SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 3, 2017
MRC GLOBAL INC.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction
|(I.R.S. Employer |
Fulbright Tower, 1301 McKinney Street, Suite 2300
Houston, TX 77010
(Address of principal executive offices, including zip code)
Registrants telephone number, including area code: (877) 294-7574
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
|☐||Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)|
|☐||Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)|
|☐||Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))|
|☐||Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
|Item 7.01||Regulation FD Disclosure.|
MRC Global Inc. (MRC Global) executive management will make presentations from time to time to current and potential investors, lenders, creditors, insurers, vendors, customers, employees and others with an interest in MRC Global and its business regarding, among other things, MRC Globals operations and performance. A copy of the materials to be used at the presentations (the Presentation Materials) is included as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information contained in the Presentation Materials is summary information that should be considered in the context of MRC Globals filings with the Securities and Exchange Commission and other public announcements that MRC Global may make by press release or otherwise from time to time. The Presentation Materials speak as of the date of this Current Report on Form 8-K. While MRC Global may elect to update the Presentation Materials in the future or reflect events and circumstances occurring or existing after the date of this Current Report on Form 8-K, MRC Global specifically disclaims any obligation to do so. The Presentation Materials will also be posted in the Investor Relations section of MRC Globals website, http://www.mrcglobal.com, for 90 days.
As the Company winds down its enterprise resource planning (ERP) implementation for its International segment, the Company expects its capital expenditures in 2018 to be reduced by approximately $20 million for ERP implementation costs.
The information referenced under Item 7.01 (including Exhibit 99.1 referenced under Item 9.01 below) of this Current Report on Form 8-K is being furnished under Item 7.01. Regulation FD Disclosure and, as such, shall not be deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information set forth in this Current Report on Form 8-K (including Exhibit 99.1 referenced under Item 9.01 below) shall not be incorporated by reference into any registration statement, report or other document filed by MRC Global pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
|Item 9.01||Financial Statements and Exhibits.|
|99.1||Investor Presentation, dated November 3, 2017|
INDEX TO EXHIBITS
|99.1||Investor presentation, dated November 3, 2017|
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|Date: November 3, 2017|
|MRC GLOBAL INC.|
|James E. Braun|
|Executive Vice President and Chief Financial Officer|
Third Quarter 2017 Investor Presentation November 3, 2017 Andrew Lane President & CEO Jim Braun Executive Vice President & CFO Exhibit 99.1
Forward Looking Statements and Non-GAAP Disclaimer This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Words such as “will,” “expect,” “expected”, “looking forward”, “guidance” and similar expressions are intended to identify forward-looking statements. Statements about the company’s business, including its strategy, the impact of changes in oil prices and customer spending, its industry, the company’s future profitability, the company’s guidance on its sales, adjusted EBITDA, adjusted gross profit, tax rate, capital expenditures and cash flow, growth in the company’s various markets and the company’s expectations, beliefs, plans, strategies, objectives, prospects and assumptions are not guarantees of future performance. These statements are based on management’s expectations that involve a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, most of which are difficult to predict and many of which are beyond our control, including the factors described in the company’s SEC filings that may cause our actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. For a discussion of key risk factors, please see the risk factors disclosed in the company’s SEC filings, which are available on the SEC’s website at www.sec.gov and on the company’s website, www.mrcglobal.com. Our filings and other important information are also available on the Investor Relations page of our website at www.mrcglobal.com. Undue reliance should not be placed on the company’s forward-looking statements. Although forward-looking statements reflect the company’s good faith beliefs, reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the company’s actual results, performance or achievements or future events to differ materially from anticipated future results, performance or achievements or future events expressed or implied by such forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except to the extent required by law. Statement Regarding Use of Non-GAAP Measures: The Non-GAAP financial measures contained in this presentation (Adjusted EBITDA and Adjusted Gross Profit) are not measures of financial performance calculated in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and should not be considered as alternatives to net income or gross profit. They should be viewed in addition to, and not as a substitute for, analysis of our results reported in accordance with GAAP. Management believes that these non-GAAP financial measures provide investors a view to measures similar to those used in evaluating our compliance with certain financial covenants under our credit facilities and provide meaningful comparisons between current and prior year period results. They are also used as a metric to determine certain components of performance-based compensation. They are not necessarily indicative of future results of operations that may be obtained by the Company.
Projects 28% Global Leader in PVF Distribution Note: TTM September 30, 2017 Largest pipe, valves and fittings (PVF) distributor - Sales of $3.5B TTM Key Role in Global Supply Chains of Energy Companies Create value for both customers and suppliers Closely integrated into customer supply chains Volume purchasing savings and capital efficiencies for customer Differentiated Global Capabilities Footprint with ~300 locations in 22 countries Premier quality program, material sourcing & customer service Serve broad PVF needs making it convenient and efficient for customers Diversified Business Mix Balanced portfolio across upstream, midstream & downstream sectors Product mix focused on higher margin offerings Strategic focus on maintenance, repair and operations (MRO) contracts Growing integrated supply & project business Serve 200+ fabrication customers and ~$300M in annual revenue Downstream 28% Midstream 43% Upstream 29%
Diversified by Region, Industry Sector and Product Line - Well Positioned Through Cycle Revenue by Geography United States 78% Downstream 28% Note: Percentage of sales are for the twelve months ended September 30, 2017. 1. Other industrial includes: metals & mining, fabrication, pulp & paper, power generation and general industrial. Midstream 43% Upstream 29% Revenue by Product Line Revenue by Industry Sector
Upstream – Providing Completion Infrastructure to E&P Operators Provide well hook-ups via on-site product trailers, above-ground infrastructure PVF products for flow lines & tank batteries Serve E&P operators including Shell, Chevron, Statoil and Canadian Natural Resources Primary drivers are customers’ capital budgets for well completions & production tank battery upgrades and expansions Walk-in counter sales at strategically located branches in active oil and gas production areas Located in all major basins Upstream revenue follows basin market activity levels
Serving Midstream Customers Gas Utilities Transmission & Gathering Provide PVF and integrated supply services including smart meters Business drivers: integrity projects pipeline enhancement projects independent of commodity prices residential and commercial, new & upgrade installations Relatively stable, steady growth Provide PVF to midstream gathering customers (e.g. MLPs) Provide PVF bulks & shorts and logistical services to long-haul transmission customers Benefit from recent pipeline approvals & modernization projects replacing older pipelines
Serving Downstream Customers Refining Chemical & Industrial Recurring MRO revenue from planned & unplanned maintenance Provide on-location “zone store” inventory Customers include Shell, Chevron, Phillips 66, Marathon Petroleum Company, BP and Valero Low gas prices provide stable, advantaged feedstock for plastics Positioned to benefit from $185B of planned U.S. petrochemical projects1 Including: ExxonMobil – Gulf Coast Shell – Franklin, PA LyondellBasell – Gulf Coast 1. Source: Wall Street Journal, “Shale Boom’s Impact In One Word: Plastics”, June 26, 2017.
MRC Global is a Critical Link Between Its Customers & Suppliers CUSTOMERS SUPPLIERS Energy Carbon Steel Tubulars Valves Supplier Value Proposition Manufacturing and scale efficiencies Leverage MRC Global’s footprint Access to 17,000+ customers Lead suppliers through the quality process Customer Value Proposition Outsource non-core supply chain and logistics functions Reduce supply chain complexity Savings from volume purchasing and global sourcing, 40+ countries Product availability - access to MRC Global’s broad inventory with over 12,000 manufacturers Approve new suppliers through rigorous quality program Fittings, Flanges and Other IOCs Downstream Midstream Upstream
Global Footprint – Strategically Located in Key Geographies to Deliver Solutions to Customers North America As of 9/30/2017 Branches 128 RDCs 10 VECs 15 Employees ~2,570 Corporate Headquarters Regional Distribution Centers Valve & Engineering Centers Branch Locations International As of 9/30/2017 Branches 57 RDCs 6 VECs 14 Countries 20 Employees ~965 International North America Nisku, AB Cheyenne, WY Odessa, TX Bakersfield, CA San Antonio, TX Munster, IN Nitro, WV Tulsa, OK Pittsburgh, PA Houston, TX ME / Caspian Asia Pacific Dubai, UAE Singapore Perth, WA NORDIC EUROPE Stavanger, NO Bradford, UK Rotterdam, NL
MRC Global’s Differentiated Value Proposition Driving enhanced profitability and return on capital through operational efficiencies, disciplined cost management and products & services portfolio optimization Active balance sheet management and robust cash flow create financial flexibility and capital allocation opportunities Strong record of winning new customers and expanding existing relationships resulting in growth Organic Growth Operational Optimization Strategic Capital Decisions Solid history of strategic acquisitions in advantageous geographies, sectors and product lines Global M&A Platform
Strong Record of Customer Contract Wins and Renewals – Yields Growth Opportunities Renew Existing & Obtain New MRO Contract Customers Approximately 52% of sales are from our top 25 customers1 Expand Global Chemical and Valves businesses 2017 Target - 40% of total revenue from valves, automation, measurement and instrumentation Continue to Expand the Integrated Supply Business Approx. $800 million in revenue1 Continue to Develop “Next 75” Customers Drive share through focused sales efforts and exceptional customer service Customer Type/ Scope Products Geography Term (years) Shell Renewal PFF, Valves N.A., Global 5 NiSource Renewal with added scope Integrated Supply U.S. 5 ConocoPhillips Renewal PVF U.S. 2 Chevron Renewal PVF Global 7 Statoil Additional scope Valves, Fittings, Manifolds Denmark, Norway 4 & Projects ExxonMobil Additional scope Valves (Downstream) Global (U.S., Europe & Asia Pacific) 5 LyondellBasell Renewal with added scope PFF (renewed 4Q16) Stainless (added 4Q16) Valves (added 2Q17) U.S. 3 PBF Energy Renewal with added scope PVF U.S. 5 Selected Recent Contract Wins and Renewals 1. For the twelve months ended September 30, 2017
Leader in Executing Global PVF Contracts - a Platform for Growth Customers prefer a dependable supplier who can offer global procurement capabilities and excellent service everywhere they operate MRC Global has executed the only global PVF contracts with IOCs in the industry Shell – Global valves & North American PFF Chevron – Global PVF ExxonMobil – Global valves, initially focused on downstream 2017 Chevron 7 year renewal term Global PVF Leveraged U.S. agreement to add Canada, Europe, Australia, Thailand, Gulf of Mexico, Kazakhstan Strategic geographic expansion since original 2003 contract 2017 ExxonMobil 5 year renewal term Global valves for MRO & projects. Initially focused on downstream for the U.S., Europe & Asia Pacific. Opportunity to expand 2017 Shell 5 year renewal term Global valves & North American PFF First global valve contract in 2012
Expanding Higher Margin Product Offerings Increases Growth Opportunities and Profitability Organic growth through expansion of higher margin products: Valves Entered into Global Enterprise Distributor Program (EDP) with Cameron Access to several valve lines previously sold directly to customers Across upstream, midstream & downstream Measurement & Instrumentation (M&I) Exclusive EDP with Cameron for M&I products in North America Previously sold directly to customers Includes 1,300 new SKUs Opportunity to expand to midstream and downstream customers On-track to deliver 2017 annual revenue $125-$150 million from expanded Cameron agreements MRC Global is the largest distributor of Cameron products
End Market Growth Opportunities Global E&P Spending1 Sources: Barclays Upstream Spending Survey, Mid-year update, published August 30, 2017. Pipe Logix Line Pipe Market Review & Outlook, 2nd Quarter 2017, Construction Outlook published May 2017. Stifel Diversified Industrials Specialty Engineering and Construction, pipeline database July 2017. All tiers. Probability weighted. Industrial Info Resources: February 2017. Asia excludes China. Global Refining & Chemical Spending4 $ billions $ billions Upstream Midstream Downstream Existing Pipeline Infrastructure Aging gas pipelines average age > 50 years2 replacement market of 5,000 miles/ year2 $ billions New Pipeline Spending In U.S.3
New Houston Regional Distribution Center - Supporting Growth & Continued Operational Efficiencies Consolidates four locations including three Houston locations, Galena Park, Darien & East Park Large project staging capabilities Easily scalable for growth Strategically located near refining and petrochemical customers Supports growth from recent multi-year downstream customer contracts including ExxonMobil, BASF, LyondellBasell and The Chemours Company Largest global valve engineering center with expanded capabilities including valve testing services Largest regional distribution center in global footprint with 410,000 ft2 including a 50,000 ft2 VEC
Investing in Technology for Long-Term Growth & Efficiency Benefits of implementing ERP system in International segment: Moves from 14 systems to one Makes interaction with customers streamlined and efficient Provides one view of inventory, procurement and strategic inventory management Standardization of processes resulting in lower costs Completed in 2017 MRCGOTM online catalog increased functionality added B-2-B for contract customers allows for easy and efficient ordering Customized for each customer’s contract terms, part numbers, commonly ordered items Real-time inventory, pricing and order status $100 million of YTD revenue generated through MRCGOTM of the top 25 U.S. customers’ 2016 revenue was transacted through e-commerce (e.g. catalog, EDI) 35%
Working Capital Management Focus on Optimizing Operations Expect to maintain capital efficiency with working capital as a percentage of revenue at approximately 20% Reduced the gap between days sales outstanding and days payable outstanding over the past two years Investments in working capital are weighted to higher margin products Optimizing Net Working Capital1 Working capital defined as Current Assets (excluding Cash) – Current Liabilities. Sales are on trailing twelve months basis. High operating leverage - SG&A as a percentage of sales is declining as sales increase and operating costs are controlled Successfully executed cost reduction measures in downturn with ~$200M of annual savings realized from 2014 Expect modest North American headcount increases in 2017 commensurate with growth expectations in N.A. Headcount reductions planned for International segment in 4Q 2017 Actively Managing SG&A Costs Declining SG&A as % of Revenue Actively Managing Costs
Strategic Capital Decisions Support Growth Investing and Financing cash flows from 2010 through 3Q 2017. Net Financing equals the total issuance less repayment of debt and equity excluding share repurchases. Effectively Positioned the Balance Sheet … Advantageous debt agreements with favorable terms, low interest rate and maturities 2022+ Liquidity of $529 million – sufficient to cover working capital and M&A Net leverage expected to decrease as EBITDA increases in 2017 … For Capital Deployment Opportunities Organic growth initiatives - Investments to drive share gains & efficiencies Opportunistic share repurchases: New $100 million authorization in October 2017 $125 million authorization completed in 1Q 2017 Accretive M&A - 39% of cash flow deployed on M&A since 2010 Debt repayment $1.12 billion in 2015 & 2016 Use of Cash Flow (2010 – 3Q 2017¹) Net Leverage
Date Company Acquired Country Revenue ($ million)1 Jun-14 HypTeck Norway $ 38 May-14 MSD Engineering Singapore & SE Asia 26 Jan-14 Stream Norway 271 Dec-13 Flangefitt Stainless United Kingdom 24 Jul-13 Flow Control Products U.S. 28 Dec-12 Production Specialty Services U.S. 127 Jun-12 Chaparral Supply U.S. 71 Mar-12 OneSteel Piping Systems Australia 174 Jul-11 Valve Systems and Controls U.S. 13 Jun-11 Stainless Pipe and Fittings Australia & SE Asia 91 Aug-10 Dresser Oil Tools Supply U.S. 13 May-10 South Texas Supply U.S. 9 Oct-09 Transmark Europe & Asia 346 Oct-08 LaBarge U.S. 233 $ 1.46+ Billion Reflects reported revenues for the year of acquisition or 2013 for Stream, MSD and HypTeck. Strategic Acquisitions Global Platform For Continued M&A North American Consolidation Global Acquisitions Differentiated Position Merger in 2007 created the largest PVF distributor to energy companies in North America Augmented North American platform through seven bolt-on acquisitions and organic growth Acquired an international valve company in 2009 as a platform for international expansion Expanded markets served and enhanced product portfolio through several subsequent acquisitions Acquired leading Norwegian supplier in 2014, which added a differentiated offshore production facility capability and provided expertise to grow in offshore production facility markets Global service capability enables expanded relationships with customers and organic growth opportunity Diversified across the energy infrastructure complex, serving upstream, midstream and downstream customers Targeted Sectors Focus in 2015 & 2016 was on debt reduction In 2017, continue to target global assets and build scale with a focus on valves & alloys
Sales Adjusted Gross Profit and % Margin1 Adjusted EBITDA and % Margin1 7.0% 8.5% ($ millions, except per share data) 2.0% 4.2% 4.8% 2.2% 4.5% Diluted EPS 13.0% 18.5% 19.0% 16.8% 18.6% Quarterly & YTD Financial Performance See reconciliation of non-GAAP measures to GAAP measures in the appendix Includes $45 million of non-cash, pre-tax charges recorded in cost of goods sold related to a restructuring of our Australian business and market conditions in Iraq as well as an increase in reserves for excess and obsolete inventory in the U.S. and Canada as a result of the current market outlook for certain products. Excluding these charges, Adjusted Gross Profit would be $148 million (18.7%) and $435 million (18.7%) for the three and the nine months ended September 30, 2016. 2 3.0% 4.8% 5.8% 2.5% 5.0% 13.0% 18.5% 19.0% 16.8% 18.6% 2
Total Debt Capital Structure Cash Flow from Operations Net Working Capital as % of Sales2 ($ millions) Strong Balance Sheet Provides Financial Flexibility Multiples represent Net Debt / trailing twelve months adjusted EBITDA. Working capital defined as Current Assets (excluding Cash) – Current Liabilities. Sales are on trailing twelve months basis. Y-o-Y Growth 30.8% 13.1% (9.0%) 39.7% (39.7%) 3.3x 3.1x 2.7x Net Leverage1: Sept 30, 2017 Cash and Cash Equivalents $ 40 Total Debt (including current portion): Term Loan B due 2024 (net of discount & deferred financing costs) $ 397 Global ABL Facility due 2022 50 Total Debt $ 447 Preferred stock 355 Common stockholders’ equity 776 Total Capitalization $ 1,578 Liquidity $ 529
World-class Management Team with Significant Distribution and Energy Experience Compelling Long-Term Investment Market Leader in PVF Distribution, Serving Critical Function to the Energy Industry Diversified Across Sectors, Regions and Customers Differentiated Global Platform Creates Customer Value Counter-cyclical Cash Flow and Strong Balance Sheet Organic Growth Potential via Market Share Gains from Expanded Multi-year MRO Contracts and Long-term Secular Growth from Global Energy Demand Proven History of Driving Continuous Productivity Improvements Industry Consolidator with Proven Success in Acquiring and Integrating Businesses
Y-o-Y Growth 61% 29% (17%) 10% (45%) (68%) Y-o-Y Growth 28% 24% (5%) 11% (27%) (36%) Sales Adjusted Gross Profit and % Margin1 Adjusted EBITDA and % Margin1 7.0% 8.5% ($ millions, except per share data) 5.8% 7.5% 8.3% 7.4% 7.1% 5.2% 2.5% Diluted EPS 17.2% 17.6% 19.0% 19.3% 18.9% 18.0% 17.2% Annual Financial Performance Y-o-Y Growth 26% 15% (6%) 13% (24%) (33%) Y-o-Y Growth (156%) 259% 21% (5%) NM 67% See reconciliation of non-GAAP measures to GAAP measures in the appendix Includes $45 million of non-cash, pre-tax charges recorded in cost of goods sold related to a restructuring of our Australian business and market conditions in Iraq as well as an increase in reserves for excess and obsolete inventory in the U.S. and Canada as a result of the current market outlook for certain products. Excluding these charges, Adjusted Gross Profit would be $568 million (18.7%). 2
Total Debt Capital Structure Cash Flow from Operations Net Working Capital as % of Sales2 ($ millions) December 31, 2016 Cash and Cash Equivalents $ 109 Total Debt (including current portion): Term Loan B due 2019 (net of discount & deferred financing costs) $ 414 Global ABL Facility due 2019 - Total Debt $ 414 Preferred stock 355 Common stockholders’ equity 763 Total Capitalization $ 1,532 Liquidity $ 534 Balance Sheet Multiples represent Net Debt / trailing twelve months EBITDA. Working capital defined as Current Assets (excluding Cash) – Current Liabilities. Sales are on trailing twelve months basis. Y-o-Y Growth 30.8% 13.1% (9.0%) 39.7% (39.7%) 5.8x 4.1x 2.6x 2.5x 3.4x 1.9x 4.0x Net Leverage1:
Adjusted Gross Profit Reconciliation Nine months ended Sept 30 Three months ended Year ended December 31 ($ millions) 2017 2016 Sept 30, 2017 (1) June 30, 2017 Sept 30, 2016 (1) 2016 2015 2014 2013 2012 2011 2010 Gross profit $ 441 $ 346 $ 152 $ 149 $ 88 $ 468 $ 786 $ 1,018 $ 955 $ 1,014 $ 708 $ 518 Depreciation and amortization 16 16 5 6 6 22 21 22 22 19 17 17 Amortization of intangibles 34 35 12 11 12 47 60 68 52 49 51 54 Increase (decrease) in LIFO reserve 19 (7) 13 5 (3) (14) (53) 12 (20) (24) 74 74 Adjusted Gross Profit $ 510 $ 390 $ 182 $ 171 $ 103 $ 523 $ 814 $ 1,120 $ 1,009 $ 1,058 $ 850 $ 663 Includes $45 million of non-cash charges (pre-tax) recorded in cost of goods sold. Charges in the international segment are related to a restructuring of our Australian business and market conditions in Iraq as well as an increase in reserves for excess and obsolete inventory in the U.S. and Canada as a result of the current market outlook for certain products. Excluding these charges, gross profit, as reported would be $133 million (16.8%) and $391 million (16.8%) for the three and nine months ended September 30, 2016. Excluding these charges, Adjusted Gross Profit would be $148 million (18.7%) and $435 million (18.7%) for the three and nine months ended September 30, 2016.
Adjusted EBITDA Reconciliation Nine months ended Sept 30 Three months ended Year ended December 31 ($ millions) 2017 2016 Sept 30, 2017 June 30, 2017 Sept 30, 2016 2016 2015 2014 2013 2012 2011 2010 Net income (loss) $ 15 $ (65) $ 3 $ 6 $ (40) $ (83) $ (331) $ 144 $ 152 $ 118 $ 29 $ (52) Income tax expense (benefit) 6 (9) 2 3 (2) (8) (11) 82 85 64 27 (23) Interest expense 24 26 9 8 9 35 48 62 61 113 137 140 Depreciation and amortization 16 16 5 6 6 22 21 22 22 19 17 17 Amortization of intangibles 34 35 12 11 12 47 60 68 52 49 51 54 Increase (decrease) in LIFO reserve 19 (7) 13 5 (3) (14) (53) 12 (20) (24) 74 75 Inventory-related charges - 40 - - 40 40 - - - - - - Goodwill & intangible asset impairment - - - - - - 462 - - - - - Change in fair value of derivative instruments 1 - 1 (1) (2) (1) 1 1 (5) (2) (7) 5 Equity-based compensation expense 12 9 3 5 2 12 10 9 15 8 8 4 Severance & restructuring charges - 12 - - 3 20 14 8 1 - 1 3 Write-off of debt issuance costs 8 - 8 - - 1 3 - - - - - Litigation settlement 3 - - 3 - - 3 - - - - - Foreign currency (gains) losses (2) 1 - (2) (1) 4 3 3 13 (1) (1) - Loss on disposition of non-core product line - - - - - - 5 10 - - - - Insurance charge - - - - - - - - 2 - - - Cancellation of executive employment agreement (cash portion) - - - - - - - 3 - - - - Expenses associated with refinancing - - - - - - - - 5 2 9 - Loss on early extinguishment of debt - - - - - - - - - 114 - - Pension settlement - - - - - - - - - 4 - - Legal and consulting expenses - - - - - - - - - - 10 4 Provision for uncollectible accounts - - - - - - - - - - - (2) Joint venture termination - - - - - - - - - - 2 - Other expense (income) - - - - - - - - 3 (1) 3 (1) Adjusted EBITDA $ 136 $ 58 $ 56 $ 44 $ 24 $ 75 $ 235 $ 424 $ 386 $ 463 $ 360 $ 224