UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Item 8.01 | Other Event |
On April 24, 2023, MRC Global Inc. (the “Company”) issued a press release announcing that it is launching an effort to refinance in full the Company’s $295 million in outstanding principal amount under its existing senior secured term loan B, scheduled to mature in November 2024. As part of this effort, the Company will seek to enter into a new, five-year $300 million senior secured term loan B (the “New Term Loan”). The Company expects to use proceeds of the New Term Loan to repay in full all indebtedness outstanding under the existing term loan.
Although the Company is seeking to enter into a New Term Loan, there can be no assurance that the Company will actually enter into a New Term Loan, or what the ultimate terms will be. The Company’s ability to enter into the New Term Loan and use the proceeds thereof depends on, among other things, market conditions, reaching final agreement with lenders and the approval of the Company’s board of directors.
The press release also includes certain limited metrics regarding the Company’s preliminary First Quarter 2023 Financial Results. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits. |
99.1 | Press release of MRC Global Inc. dated April 24, 2023 | |
104 | Cover Page Interactive Data File – The cover page XBRL tags from this Current Report on Form 8-K are imbedded within the Inline XBRL document |
INDEX TO EXHIBITS
Exhibit No. |
Description | |
99.1 | Press release dated April 24, 2023 | |
104 | Cover Page Interactive Data File – The cover page XBRL tags from this Current Report on Form 8-K are imbedded within the Inline XBRL document |
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: April 24, 2023
MRC GLOBAL INC. | ||
By: | /s/ Kelly Youngblood | |
Kelly Youngblood | ||
Executive Vice President and Chief Financial Officer |
Exhibit 99.1
MRC Global Announces Proposed Refinancing of Senior Secured Term Loan B Credit Agreement and
Provides Preliminary First Quarter 2023 Financial Results
Houston, TX April 24, 2023 MRC Global Inc. (NYSE: MRC), the leading global distributor of pipe, valves and fittings (PVF) and other infrastructure products and services to diversified gas utility, energy and industrial end-markets, today announced it is launching an effort to amend, extend and refinance in full its $295 million in outstanding principal amount under its existing senior secured Term Loan B, scheduled to mature in September 2024. The company will seek to enter into an amendment to and extension of the existing senior secured term loan B credit agreement, which is expected to, among other things, extend its current Term Loan B credit agreement for an additional five years and increase the outstanding amount under the facility from $295 million to $300 million. The company expects to use the proceeds to refinance the outstanding balance of $295 million under its existing senior secured Term Loan B with the remainder to be used for general corporate purposes.
In addition, the company is providing selected preliminary first quarter 2023 financial results.
Preliminary First Quarter 2023 Financial Results
| Revenue of approximately $885 million |
| Net income of approximately $33 million |
| Adjusted EBITDA of approximately $69 million, or 7.8% of sales |
| Gross Profit of approximately $179 million, or 20.2% of sales |
| Adjusted Gross Profit of approximately $188 million, or 21.2% of sales |
| Full year 2023 cash flow from operations continues to be expected to be at least $120 million |
The companys strong performance in the first quarter provides increasing confidence in the outlook for the full year.
The company expects to release its full first quarter 2023 results on May 8, 2023, after the market close, as previously scheduled. The company will also hold a conference call to discuss its first quarter 2023 results at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on May 9, 2023, as previously scheduled.
Adjusted Gross Profit and Adjusted EBITDA are non-GAAP measures. Please refer to the reconciliations of Adjusted Gross Profit and Adjusted EBITDA to their nearest GAAP measures in this release.
There can be no assurance that the company will refinance its Term Loan B, or what the ultimate terms of the refinanced facility will be. The companys ability to enter into this refinanced Term Loan B facility and use the proceeds depends on, among other things, market conditions, reaching final agreement with lenders and the approval of the companys board of directors.
About MRC Global Inc.
Headquartered in Houston, Texas, MRC Global (NYSE: MRC) is the leading global distributor of pipe, valves, fittings (PVF) and other infrastructure products and services to diversified energy and industrial end-markets including the gas utilities, downstream, industrial and energy transition, upstream production, and midstream pipeline sectors. With over 100 years of experience, MRC Global has provided customers with innovative supply chain solutions, technical product expertise and a robust digital platform from a worldwide network of 212 locations including valve and engineering centers. The companys unmatched quality assurance program offers over 250,000 SKUs from over 9,000 suppliers, simplifying the supply chain for approximately 10,000 customers. Find out more at www.mrcglobal.com.
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 expected, and similar expressions are intended to identify forward-looking statements.
Statements about the companys expectations regarding its cash flow from operations are not guarantees of future performance. These statements are based on managements 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 MRC Globals control, including the factors described in the companys SEC filings that may cause the companys 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 capital and other expenditure levels in the industries that the company serves; U.S. and international general economic conditions; geopolitical events; decreases in oil and natural gas prices; unexpected supply shortages; loss of third-party transportation providers; cost increases by the companys suppliers and transportation providers; increases in steel prices, which the company may be unable to pass along to its customers which could significantly lower the companys profit; the companys lack of long-term contracts with most of its suppliers; 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 companys profit; a decline in demand for certain of the products the company distributes if tariffs and duties on these products are imposed or lifted; holding more inventory than can be sold in a commercial time frame; significant substitution of renewables and low-carbon fuels for oil and gas, impacting demand for the companys products; risks related to adverse weather events or natural disasters; environmental, health and safety laws and regulations and the interpretation or implementation thereof; changes in the companys customer and product mix; the risk that manufacturers of the products that the company distributes will sell a substantial amount of goods directly to end users in the industry sectors that the company serves; failure to operate the companys business in an efficient or optimized manner; the companys ability to compete successfully with other companies; the companys lack of long-term contracts with many of its customers and the companys lack of contracts with customers that require minimum purchase volumes; inability to attract and retain employees or the potential loss of key personnel; adverse health events, such as a pandemic; interruption in the proper functioning of the companys information systems; the occurrence of cybersecurity incidents; risks related to the companys customers creditworthiness; the success of acquisition strategies; the potential adverse effects associated with integrating acquisitions and whether these acquisitions will yield their intended benefits; impairment of the companys goodwill or other intangible assets; adverse changes in political or economic conditions in the countries in which the company operates; the companys significant indebtedness; the dependence on the companys subsidiaries for cash to meet parent company obligations; changes in the companys credit profile; potential inability to obtain necessary capital; the sufficiency of the companys 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; exposure to U.S. and international laws and regulations, regulating corruption, limiting imports or exports or imposing economic sanctions; risks relating to ongoing evaluations of internal controls required by Section 404 of the Sarbanes-Oxley Act; and risks related to changing laws and regulations including trade policies and tariffs.
For a discussion of key risk factors, please see the risk factors disclosed in the companys SEC filings, which are available on the SECs website at www.sec.gov and on the companys website, www.mrcglobal.com. MRC Globals filings and other important information are also available on the Investors page of the companys website at www.mrcglobal.com.
Undue reliance should not be placed on the companys forward-looking statements. Although forward-looking statements reflect the companys 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 companys 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.
Contact:
Monica Broughton
VP, Investor Relations & Treasury
MRC Global Inc.
Monica.Broughton@mrcglobal.com
832-308-2847
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MRC Global Inc.
Supplemental Information (Unaudited)
Reconciliation of Net Income (Loss) to Adjusted EBITDA (a non-GAAP measure)
(in millions)
Three Months Ended | ||||||||
March 31, 2023 | Percentage of Revenue* |
|||||||
Net income |
$ | 33 | 3.7 | % | ||||
Income tax expense |
13 | 1.5 | % | |||||
Interest expense |
7 | 0.8 | % | |||||
Depreciation and amortization |
5 | 0.6 | % | |||||
Amortization of intangibles |
5 | 0.6 | % | |||||
Decrease in LIFO reserve |
(1 | ) | (0.1 | )% | ||||
Equity-based compensation expense (1) |
3 | 0.3 | % | |||||
Foreign currency losses |
4 | 0.5 | % | |||||
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Adjusted EBITDA |
$ | 69 | 7.8 | % | ||||
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Notes to above:
* | Does not foot due to rounding |
(1) | Recorded in SG&A |
The company defines adjusted EBITDA as net income plus interest, income taxes, depreciation and amortization, amortization of intangibles, and certain other expenses, including non-cash expenses, (such as equity-based compensation, severance and restructuring, changes in the fair value of derivative instruments and asset impairments, including inventory) and plus or minus the impact of its LIFO inventory costing methodology. The company presents adjusted EBITDA because the company believes adjusted EBITDA is a useful indicator of the companys operating performance. Among other things, adjusted EBITDA measures the companys operating performance without regard to certain non-recurring, non-cash or transaction-related expenses. adjusted EBITDA, however, does not represent and should not be considered as an alternative to net income, cash flow from operations or any other measure of financial performance calculated and presented in accordance with GAAP. Because adjusted EBITDA does not account for certain expenses, its utility as a measure of the companys operating performance has material limitations. Because of these limitations, the company does not view adjusted EBITDA in isolation or as a primary performance measure and also uses other measures, such as net income and sales, to measure operating performance. See the companys Annual Report filed on Form 10-K for a more thorough discussion of the use of adjusted EBITDA.
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MRC Global Inc.
Supplemental Information (Unaudited)
Reconciliation of Gross Profit to Adjusted Gross Profit (a non-GAAP measure)
(in millions)
Three Months Ended | ||||||||
March 31, 2023 | Percentage of Revenue* |
|||||||
Gross profit, as reported |
$ | 179 | 20.2 | % | ||||
Depreciation and amortization |
5 | 0.6 | % | |||||
Amortization of intangibles |
5 | 0.6 | % | |||||
Decrease in LIFO reserve |
(1 | ) | (0.1 | )% | ||||
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Adjusted Gross Profit |
$ | 188 | 21.2 | % | ||||
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Notes to above:
* | Does not foot due to rounding |
The company defines Adjusted Gross Profit as sales, less cost of sales, plus depreciation and amortization, plus amortization of intangibles, plus inventory-related charges incremental to normal operations and plus or minus the impact of its LIFO inventory costing methodology. The company presents Adjusted Gross Profit because the company believes it is a useful indicator of the companys operating performance without regard to items, such as amortization of intangibles, that can vary substantially from company to company depending upon the nature and extent of acquisitions of which they have been involved. Similarly, the impact of the LIFO inventory costing method can cause results to vary substantially from company to company depending upon whether they elect to utilize LIFO and depending upon which method they may elect. The company uses Adjusted Gross Profit as a key performance indicator in managing its business. The company believes that gross profit is the financial measure calculated and presented in accordance with U.S. generally accepted accounting principles that is most directly comparable to Adjusted Gross Profit.
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