MRC Global Announces Third Quarter 2012 Financial Results
Net income of $55.5 million and diluted EPS of $0.54
Excluding a special charge, net income of $62.0 million and diluted EPS of $0.61
Adjusted EBITDA of $125 million, up 14% from prior year's quarter
For the first nine months of 2012, MRC's sales were
Commenting on the company's results,
MRC's sales of
Third quarter 2012 sales to the upstream sector grew 7% from the third quarter of 2011 to $654 million, or 45% of sales. Third quarter 2012 midstream sales increased 8% over the same period in 2011 to
MRC's gross profit of
For the third quarter of 2012, selling, general and administrative expenses (SG&A) were
Mr. Lane continued, "On top of our strong growth and earnings improvement, we continue to take steps to de-lever our balance sheet and to lower our overall interest expense. In addition to the steps taken in the second and third quarters, we've also announced that we are taking further measures in the fourth quarter to lower our total interest expense by launching a transaction to obtain a new term loan, which along with draws against our asset based lending facility, is expected to replace our senior secured notes from 2009. We expect the impact of all of the steps we've taken in 2012 to have a significant improvement in lowering our total interest expense as compared to 2011."
Conference Call
The Company will hold a conference call to discuss its third quarter 2012 results at
About
Headquartered in
This news release 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" and similar expressions are intended to identify forward-looking statements.
Despite the company's expectations of entering into a new term loan, the terms and pricing of a term loan and the use of proceeds to refinance its existing Senior Secured Notes are only the company's expectations regarding these actions. Whether the company is actually successful in obtaining such a term loan on expected terms and conditions with expected uses of proceeds is dependent on a number of factors, including (among others) debt market conditions, reaching final agreement with lenders, approval of the company's board of directors and the company's financial condition, results and future prospects, which, in turn are dependent on factors, including (among others) those that impact our business.
Statements about the company's business, including its strategy, its industry, the company's future profitability, 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 involve known and unknown risks, uncertainties and other factors that may cause the company's actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. These risks and uncertainties include (among others) decreases in oil and natural gas industry expenditure levels, which may result from decreased oil and natural gas prices or other factors; increased usage of alternative fuels, which may negatively affect oil and natural gas industry expenditure levels; U.S. and international general economic conditions; the company's ability to compete successfully with other companies in the company's industry; the risk that manufacturers of the products the company distributes will sell a substantial amount of goods directly to end users in the industries it serves; unexpected supply shortages; cost increases by the company's suppliers; the company's lack of long-term contracts with most of its suppliers; increases in customer, manufacturer and distributor inventory levels; suppliers' price reductions of products that the company sells, which could cause the value of its inventory to decline; decreases in steel prices, which could significantly lower the company's profit; increases in steel prices, which it may be unable to pass along to its customers, which could significantly lower its profit; the company's lack of long-term contracts with many of its customers and its lack of contracts with customers that require minimum purchase volumes; changes in the company's customer and product mix; risks related to the company's customers' credit; the potential adverse effects associated with integrating acquisitions into the company's business and whether these acquisitions will yield their intended benefits; the success of the company's acquisition strategies; the company's significant indebtedness; the dependence on the company's subsidiaries for cash to meet its debt obligations; changes in the company's credit profile; a decline in demand for certain of the products that the company distributes if import restrictions on these products are lifted; environmental, health and safety laws and regulations; the sufficiency of the company's insurance policies to cover losses, including liabilities arising from litigation; product liability claims against the company; pending or future asbestos-related claims against the company; the potential loss of key personnel; interruption in the proper functioning of the company's information systems; loss of third-party transportation providers; potential inability to obtain necessary capital; risks related to adverse weather events or natural disasters; impairment of the company's goodwill or other intangible assets; changes in tax laws or adverse positions taken by taxing authorities in the countries in which the company operates; and adverse changes in political or economic conditions in the countries in which the company operates. For a discussion of key risk factors, please see the risk factors disclosed in the company's
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.
Contacts:
and Chief Financial Officer
Jim.Braun@mrcpvf.com
832-308-2845
DRG&L
ksdennard@drg-l.com
713-529-6600
MRC Global Inc. | |||
Condensed Consolidated Balance Sheets (Unaudited) | |||
(Dollars in thousands) | |||
September 30, |
December 31, | ||
2012 |
2011 | ||
Assets |
|||
Current assets: |
|||
Cash |
$ 36,839 |
$ 46,127 | |
Accounts receivable, net |
929,740 |
791,280 | |
Inventories, net |
1,035,861 |
899,064 | |
Other current assets |
17,563 |
11,437 | |
Total current assets |
2,020,003 |
1,747,908 | |
Other assets |
38,569 |
39,212 | |
Property, plant and equipment, net |
120,885 |
107,430 | |
Intangible assets: |
|||
Goodwill, net |
580,367 |
561,270 | |
Other intangible assets, net |
743,418 |
771,867 | |
1,323,785 |
1,333,137 | ||
$ 3,503,242 |
$ 3,227,687 | ||
Liabilities and stockholders' equity |
|||
Current liabilities: |
|||
Trade accounts payable |
$ 521,818 |
$ 479,584 | |
Accrued expenses and other current liabilities |
134,550 |
108,973 | |
Income taxes payable |
17,936 |
11,950 | |
Deferred revenue |
2,536 |
4,450 | |
Deferred income taxes |
65,699 |
68,210 | |
Total current liabilities |
742,539 |
673,167 | |
Long-term obligations: |
|||
Long-term debt, net |
1,267,971 |
1,526,740 | |
Deferred income taxes |
288,234 |
288,985 | |
Other liabilities |
16,693 |
17,933 | |
1,572,898 |
1,833,658 | ||
Stockholders' equity |
1,187,805 |
720,862 | |
$ 3,503,242 |
$ 3,227,687 |
MRC Global Inc. | ||||||||||
Condensed Consolidated Statements of Operations (Unaudited) | ||||||||||
(Dollars in thousands, except per share amounts) | ||||||||||
Three Months Ended |
Nine Months Ended | |||||||||
September 30, |
September |
September 30, |
September 30, | |||||||
2012 |
2011 |
2012 |
2011 | |||||||
Sales |
$ 1,451,114 |
$1,366,202 |
$ 4,264,125 |
$ 3,526,054 | ||||||
Cost of sales |
1,173,916 |
1,165,076 |
3,508,686 |
3,005,264 | ||||||
Gross profit |
277,198 |
201,126 |
755,439 |
520,790 | ||||||
Selling, general and administrative expenses |
154,955 |
134,685 |
452,528 |
376,094 | ||||||
Operating income |
122,243 |
66,441 |
302,911 |
144,696 | ||||||
Other income (expense): |
||||||||||
Interest expense |
(28,177) |
(34,348) |
(92,621) |
(102,372) | ||||||
Loss on early extinguishment of debt |
(10,322) |
- |
(21,746) |
- | ||||||
Write off of debt issuance costs |
- |
- |
(1,685) |
(9,450) | ||||||
Change in fair value of derivative instruments |
845 |
1,768 |
1,770 |
5,260 | ||||||
Other, net |
1,232 |
(821) |
3,554 |
241 | ||||||
(36,422) |
(33,401) |
(110,728) |
(106,321) | |||||||
Income before income taxes |
85,821 |
33,040 |
192,183 |
38,375 | ||||||
Income tax expense |
30,280 |
11,167 |
67,783 |
12,952 | ||||||
Net income |
$ 55,541 |
$ 21,873 |
$ 124,400 |
$ 25,423 | ||||||
Effective tax rate |
35.3% |
33.8% |
35.3% |
33.8% | ||||||
Basic earnings per common share |
$ 0.55 |
$ 0.26 |
$ 1.31 |
$ 0.30 | ||||||
Diluted earnings per common share |
$ 0.54 |
$ 0.26 |
$ 1.31 |
$ 0.30 | ||||||
Weighted-average common shares, basic |
101,490 |
84,418 |
94,768 |
84,417 | ||||||
Weighted-average common shares, diluted |
102,029 |
84,657 |
95,185 |
84,619 | ||||||
MRC Global Inc. | |||
Condensed Consolidated Statements of Cash Flows (Unaudited) | |||
(Dollars in thousands) | |||
Nine Months Ended | |||
September 30, |
September 30, | ||
2012 |
2011 | ||
Operating activities |
|||
Net income |
$ 124,400 |
$ 25,423 | |
Adjustments to reconcile net income to net cash provided by (used in) operations: |
|||
Depreciation and amortization |
13,180 |
12,819 | |
Amortization of intangibles |
37,184 |
37,799 | |
Equity-based compensation expense |
5,859 |
6,264 | |
Deferred income tax benefit |
(3,463) |
(14,099) | |
Amortization of debt issuance costs |
7,088 |
8,057 | |
Write off of debt issuance costs |
1,685 |
9,450 | |
Loss on early extinguishment of debt |
21,746 |
- | |
Increase in LIFO reserve |
3,080 |
46,000 | |
Change in fair value of derivative instruments |
(1,770) |
(5,260) | |
Provision for uncollectible accounts |
3,936 |
733 | |
Other non-cash items |
5,218 |
3,663 | |
Changes in operating assets and liabilities: |
|||
Accounts receivable |
(105,234) |
(223,475) | |
Inventories |
(78,889) |
(112,100) | |
Income taxes payable |
5,867 |
16,911 | |
Other current assets |
(5,836) |
83 | |
Accounts payable |
9,562 |
78,624 | |
Deferred revenue |
(1,976) |
(13,975) | |
Accrued expenses and other current liabilities |
24,130 |
28,135 | |
Net cash provided by (used in) operations |
65,767 |
(94,948) | |
Investing activities |
|||
Purchases of property, plant and equipment |
(21,002) |
(10,068) | |
Proceeds from the disposition of property, plant and equipment |
2,451 |
1,511 | |
Acquisitions, net of cash acquired $0 and $1,900 for 2012 and 2011, respectively |
(89,893) |
(39,865) | |
Proceeds from the sale of assets held for sale |
- |
10,594 | |
Other investment and notes receivable transactions |
(3,979) |
(246) | |
Net cash used in investing activities |
(112,423) |
(38,074) | |
Financing activities |
|||
Proceeds from the sale of common stock |
333,342 |
- | |
Net proceeds (payments) from/on revolving credit facilities |
(46,219) |
125,708 | |
Purchase of senior secured notes |
(205,003) |
- | |
Payments on long term obligations |
(31,456) |
- | |
Debt issuance costs paid |
(7,930) |
(9,690) | |
Proceeds from exercise of stock options |
51 |
3 | |
Tax benefit on stock options |
422 |
- | |
Net cash provided by financing activities |
43,207 |
116,021 | |
Decrease in cash |
(3,449) |
(17,001) | |
Effect of foreign exchange rate on cash |
(5,839) |
2,246 | |
Cash - beginning of period |
46,127 |
56,202 | |
Cash - end of period |
$ 36,839 |
$ 41,447 |
MRC Global Inc. | ||||||||
Supplemental Information (Unaudited) | ||||||||
Calculation of Adjusted EBITDA | ||||||||
(Dollars in millions) | ||||||||
Three Months Ended |
Nine Months Ended | |||||||
September |
September 30, |
September 30, |
September | |||||
2012 |
2011 |
2012 |
2011 | |||||
Net income |
$ 55.5 |
$ 21.9 |
$ 124.4 |
$ 25.4 | ||||
Income tax expense |
30.3 |
11.1 |
67.8 |
12.9 | ||||
Interest expense |
28.2 |
34.3 |
92.6 |
102.4 | ||||
Loss on early extinguishment of debt |
10.3 |
- |
21.7 |
- | ||||
Write off of debt issuance costs |
- |
- |
1.7 |
9.5 | ||||
Depreciation and amortization |
4.6 |
4.7 |
13.2 |
12.8 | ||||
Amortization of intangibles |
12.4 |
12.7 |
37.2 |
37.8 | ||||
Increase (decrease) in LIFO reserve |
(15.4) |
18.3 |
3.1 |
46.0 | ||||
Change in fair value of derivative instruments |
(0.8) |
(1.8) |
(1.8) |
(5.3) | ||||
Equity-based compensation expense |
2.2 |
3.8 |
5.9 |
6.3 | ||||
Legal and consulting expenses |
- |
1.5 |
(1.2) |
6.1 | ||||
Foreign currency (gains) losses |
(2.0) |
0.8 |
(0.5) |
0.3 | ||||
Other non-cash expenses |
- |
2.3 |
- |
5.9 | ||||
Adjusted EBITDA |
$ 125.3 |
$ 109.6 |
$ 364.1 |
$ 260.1 |
Note to above:
SOURCE