Distributors serving the oil and gas markets reported strong first quarter sales and indicated that despite numerous economic challenges, they anticipate a strong year.
Reasons for this optimistic outlook include a large backlog, acquisitions, European customers reassessing their energy purchases due to the Russian invasion of Ukraine, increased oil production and market opportunities. renewable/green energy.
MRC Global, for example, reported that its backlog was $667 million, up 28% from year-end and the highest level since January 2019. Each of the four business segments of the company in the United States, Canada and other international markets recorded double-digit order backlog growth in the first quarter.
“We are raising our full-year revenue guidance by $100 million to $3.1 billion and are now targeting $200 million in full-year EBITDA, representing 6.5% of sales said Robert Saltiel, President and CEO of MRC Global. “We expect 2022 to be a great year for our customers, our employees and our investors.”
Saltiel told financial analysts that a global energy transition is underway to address climate change and expects this to have a significant impact on MRC Global’s future business.
He said MRC Global has an important role to play in the energy transition.
“We are already involved in many green energy projects and decarbonization efforts,” he said. “In recent years, we have supplied PVF products for use in biofuel, wind, hydrogen, geothermal, hydroelectric, and carbon capture and storage projects. We are competing to participate in various green energy projects and decarbonization worldwide.
Meanwhile, NOW Inc., which operates primarily under the DistributionNOW and DNOW brands, said U.S. revenue was $334 million, up 10% sequentially.
The company, a global provider of energy and industrial products, services, engineered equipment packages and supply chain solutions, said growth in the United States was partly captured by increased sales of pipes, valves and fittings essential for producers to increase oil and gas production.
International developments have also had an effect on DNOW.
“The Russian invasion of Ukraine is causing many European countries to reassess the security and reliability of their energy sources that power their economies,” said David Cherechinsky, President and CEO.
He said the revaluation results in the replacement of oil and gas imported from Russia with more domestic or imported options, generating additional demand for the company’s other products in those regions.
Cherechinsky said NOW Inc. ceased operations in Russia, where revenue and net assets each accounted for less than 1% of DNOW’s totals.
The company raised its overall guidance for full-year 2022, with revenue expected to rise 20%.
DNOW is also looking to grow its business through acquisitions.
“We tend to be able to buy lower in a downturn,” Cherechinsky told analysts after the first-quarter earnings release. “But there are opportunities there. We have some that we believe may be closing very soon. They tend to be small right now. But we have plenty of cash and a strong balance sheet, and we are very actively looking for offers. We made two acquisitions last year, and I think we’ll do that or better this year.
David Little, CEO, Chairman and President of DXP Enterprises, said his company recorded organic sales growth of 25%, after adjusting for four acquisitions at the end of 2020 and overall sales growth of 30% from a year-over-year in the first quarter.
“We are starting very well this year. This is DXP’s first quarter of significant organic growth in total sales and EBITDA, which is great to see,” he said.
DXP is looking at other markets through its recent acquisitions.
“These latest acquisitions are targeted around certain less cyclical markets. We’ve been in the water and wastewater business, but now we’re pushing it even further – and trying to grow it into more of what DXP does,” he said.
DXP has acquired eight new distributors since December 2020, and the company said it is demonstrating its commitment to the water and wastewater products market with these new additions.
DXP is also looking to expand its business in the compressed air market.
Its most recent acquisition was Cisco Air Systems Inc., a leading distributor of air compressors and related products and services focused on the food and beverage, transportation and general industrial markets in the territories. of northern California and Nevada.
“We have been in this area, but it has not been our priority. And so those two things make DXP different than it was in the past,” Little said.
The longtime Houston-based distributor provides customers with innovative supply chain services, pumping solutions, and MROP products and services.
DXP is also an important player in the renewable energy market and helps its customers achieve their goal of net zero emissions thanks to their technical expertise.
Jack Keough is the president of Keough Business Communications. He was editor of Industrial Distribution for 26 years. You can reach him at [email protected]