thank you.

Speaker 2

Sure. Well, Tommy, maybe just for context setting, it would be helpful to note that when we went out to Refinance the term loan B last month, it really was opportunistic. The loan itself doesn't mature until September of 'twenty four And we were motivated by what we saw as an opportunity with market conditions being favorable to go out and try to refinance that. And obviously, now with the disagreement that we're having with our preferred shareholder, It's obviously created some other complications that we've got to think through. But as I mentioned in the prepared comments, we are looking to Come to a resolution.

Speaker 2

The preferred stockholder has been involved with this company since its inception. We've got a great relationship with that group. Unfortunately, we have a business disagreement. So we are working very constructively to see what outcome would be favorable For all stakeholders, we know that the potential discussion of the preferred shares and their redemption is Something that will be considered. But at this point in time, Tommy, I'm hesitant to be too definitive about How a resolution of this issue could be resolved in terms of structure as well as in terms of timing.

Speaker 2

It's something that we are very focused on as leadership team. The good news for the company, of course, is that we've got ample Liquidity with our ABL that really gives us lots of time and capacity to address any refinancing issues if it gets to that point. But let me be clear, if we can reach an amicable resolution sooner rather than later, we will do that. We're just not able at this point to be too specific about How that resolution may take shape.

Speaker 4

Thank you. We'll stay tuned and I'll turn it back. Great.

Speaker 2

Thanks, Tommy.

Operator

Our next question is from the line of Nathan Jones with Stifel. Please proceed with your questions.

Speaker 5

Good morning. This is Adam Farley on for Nathan.

Speaker 2

Yes. Hey, good morning, Adam. Good

Speaker 5

morning. I wanted to start with the adjusted gross margin line. Are you still seeing inflation in Your product categories outside of line pipe, which I understand is moderating. And how should we think about adjusted gross margin progression

Speaker 3

Yes, Adam, this is Kelly. I'll take that one. No, really, you kind of said at line pipe, We had been seeing some deflation compared to some of the highs we saw last year. And certainly, line pipe margins were a nice tailwind in 2022. With that said though, I will say here recently we've seen some increases again in line pipe.

Speaker 3

We're not counting on those for the rest of the year, but certainly it's been A nice little tailwind here over the last quarter or so. But I think as we've said in the last couple of phone calls, Even with the headwind we expect in line pipe margins, we think that will be offset or more than offset We have improvements in margins and other product categories we have, BAMI being one of those, which is roughly a third of our business In the valve automation piece, our stainless products are accretive to overall margins, carbon fittings and Langes is accretive to our overall margin. So we think with improvements we're seeing in those areas, that will help offset that. And then to answer your question more directly, I think in those non line pipe categories, the more kind of non commoditized categories, We're certainly seeing inflation start to stabilize some, but we are still seeing some inflation in different categories. And as you know, there's opportunity kind of windows we have in our contracts to You'll get price increases to offset those inflationary increases.

Speaker 3

We got a lot of those increases in the second half of last year, starting to see kind Full run rate effect of those this year, but still have a few more of those to get through the system. So with all of that said, We're still reiterating our 21% margins throughout this year. It will fluctuate obviously month to month, quarter to quarter, But we feel strongly we can still get those margins.

Speaker 5

Okay, that's really helpful. And then I wanted to shift to Your diet sector, it sounds like there's a lot of strength in some of your more traditional energy project funnel. Do you expect that strength to continue through the year? And then also, could you maybe provide an update on some of your energy transition business? Thank you.

Speaker 2

Yes, I'll take that one, Adam. Look, you're 100% right. Our diet sector has been very exciting for us. We're up 23% year on year versus the Q1 of 2022. So we're really seeing strength across the board.

Speaker 2

Starting with Refining and Chemicals, we're involved in a lot of turnaround in project activity. We saw that in the Q1 And then we'll see it throughout the year. On the refining side, you'll see that mostly after the driving season is complete because we get the maximum refinery utilization in the summer driving months. But on the chemical space, we've talked about that before. That's a growth opportunity for us.

Speaker 2

We're penetrating new customers with new products. We've got some experts working on our team who really understand these processes and we're gaining market share there. So really Refining and Chemicals has been a huge driver for us this year in that growth and we look for that to continue. As I also mentioned in the prepared comments, LNG has been very exciting for us. This is The growth area for us with the U.

Speaker 2

S. Now being the leading LNG exporter and with lots of cheap natural gas Available for markets that are challenged with their natural gas supplies, we see this as being an opportunity for us Going forward for quite a few years, we've got a number of projects that we're currently involved in. We've got other projects that are in the hopper that we're tracking. And so we think the LNG part of our dive business will continue to grow as we move through the rest of this decade. And then I didn't spend too much time in the prepared comments on energy transition, But this business continues to truck along for us.

Speaker 2

We're actually ahead on revenue this year versus where we were last year. That said, This is a very project oriented business. Most of what we're doing is either renewabledieselsustainable aviation fuel Or it involves wind power projects and those things tend to be lumpy in terms of when they occur, when our orders are Actually booked and billed. So there will be a little bit of lumpiness in that energy transition space. But as I said, we're off to a good start this year and we see this is a major growth vehicle for us going forward.

Speaker 2

And we're seeing early signs now of carbon capture projects being tracked and available for us. So really our team has done a great job getting involved in Projects, which is really what we're looking at with LNG and Energy Transition and as we continue to deepen our ties With EPCs, Engineering Procurement and Construction Companies and the OEMs that serve these projects, We're very well positioned for growth in this sector.

Speaker 5

Thank you for taking my questions.

Speaker 2

You're welcome. Thank you.

Operator

Our next question is from the line of Ken Newman with KeyBanc Capital Markets.

Speaker 6

Good morning. Quickly on the 2Q revenue guidance being up low single digits sequentially. I think the business is typically up something more like mid to high single digits in the second quarter. I'm just curious, is that a function of some potential pull forward in the Q1 or maybe just some extended timing on the gas utility project deliveries? Any color there would help on explaining just the maybe sequentially softer sales growth versus historical trends?

Speaker 3

Yes, Ken, this is Kelly. I'll take that one and Rob may want to add on. But yes, You're exactly right. Usually, we're up probably at least kind of mid single digits sequentially Q1 to Q2. But Q1, if you remember, we kind of guided coming into this We thought we would be down low single digits.

Speaker 3

We were actually up a couple of percent sequentially. So that Certainly implies there was some pull forward there of revenue that we had forecasted in Q2 that ended up hitting in March for us. But if you take the full first half Effect of what were the actual results of Q1 versus what we're guiding to here in Q2 And compare that back to Street consensus, we're essentially spot on, right? So really first half is playing out the way we thought. It's just a little bit different mix In Q1 versus Q2.

Speaker 6

Got it. Maybe back on to the gas utility side. Sorry if I missed this in your prepared comments, but did you talk about the timing of gas utility spending returning to more normal levels? And Maybe a little bit more color there. Is that more a function of supply chain challenges?

Speaker 6

While what was the issue with potentially getting Delivery is out the door and the way that you want it.

Speaker 2

No, there's really no issue there. I mean, look, our gas utilities business continues to be A real strong business for this company. And as we've said before, it's one that has Very little relationship to commodity prices. It's a business that we've grown over the previous 2 years at better than 20% revenue clip. And This year, even just quarter on quarter, the gas utility space is up 13%.

Speaker 2

In the Q1 of the year, because of weather and other factors Coming out of the gate, sometimes you see it start a little slower, but our Outlook for Gas Utilities this year is very bullish. It's very much intact with our guidance. And I think if you just look Across our business and you see the growth in the backlog and the projects that we're looking at for gas utilities, This is going to continue to be a great story for us this year.

Speaker 6

Okay. So just to clarify, you would expect that to kind of return Back to more normalized type of sales levels in the Q2, is that a correct assessment?

Speaker 3

Yes. Ken, actually, if you look at our I think I said this in the prepared remarks, you may have missed it, that the Q2 improvement that we're expecting to see in Q2 is driven by gas utilities.

Operator

Got you.

Speaker 6

Just a few more for me. It looks like a pretty sizable step up in the inventory days, both on a sequential and year over year basis. I am curious, we've heard from other distributors outside of the oil and gas field just talking about normalizing lead times and maybe that impacting Near term inventory decisions, curious if you're seeing any of that kind of play out currently or

Speaker 2

Look, I think if you look at our balance sheet, you can see that we increased our inventory by almost $100,000,000 just quarter to quarter here. And Obviously, we did that in anticipation of increasing sales activity this year. We're in the business of holding inventory for our customers where they need it and when they need it. And we want to be absolutely sure that we had ample inventory. That said, We're at peak inventory levels for this year as we at least forecast that.

Speaker 2

So what you'll see is that We'll continue to work our inventory down as we work through the year. And obviously, that'll contribute quite a bit to our cash flow generation that we've guided for the full year. But you're 100% right on supply chains. They're getting lead times are getting shorter. The supply chain Blockages are being unstuck.

Speaker 2

And so we're going to be in a position now where just on an average cadence, We're going to be able to generate more sales with a limited amount of inventory because we can replenish that inventory on a timely basis with a lot more confidence. So I think the fact that you saw that we consumed $30,000,000 of cash this year while building $100,000,000 of inventory It's actually quite a good story and why we continue to maintain our confidence in generating $120,000,000 more of cash this year. But you won't see inventory builds like you saw in this last quarter. It's going to be headed down from here. And again, that will contribute to The cash generation story.

Speaker 6

Got it. Maybe if I could just squeeze one more in. Sorry if I missed this, Kelly, but did you talk about What you're looking for in terms of LIFO reserves either for the Q2 or for the balance of the year?

Speaker 3

We did not specifically say that. We actually, as you probably saw, had a little bit of LIFO income This quarter, just I mean slightly over $1,000,000 or so. Last year, if you remember, we were I forget the exact number, closer to $70,000,000 of LIFO And we do still expect LIFO expense this year, but at a much more much significantly lower level.

Speaker 6

Understood. Thanks.

Speaker 2

Thank you.

Operator

Thank you. At this time, we've reached the end of our question and answer session.

Speaker 6

I'll

Operator

hand the floor right to management for closing remarks.

Speaker 1

Thank you for joining us today and for your interest in MRC Global, we look forward to having you join us on our Q2 conference call in August. Have a great day. Thank you.

Operator

Thank you. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your

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Earnings Conference Call
MRC Global Q1 2023
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