Distributors serving the oil and gas markets reported strong sales in the first quarter and indicated that despite several economic problems, they expect a strong year.
Reasons for this optimistic outlook include significant business backlogs, acquisitions, European customers’ reassessment of their energy purchases due to Russia’s invasion of Ukraine, increased oil production, and opportunities in renewables/green markets.
MRC Global, for example, stated that its site Backlog reached $667 million, a 28 percent increase over the year-end and the highest level seen since January 2019. Each of the company’s four business segments in the United States, Canada, and other international markets generated double-digit growth in backlog percentage in the first quarter.
“We are increasing our full-year revenue guidance by $100 million to $3.1 billion and are now targeting $200 million in full-year EBITDA, which represents 6.5% of sales. “We expect 2022 to be an excellent year for our customers, employees and investors.”
Saltiel told financial analysts that a global energy transition is underway to tackle climate change, and he expects this to have a significant impact on MRC Global’s future business.
He said MRC Global is playing an important role in the energy transition.
He said, “We are already involved in many green energy projects and decarbonization efforts. In recent years, we have supplied PVF products for use in biofuels, wind, hydrogen, geothermal, hydro, and carbon capture and storage projects. We are vying to participate in many of green energy and decarbonization projects around the world.
Meanwhile, NOW Inc. Inc., operating primarily under the DistributionNOW and DNOW brands, reported revenue in the United States of $334 million, an increase of 10 percent over the previous quarter.
The company, a global supplier of energy, industrial products, services, engineering equipment packages and supply chain solutions, said the growth in the United States was driven in part by expanded sales of pipes, valves and fittings essential to producers to ramp up oil and gas production.
International developments have also had an impact on DNOW.
“The Russian invasion of Ukraine is causing many European countries to reassess the security and reliability of the energy sources that drive their economies,” said David Cherichensky, President and CEO.
He said the revaluation translates into replacing oil and gas imported from Russia with more domestic or imported options, which generates additional demand for the company’s other products in those regions.
Cherechinsky said NOW Inc. It ceased operations in Russia, where both revenue and net assets account for less than 1% of DNOW’s totals.
The company raised its total guidance for the full year of 2022 with an expectation of 20% revenue increase.
DNOW is also looking to grow its business through acquisitions.
“We tend to be able to buy at lower prices in a downturn,” Cherechinsky told analysts after announcing first-quarter results. “But there are opportunities out there. We have some that we think will close soon. They tend to be small at the moment. But we have a lot of cash and a strong balance sheet, and we are very active looking for deals. We made two acquisitions last year, and I think we will. That or better this year.”
David Little, CEO and chairman of DXP Enterprises, said his company posted 25% organic sales growth, adjusted for four acquisitions at the end of 2020 and 30% year-over-year overall sales growth in the first quarter.
“We’re off to a great start this year. This is DXP’s first quarter of meaningful organic growth in total sales and EBITDA, which is great to see.
DXP is looking into other markets with its recent acquisitions.
These recent acquisitions target some of the less cyclical markets. We’ve worked in water and wastewater, but now we’re pushing it more – and trying to develop it into a bigger part of what DXP does.
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. , the leading distributor of air compressors and related products and services focused on serving the food and beverage, transportation and general industrial markets in the Northern California and Nevada regions.
“We’ve been in this business, but it wasn’t a real big focus for us. And so those two things make DXP different than it has been in the past,” Little said.
The Houston-based longtime distributor provides customers with innovative supply chain services, pump solutions, and MROP products and services.
DXP is also a significant player in the renewable energy market and helps its clients reach their goal of reducing emissions through their technical expertise.
Jack Keough is President of Keough Business Communications. He served as Industrial Distribution Editor for 26 years. You can reach him at firstname.lastname@example.org.