Greetings, and welcome to MRC Global's Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Monica Broughton, Investor Relations. Please go ahead. Thank you, and good morning. Welcome to the MRC Global second quarter 2022 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, mrcglobal.com, as well as by phone until August 23rd, 2022. 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, August 9th, 2022, and therefore you are advised that information may no longer be accurate as of the time of replay. In our call today, we will discuss various non-GAAP measures, including net debt, adjusted gross profit, adjusted gross profit percentage, adjusted SG&A, Adjusted EBITDA, adjusted EBITDA margin, and adjusted net income. Unless we specifically state otherwise, references in this call to EBITDA refer to Adjusted EBITDA. 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. 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 more in-depth review of the risk factors concerning these forward-looking statements. Now, I would like to turn the call over to our CEO, Mr. Rob Saltiel. Thank you, Monica. Good morning, and welcome to everyone joining today's call. I will begin with a high-level review of our second quarter results, then discuss growth opportunities and our positive outlook for our business. I will then turn over the call to Kelly for a detailed review of the quarter and our 2022 guidance before providing a brief recap. In a nutshell, our second quarter results were outstanding as we increased revenue significantly over the prior quarter while driving more of that revenue to the bottom line, and we did all this while increasing our backlog by double digits. Our strong second quarter was punctuated by a 14% sequential revenue increase, exceeding our previous expectations. All four business sectors experienced double-digit sequential growth led by our gas utilities and downstream industrial and energy transition, or DIET businesses, followed by our upstream production and midstream pipeline sectors. Gas utilities drove more than 40% of this quarter's sequential growth and hit a new milestone with $314 million of revenue in the second quarter, its highest quarterly revenue to date. Our gas utilities business continues to benefit from an increasing number of integrity management and meter upgrade projects and, to a much lesser extent, housing starts. Our DIET sector generated nearly a third of the second quarter's sequential improvement and is on track to approach $1 billion in revenue this year. This business has benefited from increased maintenance and turnaround activity and is rapidly returning to pre-pandemic revenue levels. Our two traditional energy sectors, upstream production and midstream pipeline, also experienced strong revenue improvements in the quarter. In particular, our U.S. upstream business grew 16% sequentially as our traditional customers ramped up investment in response to persistently strong oil and gas prices, and we expanded our share with new customers. New oil and gas production and geographic expansion of the U.S. oil field both require new gathering and processing assets, which in turn has benefited our midstream business in the quarter. Our international business grew sequentially by 12% despite the unfavorable impact of weaker foreign currencies that shaved 500 basis points off this increase for the quarter. Historically, our international business has lagged the U.S. business recovery due to a higher concentration of longer lead time projects. The good news is that our underlying international business is strengthening as we've increased our international backlog by $31 million since year-end, implying stronger international revenues in 2023 and beyond. Our Canada revenue was down 7% due to the spring breakup there. However, the backlog has grown significantly and is up 54% since year-end, supporting our expectations of strong growth in the back half of this year. We continue to emphasize profitability and efficiency at MRC Global, and I'm very proud of our team for delivering Adjusted EBITDA margins of 7.7% in the second quarter. This is the highest margin achieved by the company since 2014 when our quarterly revenue was nearly double what it is today. We are a much leaner and more focused organization than we've ever been, and this has greatly aided our improved results. In addition to the strong revenue and EBITDA performance in the first half of 2022, our backlog has continued to increase as well, supporting our positive outlook and the growing momentum in our businesses. In the second quarter, our backlog grew across all four business sectors and all three geographic segments and ended at $746 million, a 12% increase over the first quarter. As of July 31, our backlog is a further 7% higher than our June 30 figure, adding to our confidence for the second half of 2022. Our full year guidance remains at $3.3 billion of revenue and $230 million in EBITDA. This represents about $30 million more EBITDA than we generated in 2019, but on approximately $360 million of lower revenue. Our 2022 guidance also yields a 7% EBITDA margin, which is a 150 basis point improvement over 2021. Although we are not changing our guidance, we believe there is bias to the upside for our full year performance. As we look to the future, each of our end market sectors has a strong growth story, both in the near term and longer term. I wanna highlight four specific growth areas for us. First, the energy transition. This is a sub-sector where we have seen tremendous growth this year, especially with the reconfiguration of petroleum refineries to process organic and waste feedstocks to produce renewable fuels. Our energy transition backlog includes a wide variety of projects, including the previously announced offshore wind farm in New York. Multiple carbon capture and hydrogen projects in both the U.S. and Europe are visible within the three-year horizon. Most importantly, we're developing relationships, project experience, and technology expertise that provides us a first-mover advantage in PVF supplies for the energy transition space. This year, we expect to generate approximately $100 million of energy transition revenue, and we expect this figure to be exceeded significantly in 2023. MRC Global is playing a major role in the energy transition, and we expect this to be a growth driver for many years. The second area I'd like to highlight is our chemical strategy, which is gaining meaningful traction. About a year ago, we assembled a team with unrivaled chemicals expertise, tasked with identifying opportunities and growing our market share. We have won recent contract awards with major customers, and we are expanding our product mix to serve new U.S. and international markets. Our chemical sub-sector grew 10% sequentially in the second quarter and is up 28% versus the second quarter of 2021. The outlook is very positive, as North American chemical industry capital spending is expected to grow 18% through 2024. There is significant opportunity for MRC Global to deliver strong growth in the chemical space as this market expands and as we gain market share. The third growth area I would like to highlight is the upstream production sector. We are the largest PVF distributor to the energy sector, and we are committed to retaining our leadership position. We have enhanced our product offerings to serve private and smaller public operators, and we are expanding our footprint in the critical Permian Basin by opening a new facility in Midland, Texas, to better serve our customers there. Our international upstream business has picked up as well, in part due to the increased focus on energy security in Europe. Among our four business sectors, upstream production is expected to achieve the highest percentage growth this year at approximately 30%. We believe that we are in a multiyear growth cycle for the traditional oil field after years of under-investment, driven by increases in worldwide energy demand and an expanded role for U.S. energy production. Finally, I'd like to highlight the global LNG market as an area of growth for MRC Global. Natural gas is a logical transition fuel to a lower carbon future, and the U.S. in particular is blessed with abundant supplies that can be exported economically and safely to world markets as LNG. We expect that the increased focus of energy security will help facilitate growth of LNG production infrastructure in the U.S. and parallel regasification and transmission facilities in consuming markets. Here in the US, we are already active in supplying large quantities of PVF to approved LNG projects, and we expect a good number of additional LNG projects to gain approval in the next three-five years. Lastly, I want to commend our operations, supply chain, and sales and marketing teams, who continue to deliver essential PVF products to our customers safely and timely while providing superior service in addressing our customers' evolving needs. Our support functions continue to provide capable systems and personnel for our business to thrive and grow amid challenging market conditions. It has been a total team effort at MRC Global, and I'm very proud of our people for stepping up. With that, I'll now turn the call over to Kelly. Thanks, Rob, and good morning, everyone. My comments today will be focused on sequential comparisons, so unless stated otherwise, we are comparing the second quarter of 2022 to the first quarter of 2022. Total sales for the second quarter were $848 million, a 14% sequential increase, outperforming our previous expectations of an upper single-digit improvement and returning our quarterly revenue rate to late 2019 pre-pandemic levels. All sectors grew double digits, led by gas utilities and DIET, followed by the upstream and midstream sectors. Gas utilities' second quarter sales were $314 million, an increase of $43 million or 16%. We continue to experience strong growth with our customers in this market, which is expected to accelerate even further in the third quarter with the construction season well underway. While there is the potential for the new home market to decline with interest rate increases, we do not anticipate this having a significant impact on our gas utilities business, as 85% or more of customer budgets in this sector are generally dedicated to maintaining and upgrading existing infrastructure. The DIET sector second quarter revenue was $259 million, an increase of $33 million or 15%. This sector continues to surprise to the upside, driven by growing energy transition work, primarily renewable biofuel projects in the U.S., as well as increased refinery and chemical turnaround projects and maintenance activity. Also, as mentioned by Rob, this business is approaching the $1 billion mark for this year, making it our second-largest sector behind gas utilities. The upstream production sector revenue for the second quarter was $178 million, an increase of $20 million or 13% led by the U.S. as well completion activity increased for our primary customer base. International also experienced increased upstream activity in Norway and Australia as energy demand and client spending continues to rise post-pandemic. Midstream pipeline sales were $97 million in the second quarter, up $10 million or 11%. We are seeing consistent improvement in this market as production levels gradually increase, driving the need for additional gathering and processing infrastructure. Now I will cover sales performance by geographic segment. U.S. revenue was $717 million in the second quarter, a $99 million or 16% increase, also led by the gas utilities and DIET sectors, with all sectors up mid-teen percentages. The U.S. Backlog increased double digits this quarter, with all sectors up sequentially supporting our outlook for the back half of the year. Canada revenue was $40 million in the second quarter, a 7% decline compared to the first quarter, primarily as a result of the spring break up seasonal impact in the upstream production sector. However, the backlog in Canada increased 38% sequentially, positioning this market for an improved second half of the year. International revenue was $91 million in the second quarter, a 12% increase with all sectors up despite a $4 million foreign currency headwind. The upstream production sector experienced higher activity from customers responding to post-pandemic energy demand and supportive commodity prices. The DIET sector increased in New Zealand from project work on a geothermal power facility, as well as in the Netherlands from additional project work, including biofuels. Now turning to margins. Adjusted gross profit for the second quarter was $181 million, 21.3% of revenue, an 80 basis point improvement over the first quarter and the second time in our public company history, it has been over 21%. Compared to a year ago, it is 180 basis points higher as we continue to experience the benefit of higher sales volume, the positive impact of inflation, our preferred supplier position, and proactive supply chain management. As a reminder, most of our public company peers use an average cost inventory methodology. Therefore, when benchmarking MRC's global results, it is more appropriate to use the adjusted gross profit numbers to correct for the impact of LIFO expense, placing our inventory on an average cost basis. Before adjustments, our gross profit percentage was 17.8% in the second quarter, down 50 basis points from the first quarter, primarily due to increased LIFO expense, which was $20 million in the second quarter and $6 million in the first quarter. SG&A costs for the second quarter were $120 million or 14.2% of sales, as compared to $107 million or 14.4% of sales in the first quarter. As a percentage of revenue, SG&A improved by 20 basis points sequentially and 70 basis points year-on-year. Absolute SG&A cost increased $13 million sequentially, driven by increased headcount requirements to support our improved growth outlook and wage and benefit enhancements required to remain competitive in the marketplace for talent. In addition, we experienced increases in discrete areas such as medical cost, air travel, and in transportation fuel costs that are expected to moderate going forward. Therefore, we expect overall SG&A expense levels to stabilize with only modest growth anticipated for the remainder of the year. For the full year, we expect SG&A as a percentage of sales to be in the low 14% range, similar to this quarter. However, it may fluctuate the next two quarters based on sales volumes. EBITDA for the quarter was $65 million or 7.7% compared to the previous quarter, which was $48 million or 6.5%. As Rob mentioned, this is the highest quarterly EBITDA margin percentage we've generated since 2014 on nearly half the revenue base, demonstrating how we have streamlined our cost structure and are running the company much more efficiently. Tax expense in the second quarter was $6 million compared to $7 million of expense in the first quarter, resulting in an effective tax rate of 30% due to unbenefited foreign losses. For the quarter, we had net income attributable to common stockholders of $8 million or $0.09 per diluted share. Our adjusted net income attributable to common stockholders on an average cost basis, normalizing for LIFO expense was $23 million or $0.27 per diluted share. We consumed $50 million of cash from operations in the second quarter as we increased our inventory position corresponding with our revised projected increase in activity levels. We expect to continue building inventory levels into the third quarter and to be relatively flat in our use of cash from operations for this quarter. However, we do expect to generate significant cash in the fourth quarter that should result in a net positive cash flow from operations for the full year, which is unusual for the company as we have historically consumed cash in years of strong revenue growth. Our total debt outstanding at the end of the quarter was $356 million, a $53 million increase from the first quarter due to increased inventory purchases and to a lesser extent, growth in accounts receivable. Our leverage ratio based on net debt of $335 million was 1.7x, which is an improvement over the last 12 months when our average leverage ratio was 2.2x. We expect to make further progress on our leverage ratio as our EBITDA continues to grow and we lower our net debt position with expected cash generation during the fourth quarter. We ended the quarter with availability under our ABL facility of $529 million and $21 million of cash for a total liquidity position of $550 million. Our backlog position continues to demonstrate solid growth momentum. This is the fourth quarter where our backlog has been in double digits returning to 2018 levels. In one month, the backlog has grown another 7% to end July at $795 million, a 19% increase compared to March 31st. This strong backlog position is an indication of the health of the business and future growth potential. Now turning to our 2022 outlook. As we announced a month ago, we are projecting our revenue to come in at approximately $3.3 billion, a 24% growth with EBITDA at $230 million or 7% of sales, a 150 basis point improvement compared to last year. From a total company perspective, this translates to a double-digit improvement in all sectors, ranging from about 30% for upstream production, followed by DIET and gas utilities with expected growth exceeding 20% and about 14% for midstream pipeline. From a geographic view, we expect the U.S. and Canada to increase very strong double digits and international increasing mid-single digits. Sequentially, we expect the third quarter company revenue to be up mid-single digits compared to the second quarter and the fourth quarter to decline seasonally in the range of about 5%. Our normalized effective tax rate for the year is projected to be between 27%-30%, but could fluctuate from quarter to quarter due to discrete items. Now, I'll turn it back over to Rob for closing comments. Thanks, Kelly. I will summarize a few highlights before opening for Q&A. Our impressive first half performance, combined with a rapidly growing backlog and strong business fundamentals in each of our end markets, has increased our confidence in our 2022 outlook. Each of our four business sectors is expected to grow revenue by strong double-digit percentages in 2022 versus 2021. Our U.S. And Canada segments are expected to grow by strong double-digit percentages, and our international business is expected to grow mid-single digits. We are a more efficient company with an unwavering focus on our bottom line. We are earning peak EBITDA margins on much lower revenues, and our EBITDA margins are expected to increase further as we grow revenue. We reaffirm our guidance that MRC Global will achieve $3.3 billion in revenue and $230 million in EBITDA, or 7% EBITDA margin this year, which would be our best EBITDA margin percentage since 2014. Finally, we believe we are in the early innings of multiyear growth for our business with many drivers of durable growth across all four sectors, particularly in gas utilities, chemicals, energy transition, and traditional energy. With that, we will now take your questions. Operator? At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Tommy Moll with Stephens has our first question. Please proceed. Morning, and thanks for taking my questions. Morning, Tommy. Rob, I wanted to start off on gas utilities. I think you mentioned this was a record quarter on a revenue basis. I'm curious, as you look forward, can you talk to the pipeline, both in terms of potential for new customer adds or big incremental deals with existing customers? Thank you. Yeah, we're happy to do that, Tommy. Look, the gas utilities business continues to really be a fantastic business for MRC Global, something that we have grown organically over the last 15 years to now becoming our largest sector and one that continues, as you say, to set records. We did have a record quarter for gas utilities. Keep in mind, a lot of what we're doing in this space is we are taking business that is currently insourced by utilities, and they're outsourcing it to MRC Global. We've continued to penetrate many of the large gas utilities in the US. At the same time, with existing customers, we've expanded our product offerings. You're seeing those two effects manifested in our numbers. Going forward, we still have a number of large gas utilities that we either don't serve at all, or we serve in a very small way in terms of the products and/or the geographies that we cover. Our team is very active in developing those customers and those product offerings so that we can continue to expand our business there. I've been on a number of these meetings myself, where we're doing a little bit of work, but we can certainly do a lot more. Again, in a lot of cases, we're competing against what is currently insourced activity. We're very excited about continued growth in this business. Kelly talked a lot about the growth in the backlog, both in the quarter and even from June- July. Gas Utilities continues to grow in backlog for us, and this really reflects this, growing pipeline of work that you referred to in your question. Thanks, Rob. I appreciate it. Shifting gears to SG&A. If you look at the guidance for 2022, it implies notable leverage on that expense line versus the prior year. At the same time, I would assume you've probably seen some inflationary pressures there. I wonder if you could talk to any of those. As you look forward into 2023, on the assumption that your revenue is up, which I recognize you're not guiding to today, but just for the sake of conversation, let's just assume that. Can you continue to show leverage on that line, or are there some inflationary pressures that have just started to creep a bit and it's gonna be more challenging? Thanks. Yeah. Let me give you a context on that and then I'll let Kelly add some color. Look, we've said many times before that in the distribution business, inflation is our friend, and we have certainly seen increases in our margins and revenues due to inflation. Of course, this increasing activity that we've had in 2022 does require that we have adequate personnel to service that increased activity. We've had to go out and hire personnel and we'll continue to do so to serve the growing level of activity which we expect to continue based on the growth in our backlog. At the same time, I think we all know we're in inflationary times in terms of wages, and we wanna make sure that we are paying our people a fair wage, and we've had to really be market responsive in that respect. We've introduced some wage increases as well with the improving performance of the company. There's gonna be some more, you know, discretionary pay that will be coming in as part of the improved performance of the company. This SG&A number has gone up from quarter to quarter, probably more than we had anticipated, but we certainly expect that to moderate going forward because a lot of the things that occurred in the second quarter versus the first really were one-time things and/or we've caught up in terms of our wage levels given where the market is. Going forward, we continue to see SG&A as a percentage of revenue coming down, okay? This year, we're modeling around 14%. As we increase revenue going forward into 2023 and beyond, we certainly expect the scale effects to allow us to be more efficient in terms of our SG&A spend. I do think the second quarter was somewhat anomalous in terms of the increase over the first quarter. We think our costs are gonna moderate from here, and we think we'll continue to see, you know, a reduced SG&A as a percentage of revenue as we go forward. Kelly, you wanna add some color on that? You've covered it very well, Rob, but maybe just a couple of things. I mean, I do wanna point out that even with the higher SG&A costs that we have this quarter, you know, as a percent of revenue, our company is best in class when you look at that percentage, especially compared to our primary peers. We've always been, you know, I think much more efficient on SG&A, and we expect to continue to be so. You know, some of that sequential change, just to point out as a reminder, in Q1, we did have a couple million dollars benefit or credit recorded in the first quarter related to the CARES Act, and so that had artificially brought that SG&A number down somewhat in the first quarter. As Rob mentioned, here in the second quarter, you know, with the new trajectory of the business or the new forecast, you know, our revenue forecast went up $200 million. Our expected EBITDA went up $30 million. As a result of that, you know, we had headcount increases, overtime increases, some location premiums that were introduced in certain markets to remain competitive. And Rob kinda hinted to it, you know, because of the increased EBITDA projections, that causes a change in our accrual requirements for incentive bonuses. There was a year-to-date kinda retroactive catch-up in the quarter, that will not, you know, you won't see that continue in the future quarters. Just across the board, benefit claims have went up. We've, you know, fuel, travel expenses, insurance premiums. There's been increases across all of those different cost categories that we think will normalize at this point. As Rob mentioned, you know, do not expect that kind of change going forward. We think, you know, we'll have a modest type increases in the coming quarters and kinda remain at that low 14% level. Although I think Q3, it'll go lower than that as a percent of revenue because of the higher revenue that we're projecting with mid-single digit revenue increases. The fourth quarter, it could go a little bit above that just because of the lower revenue, but would average out to a similar number that we had this quarter. I appreciate all the context, and I'll turn it back. Perfect. Our next question comes from Doug Becker with Benchmark Research. Please proceed with your question. Thanks. It looks like net leverage is still on track to be around 1x at year-end, likely trends lower next year. Last quarter, you mentioned that this increases flexibility for inorganic growth. What are your thoughts on a share repurchase as those leverage statistics come down? Well, thanks for your question, Doug. Look, we are committed to maintaining a strong balance sheet in MRC Global, and we believe that is valued by our investors, and it certainly gives us more strategic flexibility to look at inorganic opportunities. I do wanna remind as we have said in our prepared comments that, you know, we did consume cash in the second quarter, as we did in the first quarter. The third quarter's gonna be relatively flat, and we do plan to generate good cash levels in the fourth quarter so that for the year operating cash flow will be positive. As we currently stand, we do have a balance on our ABL that we'd like to pay down, and we'd certainly like to continue to improve our leverage levels as we move through the rest of this year and probably early into next year. I think it's a bit premature to talk about any kind of share buybacks at this time, but we certainly will continue to revisit capital allocation as the balance sheet strengthens and as we look outside for inorganic opportunities. That makes sense. You highlighted a number of growth drivers. How do margins compare in, say, the chemical, energy transition, and LNG markets, compared to the company average? Yeah, those businesses tend to be accretive to margins for us. When you talk about the energy transition, a lot of what we're doing is in renewable fuels, and there tends to be a lot of valves and also a good amount of stainless and alloys involved in that. Those tend to be accretive for us. I can say the same thing about the chemical space as well. A lot of those growth areas for the company are accretive in margins. I think you've seen our gross margins come in at pretty healthy levels and, you know, that certainly is supportive of that. Yeah. I think you alluded to this, but accretive to gross margins as well as EBITDA margins? Yes, I'm talking about gross margins. Absolutely. Perfect. So you know, you alluded to this in the prepared remarks, but two of the last three quarters, adjusted gross margins have been above 21%. Is it too early to say that adjusted gross margins of 21% are realistic for next year, given some of the product shift you just were answering about earlier? Yeah. We said at the beginning of the year that we'd be north of 20%. I think we've been pleased with the gross margins being where they are right now. I think it's probably too early to make predictions for 2023, but we certainly see holding north of 20% gross margins to persist through the end of this year. Thank you, Rob. Thank you. Our next question is from Nathan Jones with Stifel. Please proceed with your question. Good morning, everyone. Good morning. Another question on gross margins. You know, the business does tend to benefit a little bit from inflation, and we have started to see, you know, some of the commodity costs roll over. Do you think that, you know, we're kind of looking at peak gross margins for the year in 2Q and some of that deflation starts to be a bit of an impact on gross margins going forward, or any color you can give us from that perspective on gross margins? Yeah, it's a great question because I think, if you look over the history of this business, we've seen periods of rapid inflation and around the time of the financial crisis, we saw significant deflation. This is certainly something that we watch very carefully and manage closely in terms of our inventory levels. I would tell you currently that we still see inflationary impacts in our VAMI and our gas products, and probably a little bit more of a flattening in the carbon and in the stainless product groups. The kind of rapid inflation that we saw maybe earlier in the year, especially around the early days of the Ukraine war, has subsided somewhat. We still see a bias toward general inflation across our product groups, at least as we move through this year. I think as we look to 2023, this is something that we'll, you know, we'll continue to have to watch and manage. We certainly, when we see flattening in terms of pricing as we are in the carbon products, we manage our inventory carefully to make sure that we don't hold too much of that at any period of time. As we've said, the gross margins that we're seeing north of 20%, we think those are certainly very much intact through the remainder of this year, and then we'll just see what 2023 holds for us. You guys raised guidance when you pre-announced the quarter a month ago. I think, Rob, you made a brief comment that you're probably biased to the upside, even a month later. Maybe just talk about where that upside might come from or, you know, what trends you've seen in the last month since you raised that guidance, that give you confidence that, you know, maybe there's some upside to the numbers from here. Yeah. Look, it's a great question. I think it really just comes right down to the backlog. You know, we continue to grow our backlog across all segments and all sectors. You know, we continue to see very strong demand for the products and services that we provide our customers. There's been a lot of talk, obviously, about you know, recession impacts. We're not seeing any of that in any of our geographies or in any of our business sectors. That gives us confidence in the remainder of this year. You know, we certainly feel good about our guidance. Again, I think if there's any biases to the upside, we're not gonna change the guidance, but we certainly would hope to do better. Just one more on the international side of the business. Obviously, it's, you know, it's longer cycle, it's later cycle, and tends to move, you know, a lot later than the other businesses do. Can you talk about, you know, what you've seen in terms of, you know, increased project activity that might manifest itself for you as revenue in 2023, 2024, just a bit of a longer term outlook for that side of the business? Sure. I'll talk about two elements there. The upstream and the downstream or DIET businesses. You know, on the upstream side, I think we all understand that the international markets, particularly Europe, are much more keen to develop more of their own energy, given what's happened with the importation or lack thereof of Russian energy supplies. We've seen projects go through in the North Sea. We've seen life extensions on existing platforms in the Norwegian Sea. I think there's a lot of optimism, if you will, on the upstream side as it relates to Europe that wasn't there, let's say, even six months ago, and we're seeing some project benefits there. On the DIET side, in energy transition in particular, we're seeing a lot of demand for renewable diesel projects in Central Europe. Most of those are actually in our backlog as opposed to having been recognized so far. Going forward, we continue to see, you know, lots of opportunities for energy transition, a number of carbon capture and hydrogen projects that are being planned for the U.K. and Central Europe. We're very excited about the growth in that international business. It is delayed, it's very project-focused, but we certainly have expectations of double-digit growth in that business in 2023 over 2022. Thank you very much for taking my questions. You're welcome. Our next question comes from Ken Newman with KeyBanc Capital Markets. Please proceed with your question. Hey, good morning, guys. Good morning. Good morning. You know, I know it's still early days, but, you know, I'm curious if you have a view on just how large an opportunity the tax bill that's working through Congress could be to both your traditional energy and your renewables portfolio going forward? Well, it's kind of hot off the press, Ken. I mean, you know, there's the minimum tax thing, you know, the 15%, but you have to have a $1 billion of income or higher, so that doesn't affect us. Yet. Yeah, good point, Rob. You know, and then I think some of the other areas, you know, you know, there's a semiconductor space that I think we're pretty excited about. That's something that could be a good opportunity for us to participate in as you know, as that infrastructure gets built out. Just, you know, energy transition projects in general that benefit from that, especially the ones that are already, you know, kind of driven by our primary customer base. That's gonna be very positive for us as well. Go ahead, Rob. Yeah, any of these stimulus measures really are positive for our business. You know, what it does is it creates additional investment, especially in some of these new energy areas or areas that need additional incentives to create business activity. As that activity comes to the U.S. and in the markets where, you know, which is our most dominant market, we think it can only benefit MRC Global. I think as Kelly said, it's early to identify specifics on how it impacts us, but it's a net positive for our business, no question. Right. You know, just going back to an earlier comment, Rob, I think you talked about a significantly higher operating for energy transition sales in 2023 versus, I think you said, $100 million in revenue for 2022. Any way you can help us kinda size about how to think about what significantly higher means in that context? You know, as a follow-on to that, just remind us about the operating leverage profile in that space relative to the opportunity on higher volumes. Yeah. What I would say about 2023 on the energy transition is if we just look at our backlog, we think 2023 will be stronger than 2022. I think it's a bit early to give any kind of sense of how much bigger that will be, but we continue to field inquiries around projects in the energy transition space. Again, currently, we're really have been focused primarily on renewable diesel projects, but we're seeing a lot more developments around hydrogen and carbon capture that are really a bit further out. We continue to be very bullish on the energy transition space. Look, we think this business is very accretive for us in terms of the opportunities. We tend to get very large order sizes around these projects. Keep in mind, energy transition today is largely a project business. We're really not doing much in the way of MRO. To the extent that we get in on the project side, it certainly puts us in a great position to leverage that business going forward with ongoing MRO activity. It's a business that we continue to be very excited about, we're very focused on. We think, as I said in my comments, we think we're developing a first-mover advantage with a lot of these projects that we've been involved in, our work with EPCs and end users. It's really been an excellent development for us and one that we think will pay dividends for years to come. Yeah. One more for me. You know, just wanted to talk about the guide increase for the year. I think someone else earlier in the call kinda hinted at it, but maybe I'll ask it in a different way. You know, obviously 2Q came in stronger than you originally anticipated on the flow through. I think it was high teens here in the quarter. I think maybe originally the implied guidance was maybe low double digits. You know, when I look at the back half, the implied guidance is, you know, maybe closer to like high single digits versus the prior year on a year-over-year basis to 2H 2022 versus the prior year, right? Any color on what's driving the expectation for lower operating leverage in the second half? Is that primarily all SG&A, the, you know, lumpiness that you talked about earlier, or, you know, just any sense on what's, you know, that's kind of baked into this to this outlook? Yeah. Yeah, Ken, this is Kelly. I'll take that one. Yeah. I think probably what you're seeing there, you know, if you looked at it by quarter, I think Q3 would be more what you would be expecting and, you know, kind of fall through type numbers. But we have built in, you know, which hopefully ends up being conservatism in the fourth quarter, you know, with a 5% falloff. As a reminder, you know, historically that Q4 seasonality is kind of a 5%-10% drop-off. We're not seeing anything at this point that's gonna, you know, that we don't think's gonna have it be at the higher end. It's probably gonna be more at that lower end around 5%. I think we said that in the prepared remarks. But just that lower revenue base and, you know, probably a little bit of, more conservatism in the margin, projection that we put out there just in case of, some of the deflationary things that Rob talked about that will, you know, hit at some point. Could be upside to that, but, you know, just, you know, just trying to have some conservatism mainly around the fourth quarter seasonality. There's no expectation that price cost, you know, falls off versus, you know, the first half projections that you- No, no. No. Absolutely not. No. Okay. Maybe just one more if I could squeeze it in, and I'm sorry if I missed this. Kelly, did you mention an expectation for LIFO reserves into the third quarter? And if I look at line pipe pricing, they still seem pretty elevated here. Yeah. Would you expect that to kind of be flat or up sequentially just given the lag in the index? Yeah, that's a great question. We didn't cover it in the prepared remarks, but I'll give you some context around that. You know, Q1 was $6 million in LIFO expense. Q2 was $20 million. What we're modeling right now, Ken, this is a great question. We're modeling $90 million for the full year, which, you know, so that does show a fairly significant increase there in the second half. That was one of the reasons we pointed out in the prepared remarks that when everyone's comparing our numbers to our peer group, you should really look at our adjusted numbers, whether that's at the gross margin level, EBITDA level, net income level. That's really the more apples to apples comparison because that LIFO expense or that LIFO impact, even in years when you have a deflationary environment and we have LIFO income, that can distort our GAAP results, you know, that you see on the, you know, just the pure GAAP financial statements. The average numbers are really a much better indicator of how we're benchmarking against our peers. Got it. That's helpful. Thank you very much. You bet. You're welcome. Ladies and gentlemen, we have reached the end of the question and answer session, and I would now like to turn the call back over to Monica Broughton for closing remarks. Thank you for joining us today and for your interest in MRC Global. We look forward to having you join us for our third quarter conference call in November. Have a great day. Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.