MRC Global Inc (MRC) 2023 Q4 法說會逐字稿

Greetings, and welcome to the MRC Global's fourth-quarter 2023 earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded.

您好，歡迎參加 MRC Global 2023 年第四季財報電話會議。 （操作員指示）謹此提醒，本次會議正在錄製中。

It is now my pleasure to introduce your host, Monica Broughton, VIP (sic - VP), Investor Relations and Treasury. Please go ahead.

現在我很高興向您介紹主持人莫妮卡·布勞頓 (Monica Broughton)，她是投資者關係和財務部門的 VIP（原文如此，副總裁）。請繼續。

Thank you, and good morning. Welcome to the MRC Global fourth-quarter and full-year 2023 earnings conference call and webcast. We appreciate you joining us.

謝謝你，早安。歡迎參加 MRC Global 2023 年第四季和全年財報電話會議和網路廣播。我們感謝您加入我們。

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, mrcglobal.com, as well as by phone until February 28, 2024. The dial-in information is in yesterday's release.

今天的電話會議由總裁兼執行長 Rob Saltiel 主持。執行副總裁兼財務長凱利楊布拉德 (Kelly Youngblood)。今天的電話會議將透過我們的網站 mrcglobal.com 上的網路廣播以及電話重播，直至 2024 年 2 月 28 日為止。撥入訊息已在昨天發布。

We expect to file our annual report on Form 10-K later this week, and it will also be available on our website. Please note that the information reported on this call speaks only as of today, February 14, 2024. And therefore, you're advised that the information may no longer be accurate as of the time of replay.

我們預計將在本週稍後提交 10-K 表格年度報告，該報告也將在我們的網站上發布。請注意，本次電話會議報告的資訊僅截至今天（2024 年 2 月 14 日）。因此，我們建議您，截至重播時，該資訊可能不再準確。

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 measures 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 referring to EBITDA refer to adjusted EBITDA.

在今天的電話會議中，我們將討論各種非公認會計原則措施。我們鼓勵您閱讀我們的收益報告和證券備案文件，以了解更多有關我們使用這些非GAAP 衡量標準的信息，並查看這些衡量標準與相關GAAP 項目的協調表，所有這些都可以在我們的網站上找到。除非我們另有明確說明，否則本次電話會議中提及的 EBITDA 指的是調整後的 EBITDA。

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.

此外，MRC Global 管理層在本次電話會議中發表的評論可能包含美國聯邦證券法含義內的前瞻性陳述。這些前瞻性陳述反映了 MRC Global 管理階層目前的觀點。然而，實際結果可能與今天所表達的結果有重大差異。我們鼓勵您閱讀該公司向 SEC 提交的文件，以更深入地審查與這些前瞻性陳述相關的風險因素。

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

現在，我想將電話轉給我們的執行長 Rob Saltiel 先生。

Thank you, Monica. Good morning, and welcome to everyone joining today's call. I will begin with a discussion of notable achievements in 2023, review our fourth-quarter results at a high level, and address some of the key business drivers underpinning our 2024 outlook. I will then turn the call over to Kelly to provide a detailed review of the quarter and 2024 guidance before I deliver a brief recap.

謝謝你，莫妮卡。早安，歡迎大家參加今天的電話會議。我將首先討論 2023 年的顯著成就，從高水平回顧我們第四季度的業績，並討論支撐我們 2024 年前景的一些關鍵業務驅動因素。然後，我將把電話轉給凱利，以提供本季和 2024 年指引的詳細回顧，然後再進行簡短的回顧。

For the full-year 2023, we had many accomplishments that I want to highlight, including setting several new MRC Global records for profit margins, balance sheet strength, and working capital efficiency. First, we generated $181 million in operating cash for the year, well above the $110 million that we previously expected. This translates to a robust 18% levered free cash flow yield for the year. We were very bullish on the cash generation potential of the company going forward.

對於 2023 年全年，我們取得了許多我想強調的成就，包括在利潤率、資產負債表實力和營運資本效率方面創下了多項新的 MRC Global 記錄。首先，我們今年產生了 1.81 億美元的營運現金，遠高於我們先前預期的 1.1 億美元。這意味著今年槓桿自由現金流收益率高達 18%。我們非常看好該公司未來的現金產生潛力。

We also set a company record for full-year adjusted gross margins at 21.5%, which is the second year in a row where we exceeded 21%. Some of our investors have expressed concerns that we might not be able to maintain margins at this level. But I'm happy to report that we've now had seven quarters in a row with 21%-plus margins. This is a transformational change from the high teens level of margins throughout most of our company's history.

我們也創下了全年調整毛利率 21.5% 的公司紀錄，這是我們連續第二年超過 21%。我們的一些投資者擔心我們可能無法將利潤率維持在這個水平。但我很高興地向大家報告，我們現在已經連續七個季度的利潤率超過 21%。這是我們公司歷史上大部分時間利潤率都維持在十幾位數的轉變。

Adjusted EBITDA margins were 7.3% for 2023, the second year in a row above 7%. This is the result of both higher adjusted gross margins, along with our discipline on cost management.

2023 年調整後 EBITDA 利潤率為 7.3%，連續第二年高於 7%。這是調整後毛利率提高以及我們嚴格執行成本管理的結果。

We've been very focused on working capital efficiency over the last few years, as evidenced by another record set in 2023, with our net working capital as a percentage of sales coming in at 15.5%. Since 2018, we've improved this metric by 490 basis points, which is helping us to consistently generate positive cash flow irrespective of the business cycle.

過去幾年，我們一直非常關注營運資本效率，2023 年創下的另一項記錄證明了這一點，我們的淨營運資本佔銷售額的百分比為 15.5%。自 2018 年以來，我們已將該指標提高了 490 個基點，這有助於我們無論商業週期如何，都能持續產生正現金流。

Our balance sheet has never been stronger with ample liquidity and the lowest leverage ratio in our public company history at 0.7 times. We expect this metric to improve even further in 2024.

我們的資產負債表從未如此強大，流動性充足，槓桿率達到上市公司史上最低的 0.7 倍。我們預計這項指標將在 2024 年進一步改善。

Revenue grew for the third straight year in 2023 to $3.4 billion, with year-over-year growth in our PTI and DIET sectors partially offset by a slowdown in our gas utility sector.

2023 年收入連續第三年增長，達到 34 億美元，其中 PTI 和 DIET 行業的同比增長部分被天然氣公用事業行業的放緩所抵消。

Our PTI sector grew by 6%, driven by increased activity and market share gains in the Permian Basin, partially offset by reduced sales in California and Canada. The DIET sector improved 5% in 2023, driven by various LNG, chemicals, and refining projects. Our international business grew 13% in 2023 and is poised for double-digit improvement in 2024, supported by a healthy backlog that was 55% higher at year end compared to the beginning of 2023.

我們的 PTI 部門成長了 6%，這得益於二疊紀盆地活動的增加和市場份額的成長，但部分被加州和加拿大的銷售額減少所抵消。在各種液化天然氣、化學品和煉油項目的推動下，飲食業到 2023 年將成長 5%。我們的國際業務在 2023 年成長了 13%，並預計在 2024 年實現兩位數的成長，這得益於年底訂單量較 2023 年初增加 55%。

I will now make a few comments about the fourth-quarter results and then turn to our outlook. Despite a revenue pull-back in the fourth quarter, we maintained strong profit margins and cash generation that exceeded our expectations.

我現在將對第四季度的業績發表一些評論，然後談談我們的展望。儘管第四季營收有所回落，但我們仍保持強勁的利潤率和現金產生能力，超出了我們的預期。

For the quarter, adjusted gross margins were 21.9% and adjusted EBITDA was $48 million, or 6.3% of sales. In addition, we generated cash flow from operations of $89 million in the fourth quarter, aided by excellent stewardship of our working capital that allowed us to achieve $181 million for the full year.

本季調整後毛利率為 21.9%，調整後 EBITDA 為 4,800 萬美元，佔銷售額的 6.3%。此外，由於對營運資金的出色管理，我們第四季度的營運現金流達到 8,900 萬美元，全年現金流達到 1.81 億美元。

Turning to our outlook, I will now provide some early perspectives on 2024. First of all, we have seen a meaningful improvement in our backlog and our new orders over the first few weeks of 2024. This gives us optimism that our business is stabilizing, and we expect to return to growth in the coming quarters.

談到我們的展望，我現在將提供一些對 2024 年的早期看法。首先，我們看到 2024 年頭幾週的積壓訂單和新訂單有了顯著改善。這讓我們樂觀地認為我們的業務正在穩定，我們預計在未來幾季恢復成長。

From a sector perspective, for our gas utility sector, we expect our customers to continue their destocking efforts in the near term which could cause capital spending for the first half of the year to lag the levels we saw in the first half of 2023. However, we expect to see an inflection point around mid-year for gas utility spending to improve once the destocking targets have been met. In addition, we expect moderation of inflation and interest rates as we move through 2024, which should improve the overall investment climate for this sector.

從行業角度來看，對於我們的天然氣公用事業行業，我們預計客戶短期內將繼續去庫存，這可能導致今年上半年的資本支出落後於 2023 年上半年的水平。然而，我們預計，一旦實現去庫存目標，天然氣公用事業支出將在年中左右出現轉折點，從而改善。此外，我們預計 2024 年通膨和利率將放緩，這將改善該行業的整體投資環境。

Despite the near-term headwinds, the long-term market fundamentals and growth potential of our gas utilities business remain very positive. We continue to expand our market share and wallet share with gas utilities, and we are competing for new utility contracts in 2024 that should expand our presence further.

儘管存在短期阻力，但我們的天然氣公用事業業務的長期市場基本面和成長潛力仍然非常樂觀。我們繼續擴大與天然氣公用事業公司的市場份額和錢包份額，並且正在爭奪 2024 年新的公用事業合同，這將進一步擴大我們的影響力。

Most of the work we perform with our gas utilities customers is based on multi-year programs, where they evaluate and implement measures to improve their local distribution networks and, in some cases, their transmission pipelines to ensure the safety and the integrity of these systems. Since approximately 35% of the US gas distribution network today is over 40 years old or of unknown origin, this creates a steady backlog of work due to the need to upgrade and maintain these networks as they age. Additionally, as new housing starts improve with lower interest rates, this should result in further growth opportunities for this sector.

我們與天然氣公用事業客戶進行的大部分工作都是基於多年計劃，他們評估和實施措施來改善當地的分配網絡，在某些情況下，改善他們的傳輸管道，以確保這些系統的安全性和完整性。由於目前美國約 35% 的天然氣分配網路已經使用了 40 多年或來源不明，因此隨著這些網路的老化需要升級和維護，這會導致工作量不斷積壓。此外，隨著新房開工率的下降和利率的降低，這應該會為該行業帶來進一步的成長機會。

In the DIET sector, we are optimistic that we will experience modest revenue growth this year from a strong level of refinery and chemical plant maintenance activities, supplemented by a growing slate of projects. We remain excited about energy transition growth opportunities and expect that most of the revenue in 2024 for this subsector will occur in the renewable fuels space. We expect a lot of new project bidding activity this year, but we will likely see most of the benefits in 2025 and beyond.

在飲食領域，我們樂觀地認為，由於煉油廠和化工廠維護活動的強勁水平，加上越來越多的項目，今年我們將實現適度的收入成長。我們仍然對能源轉型的成長機會感到興奮，並預計 2024 年該次產業的大部分收入將來自再生燃料領域。我們預計今年會有大量新項目招標活動，但我們可能會在 2025 年及以後看到大部分收益。

Turning to our PTI business, recent industry reports have signaled some potential risk of declining oil prices and customer spending levels in 2024. However, larger public E&P companies are expected to drive a higher percentage of the activity in 2024 in the US oil field, which bodes well for our company, as our revenue for the sector is driven primarily from this customer base.

談到我們的 PTI 業務，最近的產業報告顯示 2024 年油價和客戶支出水準下降存在一些潛在風險。然而，預計大型上市勘探與生產公司將在 2024 年推動美國油田活動的更高比例，這對我們公司來說是個好兆頭，因為我們該行業的收入主要來自該客戶群。

Recent announcements of consolidation by our PTI customers are expected to be beneficial to MRC Global once completed. We partner more extensively with the acquirers than we do with the targets. And the value we bring is generally better recognized by the larger operators who procure higher quality, longer life products for their oil and gas development projects.

我們的 PTI 客戶最近宣布的整合一旦完成，預計將對 MRC Global 有利。我們與收購方的合作比與目標公司的合作更廣泛。我們帶來的價值通常更能得到大型業者的認可，他們為其石油和天然氣開發項目採購更高品質、壽命更長的產品。

Another positive for the PTI sector is our international oil and gas market is expected to expand, and we should benefit from our strong position in growth markets such as Norway, the UK, and Middle East. For our international segment, we expect another strong year aided by favorable fundamentals in both the PTI and DIET sectors and a healthy revenue backlog that has grown each of the last five quarters.

PTI 產業的另一個積極因素是我們的國際石油和天然氣市場預計將擴大，我們應該受益於我們在挪威、英國和中東等成長市場的強勢地位。對於我們的國際業務，我們預計將在 PTI 和 DIET 行業良好的基本面以及過去五個季度每個季度都有增長的健康收入積壓的幫助下，迎來又一個強勁的一年。

Our international backlog at the end of the fourth quarter increased 14% over the third quarter. We've lined up exciting projects in both PTI and in DIET, and we expect another year of double-digit growth for international in 2024.

第四季末我們的國際積壓訂單比第三季增加了 14%。我們在 PTI 和 DIET 領域都推出了令人興奮的項目，預計 2024 年國際業務將再次實現兩位數成長。

Given the slower business environment in the US segment, we are laser focused on improving the things we can control, such as our cost structure. We are working to lower our absolute SG&A cost this year after experiencing an increase in 2023, which will support our ability to maintain healthy adjusted EBITDA margins.

鑑於美國市場的商業環境放緩，我們專注於改善我們可以控制的事情，例如我們的成本結構。在經歷 2023 年的成長後，我們今年正在努力降低絕對 SG&A 成本，這將支持我們維持健康的調整後 EBITDA 利潤率的能力。

We are implementing a number of cost optimization initiatives, including slower wage growth and reductions in professional fees, overtime, travel and entertainment expenses, and logistics costs. We have made significant progress elevating our adjusted gross margins and EBITDA returns over the last few years, and we are committed to not losing this momentum in 2024.

我們正在實施多項成本優化舉措，包括放慢工資增長速度以及減少專業費用、加班費、差旅和娛樂費用以及物流成本。過去幾年，我們在提高調整後毛利率和 EBITDA 回報方面取得了重大進展，我們致力於在 2024 年不失去這一勢頭。

In summary, we expect 2024 to be a transitional year for the company in terms of revenue, but it is clear that we have never been a stronger company than we are today. We remain optimistic about the fundamentals of all three business sectors and their long-term outlook, given our strong market position and the expectation of demand for our products and services for decades to come.

總而言之，我們預計 2024 年將是公司收入的過渡年，但很明顯，我們從未成為比今天更強大的公司。鑑於我們強大的市場地位以及未來幾十年對我們產品和服務的需求預期，我們對所有三個業務部門的基本面及其長期前景保持樂觀。

With the recent improvements in our cost structure and our working capital efficiencies, we are well positioned to generate significant earnings and cash flow across the business cycle. We are targeting to generate approximately $200 million in operating cash flow in 2024, which will make us an even stronger company with minimal debt at the end of this year. This will provide us with a lot of flexibility to pursue a capital allocation strategy that is focused on the highest return opportunities for our shareholders, including investing in our growth drivers and distributing capital to our shareholders.

隨著最近我們成本結構和營運資金效率的改善，我們處於有利地位，可以在整個商業週期中產生可觀的收益和現金流。我們的目標是在 2024 年產生約 2 億美元的營運現金流，這將使我們在今年年底成為一家更強大、債務最少的公司。這將為我們提供巨大的靈活性，以追求專注於股東最高回報機會的資本配置策略，包括投資於我們的成長動力並向股東分配資本。

I will now hand it over to Kelly.

我現在將其交給凱利。

Thanks, Rob, and good morning, everyone. My comments today will primarily be focused on sequential results, comparing the fourth quarter of 2023 to the third quarter of 2023, unless otherwise stated.

謝謝羅布，大家早安。除非另有說明，我今天的評論將主要關注連續結果，將 2023 年第四季與 2023 年第三季進行比較。

Total company sales for the fourth quarter were $768 million, a 14% sequential decline and 12% lower than the same quarter a year ago.

第四季公司總銷售額為 7.68 億美元，季減 14%，比去年同期下降 12%。

From a sector perspective, gas utility sales were $253 million in the fourth quarter, a $61 million or 19% decline. As expected, we continue to see gas utility customers focused on reducing their product inventory levels due to more certainty in supply chain and associated lead times. Into the years, seasonality along with higher interest rates and inflation in construction costs also caused customers to delay project activity.

從產業角度來看，第四季天然氣公用事業銷售額為 2.53 億美元，下降 6,100 萬美元，成長 19%。正如預期的那樣，由於供應鏈和相關的交貨時間更加確定，我們繼續看到天然氣公用事業客戶專注於降低產品庫存水準。這些年來，季節性因素以及較高的利率和建築成本的通貨膨脹也導致客戶推遲了專案活動。

The DIET sector fourth-quarter revenue was $258 million, a decrease of $21 million or 8%, due to the conclusion of various projects in the third quarter and lower year-end turnaround activity in the US. As we've mentioned before, this sector has a significant amount of project activity which can create substantial variability between quarters.

由於第三季度各種項目的完成以及美國年終週轉活動的減少，DIET 行業第四季度收入為 2.58 億美元，減少了 2,100 萬美元，即 8%。正如我們之前提到的，該部門有大量的專案活動，可能會在季度之間產生巨大的差異。

The PTI sector revenue for the fourth quarter was $257 million, a decrease of $38 million or 13% sequentially, primarily due to seasonality and lower year-end customer activity in the US.

第四季 PTI 部門營收為 2.57 億美元，比上一季減少 3,800 萬美元，即 13%，主要是由於美國的季節性和年終客戶活動減少。

From a geographic segment perspective, US revenue was $633 million in the fourth quarter, a $112 million or 15% decrease from the previous quarter, driven by the gas utility sector, which was down $59 million; followed by the PTI sector, which was down $34 million; and finally, the DIET sector, which was down $19 million.

從地域細分來看，美國第四季營收為6.33億美元，季減1.12億美元，降幅為15%，其中天然氣公用事業板塊下降了5,900萬美元；其次是 PTI 板塊，下跌 3,400 萬美元；最後是飲食業，下降了 1900 萬美元。

International revenue was $107 million in the fourth quarter, up $2 million or 2%, driven by improvement in both the PTI and DIET sectors. The PTI sector increase was driven by increased activity in Norway, the Middle East, and the UK. The DIET sector increase was driven by energy transition activity as well as project activity in Europe. We remain very optimistic about the outlook for our international segment, which has experienced a 55% increase in backlog since the beginning of 2023, with double-digit growth in both the PTI and DIET sectors.

在 PTI 和 DIET 產業改善的推動下，第四季國際營收為 1.07 億美元，成長 200 萬美元，成長 2%。PTI 產業的成長是由挪威、中東和英國的活動增加所推動的。飲食產業的成長是由能源轉型活動以及歐洲的計畫活動所推動的。我們對國際業務的前景仍然非常樂觀，自 2023 年初以來，該業務的積壓量增加了 55%，其中 PTI 和 DIET 領域均實現了兩位數成長。

Canada revenue was $28 million in the fourth quarter, down $10 million compared to the prior quarter, due to year-end budget exhaustion and year-end curtailment in customer spending.

由於年底預算耗盡和年底客戶支出削減，加拿大第四季營收為 2,800 萬美元，比上一季減少 1,000 萬美元。

Now, turning to margins. Adjusted gross profit for the fourth quarter was $168 million, or 21.9%, a 60-basis-point improvement over the third quarter. Although we have experienced deflation in our line pipe business this year, along with inflation stabilization across most other product loans, we have been successful in maintaining adjusted gross margins in excess of 21% of sales due to a higher margin product mix and a higher contribution of revenue from our international segment, which is accretive to overall company gross margins. This marks the seventh consecutive quarter with adjusted gross margins exceeding 21%.

現在，轉向邊緣。第四季調整後毛利為 1.68 億美元，成長 21.9%，比第三季提高 60 個基點。儘管今年我們的管線管業務經歷了通貨緊縮，而且大多數其他產品貸款的通貨膨脹也趨於穩定，但由於利潤率較高的產品組合和較高的貢獻，我們成功地將調整後的毛利率維持在銷售額的21% 以上。我們國際部門的收入增加了公司的整體毛利率。這標誌著調整後毛利率連續第七個季度超過 21%。

Reported SG&A for the fourth quarter was $125 million, or 16.3% of sales, as compared to $126 million, or 14.2%, for the third quarter. This quarter includes $1 million of pre-tax charges related to activism response, legal, and consulting costs. Excluding these costs from our SG&A, our adjusted SG&A for the quarter of 2023 -- for the fourth quarter of 2023 is $124 million

報告的第四季 SG&A 為 1.25 億美元，佔銷售額的 16.3%，而第三季為 1.26 億美元，佔銷售額的 14.2%。本季包括與行動響應、法律和諮詢成本相關的 100 萬美元稅前費用。如果不包括我們的 SG&A 成本，我們 2023 年第四季調整後的 SG&A 為 1.24 億美元

Adjusted EBITDA for the fourth quarter was $48million or 6.3% of sales, a 160-basis-point decline from the third quarter due to the lower sales activity. Tax expense in the fourth quarter was $2 million with an effective tax rate of 9% as compared to $14 million of expense in the third quarter. The fourth quarter was favorably impacted by a net reduction in a foreign valuation allowance provision.

由於銷售活動減少，第四季調整後 EBITDA 為 4,800 萬美元，佔銷售額的 6.3%，較第三季下降 160 個基點。第四季的稅務費用為 200 萬美元，有效稅率為 9%，而第三季的稅務費用為 1,400 萬美元。第四季受到外國估價準備金淨減少的有利影響。

For the fourth quarter, we had net income attributable to common shareholders of $15 million, or $0.17 per diluted share. And our adjusted net income attributable to common share stockholders on average cost basis normally, normalizing for LIFO adjustments and other items, was $20 million, or $0.23 per diluted share.

第四季度，我們歸屬於普通股股東的淨利潤為 1,500 萬美元，即稀釋後每股收益 0.17 美元。通常情況下，我們調整後歸屬於普通股股東的淨利潤（後進先出調整和其他項目正常化）為 2000 萬美元，即稀釋後每股 0.23 美元。

In the fourth quarter, we generated $89 million in cash from operations and a net $181 million for the full year. This is a 65% increase over our previous guidance due to exceeding our year-end working capital targets, resulting in an 18% levered free cash flow yield for the year. And as Rob pointed out, we also achieved our best net working capital to sales ratio in our history at 15.5%, a significant improvement over our historical trend.

第四季度，我們的營運現金為 8,900 萬美元，全年淨現金為 1.81 億美元。由於超出了我們的年終營運資本目標，這比我們先前的指導增加了 65%，導致今年的槓桿自由現金流收益率達到 18%。正如 Rob 指出的那樣，我們還實現了歷史上最好的淨營運資本與銷售額比率，達到 15.5%，比我們的歷史趨勢有了顯著改善。

Turning to liquidity and capital structure. Our current availability on the ABL is $610 million. And including cash, our total liquidity of $741 million. Our leverage ratio, based on net debt of $170 million, was 0.7 times, a record low for the company. With the cash we expect to generate in 2024, we believe for liquidity and the leverage ratio will continue to show significant improvement.

轉向流動性和資本結構。我們目前在 ABL 上的可用資金為 6.1 億美元。包括現金在內，我們的流動資金總額為 7.41 億美元。基於 1.7 億美元的淨債務，我們的槓桿率為 0.7 倍，創公司歷史新低。憑藉我們預計 2024 年產生的現金，我們相信流動性和槓桿率將繼續呈現顯著改善。

Based on our current projections, we believe we can comfortably pay off our term loan B on or before its maturity date in September of 2024 with a combination of excess cash and our ABL facility. As such, we are now classifying our term loan as current debt. Also, this reduces our ongoing interest expense burden by 150 basis points for any balance that remains on our ABL.

根據我們目前的預測，我們相信，結合超額現金和 ABL 融資，我們可以在 2024 年 9 月到期日或之前輕鬆償還定期貸款 B。因此，我們現在將定期貸款歸類為流動債務。此外，對於 ABL 上剩餘的任何餘額，這也將我們持續的利息支出負擔減少了 150 個基點。

I would also like to highlight an exciting initiative we are undertaking this year. We recently launched a project to replace and modernize our North America enterprise resource planning, or ERP, system. Currently, we are running on a mainframe system, which is at the end of its useful life. We will be moving to a modern cloud-based ERP system over the next two years.

我還想強調我們今年正在採取的一項令人興奮的舉措。我們最近啟動了一個項目，以替換和現代化我們的北美企業資源規劃（ERP）系統。目前，我們正在運行一個大型主機系統，該系統已達到其使用壽命。我們將在未來兩年內轉向基於雲端的現代 ERP 系統。

I am personally the executive sponsor of the project and have the utmost confidence that we will be successful in leading our budget and timeline goals. We have spent the past year planning, evaluating software packages and implementation partners, and building a stellar blue-ribbon team of some of the company's best resources to implement this ERP system.

我個人是該專案的執行發起人，並且對我們將成功實現預算和時間表目標充滿信心。在過去的一年裡，我們一直在規劃、評估軟體包和實施合作夥伴，並建立了一支由公司最好的資源組成的一流藍帶團隊來實施這個 ERP 系統。

The new ERP is expected to provide leading-edge functionality, including AI capabilities, allowing us to automate and streamline our processes and systems to improve reporting, forecasting, and controls. It will also reduce IT maintenance costs by approximately $2 million a year.

新的 ERP 預計將提供領先的功能，包括人工智慧功能，使我們能夠自動化和簡化我們的流程和系統，以改善報告、預測和控制。它還將每年減少約 200 萬美元的 IT 維護成本。

The CapEx investment is expected to be approximately $50 million spent over the next two years, and we expect to be fully implemented and running on the new system in the second half of 2025. We are excited about the multitude of opportunities this new cloud-based system will provide to our organization.

未來兩年的資本支出預計約為 5,000 萬美元，我們預計新系統將在 2025 年下半年全面實施並運作。我們對這個新的基於雲端的系統將為我們的組織提供的眾多機會感到興奮。

Now, I'll cover our outlook for the first quarter and full year 2024. For the first quarter, we expect sequential revenue to be flat to modestly lower for the total company, with PTI and gas utility revenue flattish for the fourth quarter and DIET declining modestly due to the timing of various project deliveries.

現在，我將介紹我們對 2024 年第一季和全年的展望。對於第一季度，我們預計整個公司的環比收入將持平或小幅下降，其中第四季度 PTI 和天然氣公用事業收入持平，而 DIET 由於各個項目交付時間的安排而小幅下降。

We expect 2024 to be a transitional year and currently believe total company revenue will come in flat to a potentially modest decline of low to mid-single digits compared to 2023 levels. From a sector perspective, we expect DIET to be modestly higher for the year, PTI to be modestly lower, and gas utilities to also be down to full year but showing recovery in the second half of 2024.

我們預計 2024 年將是過渡性的一年，目前認為，與 2023 年的水平相比，公司總收入將持平，甚至可能小幅下降，為低至中個位數。從產業角度來看，我們預計今年 DIET 將小幅走高，PTI 將小幅走低，天然氣公用事業也將全年下降，但將在 2024 年下半年出現復甦。

It's noteworthy and encouraging that recent trends in our 2024 year-to-date sales, new order intake, and backlog are providing optimism that we are seeing stabilization in the business. For example, the backlog at the end of January was up $47 million or 6.8% since December 31 with gains across all sectors and all segments. Also, January sales and improved by about 1% over December. And finally, January's new order intake is up over 30% compared to December, a significant improvement.

值得注意且令人鼓舞的是，我們 2024 年迄今的銷售額、新訂單量和積壓訂單的最新趨勢讓我們樂觀地認為我們看到業務趨於穩定。例如，自 12 月 31 日以來，1 月底的積壓訂單增加了 4,700 萬美元，即 6.8%，所有部門和細分市場都有所成長。此外，1 月份銷售額比 12 月份增長約 1%。最後，1 月的新訂單量比 12 月增加了 30% 以上，這是一個顯著的進步。

In 2024, we will also target the following key metrics: average adjusted gross margins of 21% or better, average adjusted EBITDA margins of 7%, average SG&A costs as a percent of revenue below 15%. And for cash flow from operations, we expect to exceed the cash we generated in 2023, targeting to hit $200 million in operational cash generation.

2024 年，我們也將實現以下關鍵指標：平均調整後毛利率為 21% 或更高，平均調整後 EBITDA 利潤率為 7%，平均 SG&A 成本佔營收的百分比低於 15%。對於營運現金流，我們預計將超過 2023 年產生的現金，目標是營運現金產生達到 2 億美元。

Capital expenditures are expected to be elevated this year due to our ERP initiative. We estimate total capital spend in the $40 million to $45 million range in 2024, higher than our normal run rate of approximately $15 million. And finally, we expect our effective tax rate in 2024 to be in the range of 26% to 28%.

由於我們的 ERP 計劃，預計今年的資本支出將會增加。我們預計 2024 年總資本支出將在 4,000 萬至 4,500 萬美元之間，高於我們約 1,500 萬美元的正常運作率。最後，我們預計 2024 年的有效稅率將在 26% 至 28% 之間。

And with that, I would like to turn it back to Rob for closing comments.

說到這裡，我想把它轉回給羅布以供結束評論。

Thanks, Kelly. It bears repeating that our company is in a very strong position. And despite the pullback in activity in the second half of 2023, we achieved key milestones in profit margins, working capital efficiency, and balance sheet strength, setting us up for future success. As we continue to execute our strategy and generate consistently strong levels of free cash flow, we will have ample financial flexibility to deliver shareholder value through an opportunistic shareholder returns-focused capital allocation strategy.

謝謝，凱利。值得重申的是，我們公司處於非常有利的地位。儘管 2023 年下半年活動有所回落，但我們在利潤率、營運資本效率和資產負債表實力方面實現了關鍵里程碑，為我們未來的成功奠定了基礎。隨著我們繼續執行我們的策略並產生持續強勁的自由現金流水平，我們將擁有充足的財務靈活性，透過以機會主義股東回報為中心的資本配置策略來實現股東價值。

These are the highlights I want to summarize before opening for Q&A. We are targeting $200 million of cash from operations in 2024. With the working capital efficiencies we've achieved, we are well positioned to consistently generate cash regardless of the business cycle, which is a transformational change.

這些是我在開始問答之前想要總結的要點。我們的目標是到 2024 年從營運中獲得 2 億美元的現金。憑藉我們所取得的營運資本效率，我們處於有利地位，無論商業週期如何，都能持續產生現金，這是一個轉型性的變化。

We expect average adjusted gross profit to remain in the 21% range in 2024 and are targeting average EBITDA margins of 7% for the full year. We intended to pay off our term loan B on or before its maturity date in September 2024 without requiring any additional financing. We expect to exit 2024 with a minimal net debt position and be in a positive net cash position in 2025.

我們預計 2024 年平均調整後毛利將維持在 21% 的範圍內，全年平均 EBITDA 利潤率為 7%。我們打算在 2024 年 9 月到期日或之前償還定期貸款 B，而不需要任何額外融資。我們預計 2024 年退出時淨債務部位將降至最低，並在 2025 年淨現金部位為正。

And lastly, before we open the call for Q&A, similar to last quarter, I wanted to acknowledge the rumors and speculation about one of our shareholders. As I'm sure you can appreciate, we don't discuss the specifics of our interaction with any of our existing or potential shareholders, and we won't be able to comment. As such, we see kindly ask that you keep your questions in the Q&A session focused on our results.

最後，在我們開始問答之前，與上個季度類似，我想承認有關我們一位股東的謠言和猜測。我相信您會理解，我們不會討論與任何現有或潛在股東互動的具體細節，我們也無法發表評論。因此，我們懇請您在問答環節中將問題集中在我們的結果上。

And with that, we will now take your questions. Operator?

現在我們將回答你們的問題。操作員？

Thank you. We will now be conducting a question-and-answer session. (Operator Instructions) Nathan Jones, Stifel.

謝謝。我們現在將進行問答環節。（操作員說明）Nathan Jones，Stifel。

Good morning, everyone.

大家，早安。

Yeah. Good morning, Nathan.

是的。早安，內森。

Good morning, Nathan.

早安，內森。

I just wanted to start off with cash flow, given I'm sure you guys had trouble getting out of your offices. It's crawling (inaudible) this morning. There's been a significant reduction in receivables inventory and offset a little bit by reduction in payables. I think the cash flow guidance for 2024 would imply a pretty significant further reduction in working capital and receivables, inventories, payables.

我只想從現金流開始，因為我確信你們在離開辦公室時遇到了困難。今天早上它正在爬行（聽不清楚）。應收帳款庫存大幅減少，並被應付帳款的減少所抵銷。我認為 2024 年的現金流指引將意味著營運資金和應收帳款、庫存、應付帳款將進一步大幅減少。

Can you talk about what you're expecting there? I would say, probably, you would acknowledge that $200 million (inaudible) might not be sustainable over the long run at these levels of revenue. So any color you can give us on what you think the sustainable cash flow level of the business is?

你能談談你對那裡的期望嗎？我想說，您可能會承認，從長遠來看，在這樣的收入水平下，2 億美元（聽不清楚）可能無法持續。那麼您能告訴我們您認為企業的可持續現金流水準是多少嗎？

Yeah, Nathan. This is Kelly. I'll start off, and Rob can jump in if he likes. But no, listen. We've been consistent here over the last couple of years, saying to the market that with our working capital efficiency that we've maintained or we've improved over the last couple of years, that we think we can consistently generate cash irregardless of what the market conditions are.

是的，內森。這是凱利。我先開始，羅佈如果願意的話也可以加入。但不，聽著。過去幾年我們一直保持一致，對市場說，憑藉過去幾年我們保持或提高的營運資本效率，我們認為無論發生什麼情況，我們都可以持續產生現金。市場狀況如何。

And so I think this year is a very good example of that, up slightly -- not huge improvement, but up slightly on revenue. But having $181 million in cash generation, we're very proud of that. Working capital efficiency, I think we put in our press release, it's a new record of 15.5%. If you go back to 2018, that was around a 20% number. So we've made drastic improvement there.

所以我認為今年是一個很好的例子，略有上升——不是巨大的進步，但收入略有上升。但擁有 1.81 億美元的現金生成，我們對此感到非常自豪。營運資金效率，我認為我們在新聞稿中提到，這是 15.5% 的新紀錄。如果你回到 2018 年，這個數字約為 20%。所以我們在這方面取得了巨大的進步。

To answer your question, though, the sustainability, we think, as we've guided to $200 million in 2024, we're going to have some working capital influence there. We think we have room to improve our turn rates on inventory. And we made a lot of progress on our receivables, past due receivables, and things like that. But we think we can maintain and even continue to improve that in 2024.

不過，為了回答你的問題，我們認為，正如我們在 2024 年指導的 2 億美元的可持續性一樣，我們將在那裡產生一些營運資金影響。我們認為我們還有提高庫存週轉率的空間。我們在應收帳款、逾期應收帳款等方面取得了很大進展。但我們認為到 2024 年我們可以保持甚至繼續改進這一點。

The majority of the cash flow generation, I would say two-thirds to three-quarters of it, is still going to be cash flow from operations before working capital changes. But we'll still get the benefit from working capital changes to get us up -- make up that other one-third to 25% to get us up to the $200 million number.

大部分現金流生成，我想說其中三分之二到四分之三，仍然是營運資本變動之前營運產生的現金流。但我們仍然會從營運資本變化中獲益，以幫助我們實現目標——彌補另外的三分之一到 25%，使我們達到 2 億美元的目標。

And then I think going forward, Nathan, we're not guiding anything right now. But we think, easily, we can have $100 million-plus, maybe even $150 million-plus of cash generation per year in a, call it, single-digit type growth market.

然後我想，內森，展望未來，我們現在不會指導任何事情。但我們認為，在一個所謂個位數成長的市場中，我們每年可以輕鬆產生 1 億美元以上，甚至可能 1.5 億美元以上的現金產生。

If you get into it like we were in 2022, where we had a 26% revenue growth, it's harder to achieve that kind of cash flow number. But with moderate growth, whether we're up or down, we think, easily, $100 million, $150 million-plus is very achievable.

如果你像 2022 年一樣，營收成長 26%，那麼要達成這樣的現金流數字就更難了。但隨著適度的成長，無論成長或下降，我們認為 1 億美元、1.5 億美元以上都是可以輕鬆實現的。

Thanks. I'll follow-up with, I guess, cash priorities. You obviously have this timeline that you have to deal with in September. It seems counterproductive for your preferred shareholder to be blocking refinancing of that.

謝謝。我想我會跟進現金優先事項。顯然，你必須在九月處理這個時間表。對於你的優先股東來說，阻止再融資似乎會適得其反。

Is there any update you can give us on any of the negotiations you had there that might allow you to refinance that rather than have to use cash plus the ABL to pay it off, which would clearly give you guys some more financial flexibility to do some M&A or to do some share repurchase in the nearer term rather than have to wait a little bit longer for that? So if there's any commentary you can make on that or how you're thinking about deploying capital once we resolve this issue.

您是否可以向我們提供有關您在那裡進行的任何談判的任何最新信息，這些信息可能允許您進行再融資，而不必使用現金加上ABL 來還清，這顯然會給您帶來更多的財務靈活性來做一些事情併購或在近期進行一些股票回購，而不是等待更長的時間？因此，如果您對此有任何評論，或者我們解決此問題後您將如何考慮部署資本。

Yeah, Nathan. I'll jump in here. Look, we've talked about this before, that we had the disagreement previously on the previous attempt to refinance the term loan. And we continue to remain in discussions about the opportunities to get through that if, in fact, we decide to go to the market for a refinancing.

是的，內森。我會跳到這裡。聽著，我們之前已經討論過這一點，我們之前對定期貸款再融資的嘗試存在分歧。如果事實上我們決定去市場進行再融資，我們將繼續討論解決這個問題的機會。

I think one of the things that we've been pleasantly surprised with is how much cash generation we've actually been able to deliver. As Kelly said, we've talked about this for quite some time, that we need to be able to demonstrate we can generate cash across the cycle and to do so in, I would say, pretty large amounts, given the comment you made that when we open the call. And I'm really proud of the fact that our team's been able to do that.

我認為讓我們感到驚訝的事情之一是我們實際上能夠產生多少現金。正如凱利所說，我們已經討論這個問題很長一段時間了，我們需要能夠證明我們可以在整個週期內產生現金，並且考慮到您的評論，我想說，數額相當大當我們打開通話時。我對我們的團隊能夠做到這一點感到非常自豪。

It's obviously a combination of profitability of the business. Our team has done a great job on collections and reducing our days sales outstanding and making sure as well that we're more efficient with our inventory, that we can generate more revenue and more profitability with less inventory, which is a key metric when you're in the distribution business.

這顯然是企業獲利能力的結合。我們的團隊在收集產品和減少應收帳款天數方面做得非常出色，並確保我們的庫存效率更高，我們可以用更少的庫存產生更多的收入和更高的盈利能力，這是一個關鍵指標，當您從事分銷業務。

So all those things lining up have really demonstrated we can generate a lot of cash. And in fact, we're generating so much cash that we can basically pay off the term loan with a combination of cash and pulling on the ABL without any necessity of refinancing.

因此，所有這些事情確實表明我們可以產生大量現金。事實上，我們產生瞭如此多的現金，我們基本上可以透過現金和 ABL 的組合來償還定期貸款，而無需再融資。

Now opportunistically, to the extent that we have a resolution with the disagreement with the preferred shareholder, we could consider doing exactly what you say, which is taking out an additional financing vehicle to do some other things potentially with returning cash to shareholders. But at this point in time, the base case is we use a combination of the ABL and cash to retire the term loan B in September.

現在機會主義地，如果我們就與優先股股東的分歧達成了解決方案，我們可以考慮完全按照你所說的去做，即拿出一個額外的融資工具來做一些其他可能向股東返還現金的事情。但目前，基本情況是我們結合使用 ABL 和現金在 9 月償還定期貸款 B。

Thanks. [Last one] for me on the ERP -- go ahead, Kelly.

謝謝。 [最後一篇]關於 ERP 的我——繼續吧，凱利。

Nathan, I would just going to add one more thing to what Rob said. When we saw how much cash we generated closing out '23 and what we're projecting for 2024, we saw pretty quickly that if we went out to the market to do a refi of the term loan, we were going to be putting a lot of cash just immediately on the balance sheet, right? I mean, like, literally like a couple of hundred million of cash on the balance sheet.

內森，我想在羅布所說的基礎上再補充一件事。當我們看到我們在 23 年結束時產生了多少現金以及我們對 2024 年的預測時，我們很快就發現，如果我們進入市場對定期貸款進行再融資，我們將投入大量資金現金立即出現在資產負債表上，對嗎？我的意思是，就像資產負債表上的幾億現金一樣。

And we can always go back out to the market. There's nothing that says we have to do it right now. We always have that flexibility. And so time is on our side. We've got very good projections ahead of us.

我們隨時可以回到市場。沒有任何內容表明我們必須立即這樣做。我們始終擁有這種靈活性。所以時間站在我們這邊。我們前面有非常好的預測。

As Rob said in his prepared comments and I think I mentioned it, too, we're going to have minimal net debt at the end of the year. So we think we're very well-positioned.

正如羅佈在他準備好的評論中所說的那樣（我想我也提到過），我們到年底的淨債務將降至最低。所以我們認為我們處於非常有利的位置。

Yeah, I think you're in a good spot for that. Just on the ERP system. I guess the implication is about $30 million of CapEx in '24 on that. Can you talk about how long that total rollout is, and what the total cost of the ERP system is going to be, and then what you expect to be the financial and operational benefits that you can generate from that system?

是的，我認為你處於一個很好的位置。就在ERP系統上。我猜這意味著 24 年的資本支出約為 3000 萬美元。您能否談談整個部署需要多長時間，ERP 系統的總成本是多少，以及您期望從該系統中獲得的財務和營運效益是多少？

Yeah. Absolutely, Nathan. No, good question. We said in the prepared comments, the total project cost, we're estimating around $50 million. We think will incurred $25 million to $30 million of that here in 2024, with the remainder in 2025.

是的。當然，內森。不，好問題。我們在準備好的評論中表示，我們估計項目總成本約為 5000 萬美元。我們認為 2024 年將產生 2,500 萬至 3,000 萬美元的成本，其餘的將在 2025 年產生。

We think we'll be fully up and running on the new system in the second half of '25. So this doesn't go on for many years. It's really just an 18-month period that we're going to be doing the implementation. And so that's on top of our normal run rate of CapEx, around $15 million, to get you to the guide that we have this year of $40 million to $45 million.

我們認為我們將在 25 年下半年在新系統上全面啟動並運行。所以這種情況不會持續很多年。我們實際上只有 18 個月的時間來進行實施。因此，這是在我們正常的資本支出運行率（約 1500 萬美元）之上，讓您了解我們今年的資本支出為 4000 萬至 4500 萬美元。

The benefits we expect to receive -- and we're really just in the early days of the design phase right now. But let me tell you. We've been working on this for over a year. We spent the first six months of last year going through software selection to make sure we were getting the best fit tool for our business. And then we spent really the second half of the year making sure we got a best in class implementation partner to take us through the whole process.

我們期望獲得的好處——我們現在確實還處於設計階段的早期階段。但讓我告訴你。我們為此已經努力了一年多。去年的前六個月，我們進行了軟體選擇，以確保我們獲得最適合我們業務的工具。然後我們花了下半年的時間來確保我們有一個一流的實施夥伴來帶領我們完成整個過程。

And some of the benefits we think we're going to get, if you look at just the maintenance costs we have on the existing system versus the new, it's a $2 million annual savings from that alone. Being on a mainframe system, which is what we are right now on the North -- for North America, there's just a lot of compatibility issues, integration issues with other equipment software industry standards.

我們認為我們將獲得的一些好處，如果您只考慮現有系統與新系統的維護成本，僅此一項就每年節省 200 萬美元。在大型主機系統上，這就是我們現在在北美的情況——對於北美來說，存在著許多相容性問題，與其他設備軟體行業標準的整合問題。

So that system has serviced very well for many decades, but it just becomes more and more challenging to maintain an old system like that. And even just hiring employees and contract resources to maintain support and operate the system becomes very difficult. And so it really is time for us to move on to something new.

因此，該系統幾十年來一直運作良好，但維護這樣的舊系統變得越來越具有挑戰性。即使只是僱用員工和合約資源來維持支援和操作系統也變得非常困難。因此，現在確實是我們轉向新事物的時候了。

And as far as -- I know there's always concern about the level of risk of a new system like this, but let me tell you. As I mentioned, we spent the last year doing our homework. We've selected a first class team of MRC employees to work on this, many of them, this is not their first ERP project. They've worked on other ERP implementations, and so they're not new to this.

就我而言，我知道人們總是擔心像這樣的新系統的風險水平，但讓我告訴你。正如我所提到的，我們去年花了很多時間做功課。我們選擇了一流的 MRC 員工團隊來從事這項工作，其中許多人這並不是他們的第一個 ERP 專案。他們曾參與其他 ERP 實施工作，因此對此並不陌生。

This is a North America only implementation, which I think is very important. We're not dealing with a lot of countries around the globe, which can introduce different risk. If you look at our footprint here in North America, between our service centers and our RDCs, we have a very standardized approach and processes in the way we run the business.

這是僅限北美的實施，我認為這非常重要。我們不與全球許多國家打交道，這可能會帶來不同的風險。如果你看看我們在北美的足跡，在我們的服務中心和 RDC 之間，我們的業務運作方式和流程都非常標準化。

And then we really intend to have very little to no customization. That introduces risk when you do that. And with the cloud-based systems you have today, off the shelf, they give you virtually all the functionality that you need, I mean, off-the-shelf functionality. There's hundreds or even thousands of companies that are using the soft where package already.

然後我們真的打算很少甚至沒有定制。當你這樣做時就會帶來風險。借助您今天擁有的現成的基於雲端的系統，它們幾乎為您提供了您需要的所有功能，我的意思是，現成的功能。已經有數百甚至數千家公司在使用此軟體包。

And so it's not like you're having to program things from the ground up. It's already been proven and in use for many years now, and so we feel pretty comfortable. And then on top of that, we're going to have multiple, what we call, conference room pilot testing before we go live with the system to make sure that everything's working correctly.

因此，您不必從頭開始編程。它已經被證明並使用了很多年，所以我們感覺很舒服。最重要的是，在系統上線之前，我們將進行多次會議室試點測試，以確保一切正常運作。

So we're very excited about it. I think this is going to be a game changer for the company. That's going to help us with our reporting, our forecasting. We've made a lot of improvement in working capital efficiencies. But I think this new system is going to take us even to the next level in demand forecasting and better inventory management and things like that.

所以我們對此感到非常興奮。我認為這將改變公司的遊戲規則。這將有助於我們的報告和預測。我們在營運資金效率方面取得了很大的進展。但我認為這個新系統將把我們在需求預測和更好的庫存管理等方面提升到一個新的水平。

Great. That's awesome. Thank you.

偉大的。棒極了。謝謝。

Kenneth Newman, KeyBanc Capital Markets.

肯尼斯紐曼，KeyBanc 資本市場。

Hey. Morning, guys.

嘿。早安，夥計們。

Morning, Ken.

早安，肯。

Morning.

早晨。

The cash flow comments earlier were very helpful, but I'd maybe add some working capital question a little differently. Obviously, working capital is going to benefit from the lower revenue in the next few quarters. But is there a way to quantify what working cap as a percentage of revenue gets to longer-term? Is there a target that you want to quantify?

之前的現金流評論非常有幫助，但我可能會添加一些稍微不同的營運資金問題。顯然，營運資金將受益於未來幾季收入的下降。但有沒有辦法量化長期工作上限佔收入的百分比？您有想要量化的目標嗎？

Yeah. So we finished last year at 15.5% net working capital as a percent of revenue. As we mentioned, that's a record. It's been trending lower for the last several years. We think we can continue to do even better on that metric.

是的。因此，我們去年的淨營運資本佔收入的比例為 15.5%。正如我們所提到的，這是一個記錄。過去幾年來一直呈下降趨勢。我們認為我們可以繼續在這個指標上做得更好。

I'm hoping that we can get a 14 handle on that percent versus a 15%. And it's always a function -- inventory, it's a lot easier for us to control. We'll be reducing inventory in 2024. The receivable side of it, getting the collection from customers, can vary quarter by quarter.

我希望我們能夠將這一百分比控制在 14% 而非 15%。它始終是一個功能——庫存，我們更容易控制。我們將在 2024 年減少庫存。應收方面，即從客戶收取的款項，可能會因季度而異。

And I'll say the fourth quarter of '23, we had really strong collections coming in. We were able to do a lot of improvement on past due receivables. And we just got to stay on top of that, keep working at. But again, I think we'll be in that 14% to 15% percentage range when you look at the net working capital as a percent of revenue.

我想說的是，23 年第四季度，我們推出了非常強大的產品系列。我們能夠對逾期應收帳款進行大量改進。我們只需保持這一點，繼續努力。但同樣，我認為當您將淨營運資本佔收入的百分比視為 14% 至 15% 的百分比範圍時。

Got it. That's very helpful. And then maybe just go a little bit more in depth on you -- you've had the ERP system that you're initially working on this year. But what else can you talk to you that structurally, giving you better line of sight on that working capital outlook?

知道了。這非常有幫助。然後也許再深入一點——您已經擁有了今年最初開發的 ERP 系統。但是，您還能從結構上與您談論什麼，讓您更了解營運資本前景？

Yeah. I mean, I think as I mentioned, the inventory management is something that we're really extremely focused on, centralizing inventory where we can, reduce the churn rates where we can. As I mentioned, I think the ERP, we made a ton of progress in that area.

是的。我的意思是，我認為正如我所提到的，庫存管理是我們非常關注的事情，盡可能集中庫存，盡可能降低流失率。正如我所提到的，我認為 ERP 方面我們在該領域取得了很大進展。

But I think the ERP system is going to take us even to the next level with improving analytics. We're going to have some hey guy functionality that's going to be embedded, a machine learning type functionality. But just the forecasting capability, better reporting, and things like that, we think we can continue to improve on top of what we've done today. And that working capital metric as a percent of sales will just continue to improve.

但我認為 ERP 系統將透過改進分析將我們帶入新的水平。我們將擁有一些嵌入的功能，即機器學習類型的功能。但只是預測能力、更好的報告以及類似的事情，我們認為我們可以在今天所做的基礎上繼續改進。營運資金佔銷售額的百分比將持續改善。

And if I could jump in, we really spent a lot of time focusing on inventory efficiency. I mean, inventory is where the distributor puts his or her capital dollars, and that has to be an efficient metric for us.

如果我可以插話的話，我們確實花了很多時間關注庫存效率。我的意思是，庫存是分銷商投入資金的地方，這對我們來說必須是一個有效的指標。

In fairness, I don't think we focused on that as much as maybe we could have or should have in previous years. And we've done a lot of centralization of the decision making around inventory purchases. And we're making sure that that any inventory that we add to our system will absolutely pay for itself and then some.

公平地說，我認為我們沒有像前幾年那樣關注這一點。我們圍繞著庫存採購做了很多集中化的決策。我們確保添加到系統中的任何庫存都絕對能收回成本，然後再收回成本。

And so I think going forward, you're just going to see the manifestation of that change in outlook and focus on inventory management to increase our turn rates just make sure we have more productive, more profitable inventory, which again, is a key driver of the working capital efficiency measure.

因此，我認為，展望未來，您將看到前景變化的表現，並專注於庫存管理，以提高我們的周轉率，確保我們擁有更高生產力、更有利可圖的庫存，這又是一個關鍵驅動因素營運資本效率衡量標準。

Yeah, maybe another follow-on question to the one that Nathan asked earlier. But in terms of -- you're going to be close to that zero net debt by the end of the year. You could argue that maybe that's too low of a net leverage, structurally, longer term. I guess, how do you think about the capital structure once you pay that off? And I guess we're in the priority list with a take out of the preferred land for capital deployment?

是的，也許是內森之前問的另一個後續問題。但就而言——到今年年底，你將接近零淨債務。你可能會說，從結構上看，從長期來看，淨槓桿率可能太低了。我想，一旦你還清這筆錢，你會如何看待資本結構？我想我們已經在優先考慮的名單中，從優先土地中取出資本部署？

Well, we think it's a little premature on this call to talk about all the things that we're going to be doing four quarters from now. But we did want to give you, as investors, some insight into how we're thinking about the capital structure and the flexibility that we're going to have that, frankly, we've ever had as a public company to really consider these things and not over lever ourselves.

好吧，我們認為在這次電話會議上談論我們從現在起四個季度後將要做的所有事情還為時過早。但我們確實想讓你們，作為投資者，了解我們如何思考資本結構以及我們將擁有的靈活性，坦白說，作為一家上市公司，我們曾經真正考慮過這些事情，而不是過度槓桿化自己。

But we're going to keep a really open mind about how that bounce sheet is managed and what is the right level of leverage for us. You asked a question about where's the preferred -- currently, the interest or the dividend that we pay and the interest, the 6.5% coupon that's on that preferred, that's a pretty attractive financing right now in today's market, at least with where interest rates are today and even accounting for the lack of tax shield.

但我們將對如何管理彈跳表以及對我們來說合適的槓桿水平保持真正開放的態度。你問了一個關於優先股在哪裡的問題——目前，我們支付的利息或股息以及利息，優先股的6.5% 息票，在當今市場上這是一項相當有吸引力的融資，至少在利率方面今天，甚至是缺乏稅盾的原因。

But going forward, if interest rates get reduced, then maybe the dividend looks a little more expensive than it does today. But right now, we really haven't made any decisions about how and whether the preferred needs to be taken out again.

但展望未來，如果利率降低，那麼股息可能會比現在貴一些。但目前，我們還沒有就如何以及是否需要再次刪除優先選項做出任何決定。

We've got a lot more flexibility than we've ever had before, and we'll consider that as we go forward. Certainly, one thing that we do want to give some shareholders some reassurance on is that we certainly would try to avoid any kind of a dilution event of conversion of the preferred into common stock.

我們比以前擁有更大的靈活性，我們將在前進時考慮這一點。當然，我們確實想讓一些股東放心的一件事是，我們當然會盡力避免優先股轉換為普通股的任何形式的稀釋事件。

Obviously, the stock price has got to move a bit more from where it is today. So that's something that shareholders should have in their mind. But look, if we find ourselves in a position where we've got enough cash to fund growth, enough cash potentially return to comment. And additionally, we see an attractive opportunity to take out the preferred, we'll certainly look to do that.

顯然，股價必須比今天的水平有更多的變動。所以這是股東應該牢記的事情。但是看，如果我們發現自己有足夠的現金來為成長提供資金，那麼足夠的現金可能會重新發表評論。此外，我們看到了一個有吸引力的機會來剔除優先股，我們當然會考慮這樣做。

That's helpful. If I could just squeeze one more in. I know that there's a lot of moving pieces and parts here on the macro outlook, but I'm curious if you've seen any impact from the administration calls on LNG permitting. And to where does that fit into your PTI guidance for the year?

這很有幫助。如果我能再擠一個進去就好了。我知道宏觀前景有很多變化，但我很好奇您是否看到政府呼籲液化天然氣許可產生任何影響。這與您今年的 PTI 指導意見有何關係？

Yeah. I would say it's early days to really assess what's happened on that yet. Clearly, it feels a little bit like an election year action, given the importance of LNG exports to many of our allies around the world and the fact that the US still has abundant supplies of natural gas that is cheap and can be transported safely and reliably around the world. So we think LNG is going to continue to be a strong growth vehicle for the country and then frankly, for our DIET sector.

是的。我想說，現在真正評估所發生的情況還為時過早。顯然，考慮到液化天然氣出口對我們在世界各地的許多盟友的重要性以及美國仍然擁有豐富的廉價且可以安全可靠運輸的天然氣供應這一事實，這感覺有點像選舉年的行動世界各地。因此，我們認為液化天然氣將繼續成為該國以及我們的飲食產業強勁成長的工具。

The projects that we're already involved in that don't involve shipping LNG to non-FTA members, those are obviously going forward. And then going on the projects that are under consideration, at this point, we really haven't seen any direct effects of that on our business. But obviously, we'll watch this space as we go forward. We hope this is a temporal issue that works itself out because again, we're bullish on LNG, and this is a great growth opportunity for MRC Global.

我們已經參與的項目不涉及向非自由貿易協定成員國運輸液化天然氣，這些項目顯然正在向前推進。然後繼續正在考慮的項目，目前我們還沒有看到這對我們的業務有任何直接影響。但顯然，我們會在前進的過程中關注這個領域。我們希望這是一個暫時的問題，能夠自行解決，因為我們再次看好液化天然氣，這對 MRC Global 來說是一個巨大的成長機會。

Very helpful, guys. Thank you.

非常有幫助，夥計們。謝謝。

You're welcome.

不客氣。

Chris Dankert, Loop Capital.

克里斯·丹克特，Loop Capital。

Hey. Good morning, guys.

嘿。早上好傢伙。

Morning, Chris.

早上好，克里斯。

Glad to hear about the kind of proactive efforts around SG&A. And then thank you for getting into the moving parts there. But maybe, can you try and size what some of these proactive actions are for '24 and maybe just even kind of level set us for what to expect in the first quarter on SG&A?

很高興聽到有關 SG&A 的積極努力。然後感謝您進入那裡的活動部分。但也許，您能否嘗試確定 24 年的一些主動行動的規模，甚至可能只是設定我們對第一季 SG&A 的預期水平？

Yeah. I mean, look, we recognize that as revenues stagnate or potentially even fall a little bit from '23 to '24, that we really need to make sure that our cost structure reflects that. And we've identified a number of initiatives, some of which I talked about generally in the prepared comments, for how we can reduce our SG&A this year.

是的。我的意思是，我們認識到，從 23 年到 24 年，收入停滯甚至可能略有下降，我們確實需要確保我們的成本結構反映這一點。我們已經確定了一些舉措，其中一些我在準備好的評論中一般性地談到了我們如何減少今年的銷售及管理費用。

We're really looking at single-digit reduction. So this is not a massive reduction because we're looking to 2024 as a transition year. We fully expect that we're going to get back on a growth trajectory. So we're not looking to take, really, a significant reduction in SG&A, which then would cause us to not be in position to capitalize on the growth we expect in 2025.

我們確實正在考慮個位數的減少。因此，這並不是一次大規模的削減，因為我們希望 2024 年是個過渡年。我們完全期望我們能夠回到成長軌道。因此，我們實際上並不打算大幅削減 SG&A，這將導致我們無法充分利用 2025 年預期的成長。

But as a practical matter, we obviously are expecting slower wage growth this year. I think everybody is seeing that across industry and certainly, here in the US. We've mentioned that professional fees, some of our travel and entertainment expenses, overtime, all those things potentially can come down with lower of activity or flat activity relative to what we'd expected previously.

但實際上，我們顯然預計今年薪資成長將放緩。我認為整個行業的每個人都看到了這一點，當然，在美國也是如此。我們已經提到過，與我們之前的預期相比，專業費用、我們的一些旅行和娛樂費用、加班費，所有這些都可能會隨著活動的減少或活動的平淡而下降。

Logistics costs, we think we can reduce as well through some additional efficiencies in our regional distribution center network. So we're going to be looking at a new RDC in the Atlanta area that's going to give us some savings on freight costs. So we've got a number of things identified which will take that number down.

我們認為，我們也可以透過提高區域配送中心網路的效率來降低物流成本。因此，我們將考慮在亞特蘭大地區建立一個新的 RDC，這將為我們節省一些貨運成本。所以我們已經確定了一些事情，這將減少這個數字。

Again, I think you should really focus on low single-digit reduction in the SG&A in aggregate, but that's the kind of reduction that -- given we're going to be flat to slightly down on revenue, at least we anticipate that that allow us to maintain that 7% EBITDA margin. And we think that's really important for shareholders and something that we want to make sure that we preserve as we move through this transition year.

再說一次，我認為你應該真正關注 SG&A 總體上的低個位數減少，但這種減少——考慮到我們的收入將持平甚至略有下降，至少我們預計這允許我們維持7% 的EBITDA 利潤率。我們認為這對股東來說非常重要，我們希望確保在過渡的一年中保留這一點。

And Chris, I would just add. You asked about Q1. I would keep Q1 SG&A pretty consistent to where we were in Q4, but then it will be stepping down each quarter through the year as we progress. And then as we said in our guidance, we think we can keep that as a percent of revenue below 15%. In 2023, we were 14.7%. So still keen to get a percentage in that same range.

克里斯，我想補充一下。您問的是 Q1。我會讓第一季的銷售及管理費用與第四季的水平保持一致，但隨著我們的進展，全年每季都會有所下降。然後，正如我們在指導中所說，我們認為我們可以將其佔收入的百分比保持在 15% 以下。2023 年，我們是 14.7%。因此仍然渴望獲得同一範圍內的百分比。

Got it. That's all extremely helpful. Thank you for the color there, guys. And then I guess just with the trans-mountain pipeline nearing completion, how do we think about opportunities in Canada, perhaps, more broadly? I mean, do we see more funding opportunity? Are things tapering off now that's done? How do we think about Canada overall?

知道了。這一切都非常有幫助。謝謝你們的顏色，夥伴們。然後我想隨著跨山管道即將完工，我們如何更廣泛地考慮加拿大的機會？我的意思是，我們是否看到更多的融資機會？現在事情已經結束了嗎？我們如何看待加拿大的整體情況？

Well, Canada, to be fair has been a bit of a challenge for us in terms of the revenue profile. And for a couple of reasons, I think you see that a lot of the larger players in Canada that we typically serve are not as active in that market as they are in, let's say, some other upstream markets like the Permian Basin. So that's been a challenge for us.

好吧，公平地說，加拿大的收入狀況對我們來說是一個挑戰。由於幾個原因，我認為您會看到我們通常服務的加拿大許多較大的參與者在該市場上並不像在二疊紀盆地等其他一些上游市場那樣活躍。所以這對我們來說是一個挑戰。

And it's very competitive market as well. And so we are seeing the start of the year, as Kelly mentioned, increasing in backlog. And we see it across all segments, so that includes Canada. So we are seeing some really nice step up there to start the year. We're also seeing some attractive projects, some of which fall in the energy transition space, up there as well.

這也是一個競爭非常激烈的市場。因此，正如凱利所提到的，我們看到今年年初積壓的情況增加。我們在所有領域都看到了這一點，其中包括加拿大。因此，我們看到新年伊始就取得了一些非常好的進展。我們也看到了一些有吸引力的項目，其中一些也屬於能源轉型領域。

So there are some good things happening in Canada. But before we get too excited about the Canadian market, we just need to make sure that we can consistently generate revenue and profitable revenue up there in what has been historically -- or recently historically for us -- been a pretty tough market.

所以加拿大正在發生一些好事。但在我們對加拿大市場過於興奮之前，我們只需要確保我們能夠在歷史上或最近對我們來說是一個相當艱難的市場中持續產生收入和盈利收入。

Yeah, makes sense. Makes sense. If I sneak just one last one in. Again, like you say, net cash position, '25, more optionality than recent years here. Where would you see any potential M&A opportunities? Obviously, excluding the destocking, gas utility has been a great organic story. But where, maybe, are some of the gaps that M&A could help bolster growth here, if any?

是的，有道理。說得通。如果我偷偷溜進最後一顆的話再說一次，就像你說的，淨現金頭寸，'25，比近年來更多的選擇。您認為哪裡有潛在的併購機會？顯然，不包括去庫存，天然氣公用事業一直是一個偉大的有機故事。但併購可能有助於促進成長的一些差距（如果有的話）在哪裡？

Yeah. Look, we're going to look at various capital allocation strategies. And were big believers that growing our business is important to shareholders as well. Obviously, any M&A that we would consider or undertake has to be really thoughtful and absolutely accretive to the story and to the financials of the company.

是的。看，我們將研究各種資本配置策略。我們堅信發展我們的業務對股東也很重要。顯然，我們考慮或進行的任何併購都必須經過深思熟慮，並且絕對有利於公司的發展和財務狀況。

We're big believers that if you can get scale economies in a business, that is certainly a really a good way to gain market share and also to have some synergies right out of the gate in terms of cost reduction. And then opportunities potentially to expand the scope of services that we provide, those kinds of things are fair game as well.

我們堅信，如果您能夠在企業中實現規模經濟，這無疑是獲得市場份額的真正好方法，並且在降低成本方面也能立即產生一些協同效應。然後還有可能擴大我們提供的服務範圍的機會，這些事情也是公平的。

But I don't want to get too far ahead of ourselves in terms of saying that we got a very, let's say, well-developed M&A plan around particular acquisitions. We continue to look at the market and see what makes sense. Again, it's going to have to be a high hurdle for any significant M&A to really make our cut because we're really conscious of the fact that we've got to do right by our shareholders in terms of making sure that they share in the bounty that we're now developing through all this cash generation.

但我不想說得太過分，我們圍繞著特定收購制定了一個非常完善的併購計劃。我們繼續關注市場，看看什麼是有意義的。再說一遍，任何重大併購要想真正實現我們的目標，都必須是一個很高的障礙，因為我們真正意識到，我們必須為我們的股東做正確的事，以確保他們分享公司的股份。我們現在正在透過所有這些現金產生來開發賞金。

So I would just say stay tuned on that. And as and when we see deals that make sense for this company, we'll certainly be happy to share those thoughts when they're developed.

所以我只想說請繼續關注。當我們看到對這家公司有意義的交易時，我們當然會很樂意在這些想法形成後分享這些想法。

Understood. Well, best of luck in '24, guys.

明白了。好吧，祝大家 24 年好運。

Great. Thank you.

偉大的。謝謝。

Tommy Moll, Stephens, Inc.

湯米·莫爾，史蒂芬斯公司

Good morning. This is Max Kane on for Tommy. I was wondering if you could provide us with any additional color on gross margin seasonality for '24 and whether or not you're expecting margins to be sequentially higher in 1Q?

早安.這是湯米的麥克斯·凱恩。我想知道您是否可以向我們提供有關 24 年毛利率季節性的任何其他信息，以及您是否預計第一季度的利潤率會連續較高？

Yeah. Well, Max, we guided that we thought -- for the full-year average, we feel comfortable that we can maintain the 21%-plus margins that we've been enjoying for seven quarters in a row. So we're pretty proud of that.

是的。好吧，馬克斯，我們認為，就全年平均而言，我們對能夠連續七個季度保持 21% 以上的利潤率感到滿意。所以我們對此感到非常自豪。

I think in Q4, we had elevated margins of 21.9%. That was really strong. We had some good sales, some bulky (inaudible) line pipe sales that came in at high margins that helped prop that up higher than just the normal low 21% range.

我認為第四季我們的利潤率提高到了 21.9%。那真是太強了。我們有一些良好的銷售，一些大宗（聽不清楚）的管線管銷售，利潤率很高，有助於支撐高於正常的低 21% 範圍。

I think in Q1, you will see a 21.9%. It is going to moderate from that level, but still be above the 21% -- call it, low 21% type range is probably what we're thinking. But again, for the full year, we're proud seven quarters in a row. We're going to keep that trend going.

我認為在第一季度，你會看到 21.9%。它將從該水平開始放緩，但仍高於 21%——可以這麼說，我們可能正在考慮低 21% 類型的範圍。但在全年中，我們再次為連續七個季度感到自豪。我們將保持這一趨勢。

The one that really works against us there's the line pipe margins. There has been a deflation over the last year so that we have to deal with. But we've been focusing on product mix and the higher margin product categories to offset or help offset the impact that we see in line pipe.

真正對我們不利的是管線邊緣。去年出現了通貨緊縮，所以我們必須應付。但我們一直專注於產品組合和利潤率較高的產品類別，以抵消或幫助抵消我們在管線管中看到的影響。

Also, with the double-digit growth that we've had in the international business, that is a nice tailwind for us because the international business has accretive gross margins compared to the company average. And so we feel like everything is pointing in the right direction to keep that trend and going at 21%-plus.

此外，隨著我們國際業務的兩位數增長，這對我們來說是一個很好的推動力，因為與公司平均水平相比，國際業務的毛利率不斷增加。因此，我們覺得一切都朝著正確的方向發展，可以保持這一趨勢並保持 21% 以上的成長。

Okay, great. Yeah, thanks for the color. And yeah, you have already covered the rest of my questions. So I'll go ahead and turn it back. You have a nice day.

好的，太好了。是的，謝謝你的顏色。是的，您已經回答了我的其餘問題。所以我會繼續前進並把它轉回來。你有美好的一天。

Thank you.

謝謝。

Thank you,

謝謝你，

Thank you. I will now turn the call over to Monica Broughton for closing remarks.

謝謝。現在我將把電話轉給莫妮卡·布勞頓做總結發言。

Thank you all for joining our call today and for your interest in MRC Global. We look forward to having you join us for our first-quarter conference call in May. Have a great day.

感謝大家今天加入我們的電話會議以及對 MRC Global 的興趣。我們期待您參加我們五月的第一季電話會議。祝你有美好的一天。

This concludes today's teleconference. You may disconnect your lines at this time. And thank you for your participation.

今天的電話會議到此結束。此時您可以斷開線路。並感謝您的參與。