UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 4, 2014
MRC GLOBAL INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-35479 | 20-5956993 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification Number) |
2 Houston Center, 909 Fannin, Suite 3100,
Houston, TX 77010
(Address of principal executive offices, including zip code)
Registrant’s 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)) |
| 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 Global’s 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 Global’s 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 Global’s website, http://www.mrcglobal.com for 90 days.
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. |
| (d) | Exhibits. | |
| 99.1 | Investor Presentation, dated September 4, 2014 | |
2
SIGNATURES
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: September 4, 2014
| MRC GLOBAL INC. | ||
| By: | /s/ James E. Braun | |
| James E. Braun | ||
| Executive Vice President and Chief Financial Officer | ||
3
INDEX TO EXHIBITS
| Exhibit No. |
Description | |
| 99.1 | Investor Presentation, dated September 4, 2014 | |
4
 1
Barclays –
CEO Energy-
Power Conference
September 4, 2014
September 4, 2014
Investor Presentation
Exhibit 99.1 |
 2
September 4, 2014
2
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, 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.
Forward Looking Statements and Non-GAAP Disclaimer |
 3
September 4, 2014
By the Numbers
Industry Sectors
Product Categories
2014 Sales Guidance
$5.7B
-
$5.9B
Upstream
Line Pipe / OCTG
Employees
4,900+
Locations
400+
Midstream
Valves
Countries
•
Operations
•
Direct Sales
(>$100,000)
•
All countries
20
45+
90+
Customers
19,000+
Downstream/
Industrial
Fittings / Flanges
Suppliers
20,000+
SKU’s
230,000+
Company Snapshot
U.S.
75%
MRC
Global
is
the
largest
global
distributor
of
pipe,
valves
and
fittings
(PVF)
to the energy industry, by sales |
 4
September 4, 2014
MRC Global Revenue Diversification by Industry Sector
Note: Percentage of sales for the twelve months ended June 30, 2014.
Upstream
46%
Downstream 26%
28% Midstream
Other/
Industrial
13%
Refining
7%
Chemical
6%
Gas Utility
11%
Transmission
17%
Drilling &
Completion
Tubulars
%
Production
Infrastructure,
Materials &
Supplies
37%
9 |
 5
September 4, 2014
By Product Line
MRC Global Revenue Diversification
Note: Percentage of sales for the twelve months ended June 30, 2014.
By Geography
Houston, TX
Edmonton, AB
Bradford, UK
Singapore
Perth, AU
Stavanger, NO
12%
13%
17%
17%
18%
23%
Canada
Asia / Europe
Southwest
Western US
Gulf Coast
Eastern US
30%
21%
20%
20%
9%
Valves
Fittings & Flanges
General Oilfield
Products
Line Pipe
OCTG
30%
21%
20%
20%
9% |
 6
September 4, 2014
Why Customers Choose Distribution & MRC Global
Generating savings and efficiencies for our customers
while enabling them to focus on their core competencies
•
Supplier Registration / Preferred Supplier List
•
Global delivery footprint with 1.5 million+ sq.ft. of
regional distribution centers
•
Approximately $1.1 billion+ in global inventory
•
Global sourcing from 45+ countries
•
Cost Savings and Efficiencies
•
Technical Assistance / Product Recommendation
•
Warehouse and Logistics Management
•
Inventory Consignment / Just-in-Time Delivery
•
Customized IT Solutions
Benefits of MRC Global
Integrated Supply Chain Services |
 7
September 4, 2014
Downstream
Midstream
Upstream
MRC Global plays a vital role in the complex, technical, global energy supply
chain Long-Term Supplier & Customer Relationships
CUSTOMERS
SUPPLIERS
IOCs
Phillips 66
Valero
DOW
DuPont
Marathon
Petroleum
Access
Midstream
AGL
Resources
Atmos
NiSource
PG&E
Williams
DCP
Midstream
Chesapeake
Energy
ConocoPhillips
Devon
Apache
Anadarko
CNRL
Hess
Husky
Energy
Marathon
Oil
Statoil
Energy Carbon Steel
Tubular Products
Valves
Fittings, Flanges and General
Use Products
Tenaris
TMK-
IPSCO
U.S.
Steel
CSI Tubular
JMC
Wheatland
Balon
Cameron
Flowserve
Kitz
Neway
Velan
Boltex
Bonney
Forge
Chevron
Phillips
Chemical
Tube
Forgings of
America
WL Plastics |
 8
September 4, 2014
Global E&P Spending
Source: Barclays June 2014 Global E&P Spending Update.
$ millions
Midstream 28%
Downstream 27%
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
2012A
2013A
2014E
2015E
2016E
2017E
United States
Canada
Outside North America |
 9
September 4, 2014
Strategic Objectives
Rebalance Product Mix to Higher Margin
Items
•
Focus on valve and valve automation
•
Strengthen offerings in stainless & alloy PFF
1.
Percentage of sales for the twelve months ended June 30, 2014.
•
Targeted Growth Accounts: develop the
“next 75”
customers
•
Chevron
•
Kazakhstan, Future Growth Project, PFF
•
Thailand & Australia, MRO, PVF
•
ConocoPhillips
•
Lower 48 states & Canada, MRO, PVF
Execute Global Preferred Supplier Contracts
24%
21%
55%
Customer
Mix
–
Sales
1
Organic Growth
All Other -
19,000+ customers
Targeted Growth Accounts
Top 1 -
25
•
Stream AS –
Norway
•
NAWAH/MRC Global/US Steel Tubular
Products
consortium
–
Iraq
•
MSD
Engineering
–
Singapore
and
SE
Asia
•
HypTeck
–
Norway
Growth from Mergers & Acquisitions
•
Add product lines to complete global PVF
offerings and geographies for scale and expertise |
 10
September 4, 2014
Strategic Expansion into Offshore
•
Pre Stream
acquisition –
approx. 98% onshore, 2% offshore
•
Pro-forma post Stream
acquisition –
approx. 92% onshore, 8%
offshore
1.
For the year ended December 31, 2013
2.
Source: Rystad Energy, 2013
($billions)
$32
$30
$23
$23
$15
$14
$13
$12
$10
$8
Norway
Brazil
USA
Great Britain
Angola
Mexico
Kingdom of Saudi Arabia
Nigeria
Australia
Malaysia
Valve
Management
38%
Instrumentation
36%
Pipe, Fittings &
Flanges
26%
Stream 2013 Sales by Product Class
Top 10 Global Offshore E&P Markets (2012)
2
•
Top 4 largest offshore markets = $100 billion E&P spend
•
Norway is the largest
•
MRC
Global
revenue
mix
1 |
 11
September 4, 2014
1.
Reflects reported revenues for 2013.
M&A -
Track Record of Strategic Acquisitions
Acquisition Priorities
Guidance
•
Global stainless/alloys
•
Global valve and valve automation
•
Branch platforms/infrastructure for North American shale plays
•
International
branch
platform
for
“super
majors”
E&P
spend
$0
$52
$256
$330
$567
$554
>$900
2008
2009
2010
2011
2012
2013
2014
International Sales
($ millions) |
 12
September 4, 2014
Financial Metrics
Sales
Adjusted Gross Profit and % Margin
Adjusted EBITDA and % Margin
7.0%
8.5%
($ in millions, except per share data)
Y-o-Y
Growth
24%
(5%)
10%
Y-o-Y
Growth
29%
(17%)
8%
7.5%
8.3%
7.4%
7.3% -
7.0%
7.9%
6.8%
Y-o-Y
Growth
15%
(6%)
11%
Diluted EPS
Y-o-Y
Growth
259%
21%
17.6%
19.0%
19.3%
19.3% -
18.8%
19.9%
19.2%
$1,140
Six Months Ended
June 30
Six Months Ended
June 30
Six Months Ended
June 30
$4,832
$5,571
$5,231
$5,700
$2,573
$2,803
2011
2012
2013
2014
Guidance
2013
2014
$5,900
$850
$1,058
$1,009
$1,070
$512
$538
2011
2012
2013
2014
Guidance
2013
2014
Six Months Ended
June 30
$360
$463
$386
$400
$203
$190
2011
2012
2013
2014
Guidance
2013
2014
$430
$0.34
$1.22
$1.48
$0.88
$0.61
2011
2012
2013
2013
2014 |
 13
September 4, 2014
Balance Sheet Metrics
Total Debt
Capital Structure
Cash Flow from Operations
Net Leverage
($ in millions)
June 30, 2014
Cash and Cash Equivalents
$ 36
Total
Debt
(including
current
portion):
Term Loan B due 2019, net of discount
784
Global ABL Facility due 2019
614
Total Debt
$ 1,398
Total Equity
$ 1,416
Total Capitalization
$ 2,814
1. The net leverage ratio is 3.4x pro forma for the acquisition of Stream,
Flangefitt, MSD and HypTeck.
Six Months Ended
June 30
$1,527
$1,257
$987
$1,398
2011
2012
2013
June 30, 2014
$(103)
$240
$324
$182
$(52)
2011
2012
2013
2014
Guidance
2013
2014
$100
4.1x
2.6x
2.5x
3.6x
2011
2012
2013
June 30, 2014
3x
2x
Target range 2x-
3x
$75
1 |
 14
September 4, 2014
Appendix |
 15
September 4, 2014
Six months ended
June 30
Year ended December 31
($ in millions)
2014
2013
2013
2012
2011
Net income
$ 62.8
$ 90.0
$ 152.1
$ 118.0
$ 29.0
Income tax expense
34.0
44.2
84.8
63.7
26.8
Interest expense
30.5
30.5
60.7
112.5
136.8
Increase (decrease) in LIFO reserve
2.1
(15.6)
(20.2)
(24.1)
73.7
Expenses associated with refinancing
-
-
5.1
1.7
9.5
Loss on early extinguishment of debt
-
-
-
114.0
-
Depreciation and amortization
10.5
11.2
22.3
18.6
17.0
Amortization of intangibles
33.9
26.0
52.1
49.5
50.7
Change in fair value of derivative instruments
4.3
(2.4)
(4.7)
(2.2)
(7.0)
Equity-based compensation expense
4.0
4.6
15.5
8.5
8.4
Loss on sale of Canadian progressive cavity pump business
6.2
-
-
-
-
Executive separation expense (cash portion)
-
-
0.8
-
-
Insurance charge
-
-
2.0
-
-
Employee severance
5.0
-
-
-
-
Foreign currency (gains) losses
(3.1)
13.4
12.9
(0.8)
(0.6)
Pension settlement
-
-
-
4.4
-
Legal and consulting expenses
-
-
-
(1.2)
9.9
Joint venture termination
-
-
-
-
1.7
Other expense
-
0.8
3.0
0.6
4.6
Adjusted EBITDA
$ 190.2
$ 202.7
$ 386.4
$ 463.2
$ 360.5
Adjusted EBITDA Reconciliation |
 16
September 4, 2014
Six months ended
June 30
Year ended December 31
($ in millions)
2014
2013
2013
2012
2011
Gross Profit
$ 491.6
$ 490.5
$ 954.8
$ 1,013.7
$ 708.2
Depreciation and amortization
10.5
11.5
22.3
18.6
17.0
Amortization of intangibles
33.9
26.0
52.1
49.5
50.7
Increase (decrease) in LIFO reserve
2.1
(15.6)
(20.2)
(24.1)
73.7
Adjusted Gross Profit
$ 538.1
$ 512.1
$1,009.0
$ 1,057.7
$ 849.6
Adjusted Gross Profit Reconciliation |