MRC Global Announces Second Quarter 2012 Financial Results
For the first six months of 2012, MRC's sales were
Commenting on the company's results,
MRC's sales of
Second quarter 2012 sales to the upstream sector grew 22% from the second quarter of 2011 to
MRC's gross profit of
For the second quarter of 2012, selling, general and administrative expenses (SG&A) were flat as a percentage of sales, 10.6% in both of the three months ended
In
In
Mr. Lane continued, "Following our successful IPO in April, we continued to focus on positioning the company for long term growth. In May, we were awarded a five-year global Enterprise Framework Agreement with Shell for the distribution of valves and automation services for their upstream, midstream and downstream project and maintenance, repair and operations (MRO) requirements. The agreement also included pipe, flange and fitting (PFF) requirements in
Calendar Year 2012 Updated Guidance
MRC's expected full year 2012 results are as follows:
Low |
High |
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Revenue |
$5.50 billion |
$5.65 billion |
|
Adjusted Gross Profit Percentage (1) |
18.3% |
19.0% |
|
Adjusted EBITDA Percentage (1) |
8.2% |
8.6% |
|
Effective Tax Rate |
35.0% |
36.0% |
|
Capital Expenditures |
$26 million |
$27 million |
|
(1) See the Annual Report filed on Form 10-K and the quarterly report filed on Form 10-Q for the Company's full definition of Adjusted Gross Profit and Adjusted EBITDA. |
Conference Call
The Company will hold a conference call to discuss its second quarter 2012 results at
About
Headquartered in
Safe Harbor Statement
During a public investor call to discuss the results set forth in this announcement, we may make forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act, as amended, including, for example, statements about the company's business strategy, its industry, its future profitability, growth in the company's various markets, and the company's expectations, beliefs, plans, strategies, objectives, prospects and assumptions, including the company's growth expectations from its recently signed Enterprise Framework Agreement with Shell. These forward-looking statements 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 other things: 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; our ability to compete successfully with other companies in our industry; the risk that manufacturers of the products we distribute will sell a substantial amount of goods directly to end users in the industries we serve; unexpected supply shortages; cost increases by our suppliers; our lack of long-term contracts with most of our suppliers; increases in customer, manufacturer and distributor inventory levels; suppliers' price reductions of products that we sell, which could cause the value of our inventory to decline; decreases in steel prices, which could significantly lower our profit; increases in steel prices, which we may be unable to pass along to our customers, which could significantly lower our profit; our lack of long-term contracts with many of our customers and our lack of contracts with customers that require minimum purchase volumes; changes in our customer and product mix; risks related to our customers' credit; the potential adverse effects associated with integrating acquisitions into our business and whether these acquisitions will yield their intended benefits; the success of our acquisition strategies; our significant indebtedness; the dependence on our subsidiaries for cash to meet our debt obligations; changes in our credit profile; a decline in demand for certain of the products we distribute if import restrictions on these products are lifted; environmental, health and safety laws and regulations; the sufficiency of our insurance policies to cover losses, including liabilities arising from litigation; product liability claims against us; pending or future asbestos-related claims against us; the potential loss of key personnel; interruption in the proper functioning of our 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 our goodwill or other intangible assets; changes in tax laws or adverse positions taken by taxing authorities in the countries in which we operate; and adverse changes in political or economic conditions in the countries in which we operate. 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 our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements 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.
MRC Global Inc. |
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June 30, |
December 31, |
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2012 |
2011 |
||
Assets |
|||
Current assets: |
|||
Cash |
$ 39,995 |
$ 46,127 |
|
Accounts receivables, net |
879,277 |
791,280 |
|
Inventories, net |
1,070,837 |
899,064 |
|
Other current assets |
17,532 |
11,437 |
|
Total current assets |
2,007,641 |
1,747,908 |
|
Other assets |
40,709 |
39,212 |
|
Property, plant and equipment, net |
117,942 |
107,430 |
|
Intangible assets: |
|||
Goodwill, net |
576,822 |
561,270 |
|
Other intangible assets, net |
754,038 |
771,867 |
|
1,330,860 |
1,333,137 |
||
$ 3,497,152 |
$ 3,227,687 |
||
Liabilities and stockholders' equity |
|||
Current liabilities: |
|||
Trade accounts payable |
$ 547,083 |
$ 479,584 |
|
Accrued expenses and other current liabilities |
100,298 |
108,973 |
|
Income taxes payable |
7,091 |
11,950 |
|
Deferred revenue |
4,288 |
4,450 |
|
Deferred income taxes |
65,787 |
68,210 |
|
Total current liabilities |
724,547 |
673,167 |
|
Long-term obligations: |
|||
Long-term debt, net |
1,355,122 |
1,526,740 |
|
Deferred income taxes |
282,321 |
288,985 |
|
Other liabilities |
17,204 |
17,933 |
|
1,654,647 |
1,833,658 |
||
Stockholders' equity |
1,117,958 |
720,862 |
|
$ 3,497,152 |
$ 3,227,687 |
MRC Global Inc. |
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Three Months Ended |
Six Months Ended |
|||||||||
June 30, |
June 30, |
June 30, |
June 30, |
|||||||
2012 |
2011 |
2012 |
2011 |
|||||||
Sales |
$ 1,430,379 |
$ 1,168,039 |
$ 2,813,011 |
$ 2,159,852 |
||||||
Cost of sales |
1,188,699 |
995,341 |
2,334,770 |
1,840,188 |
||||||
Gross profit |
241,680 |
172,698 |
478,241 |
319,664 |
||||||
Selling, general and administrative expenses |
151,189 |
124,052 |
297,573 |
241,409 |
||||||
Operating income |
90,491 |
48,646 |
180,668 |
78,255 |
||||||
Other income (expense): |
||||||||||
Interest expense |
(30,727) |
(34,524) |
(64,444) |
(68,024) |
||||||
Loss on early extinguishment of debt |
(11,424) |
- |
(11,424) |
- |
||||||
Write off of debt issuance costs |
- |
(9,450) |
(1,685) |
(9,450) |
||||||
Change in fair value of derivative instruments |
(1,200) |
1,624 |
925 |
3,492 |
||||||
Other, net |
575 |
857 |
2,322 |
1,062 |
||||||
(42,776) |
(41,493) |
(74,306) |
(72,920) |
|||||||
Income before income taxes |
47,715 |
7,153 |
106,362 |
5,335 |
||||||
Income tax expense |
16,390 |
2,475 |
37,503 |
1,785 |
||||||
Net income |
$ 31,325 |
$ 4,678 |
$ 68,859 |
$ 3,550 |
||||||
Effective tax rate |
34.3% |
34.6% |
35.3% |
33.5% |
||||||
Basic earnings per common share |
$ 0.32 |
$ 0.06 |
$ 0.75 |
$ 0.04 |
||||||
Diluted earnings per common share |
$ 0.32 |
$ 0.06 |
$ 0.75 |
$ 0.04 |
||||||
Weighted-average common shares, basic |
98,303 |
84,418 |
91,370 |
84,416 |
||||||
Weighted-average common shares, diluted |
98,726 |
84,605 |
91,743 |
84,602 |
||||||
MRC Global Inc. |
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Six Months Ended |
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June 30, |
June 30, |
||
2012 |
2011 |
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Operating activities |
|||
Net income |
$ 68,859 |
$ 3,550 |
|
Adjustments to reconcile net income to net cash provided by (used in) operations: |
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Depreciation and amortization |
8,550 |
8,165 |
|
Amortization of intangibles |
24,756 |
25,068 |
|
Equity-based compensation expense |
3,658 |
2,442 |
|
Deferred income tax benefit |
(9,523) |
(5,325) |
|
Amortization of debt issuance costs |
4,805 |
5,373 |
|
Write off of debt issuance costs |
1,685 |
9,450 |
|
Loss on early extinguishment of debt |
11,424 |
- |
|
Increase in LIFO reserve |
18,500 |
27,700 |
|
Change in fair value of derivative instruments |
(925) |
(3,492) |
|
Provision for uncollectible accounts |
2,544 |
315 |
|
Other non-cash items |
1,573 |
1,148 |
|
Changes in operating assets and liabilities: |
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Accounts receivable |
(63,523) |
(79,305) |
|
Inventories |
(138,161) |
(73,137) |
|
Income taxes payable |
(4,887) |
2,834 |
|
Other current assets |
(6,208) |
(1,511) |
|
Accounts payable |
40,784 |
39,654 |
|
Deferred revenue |
(161) |
(13,101) |
|
Accrued expenses and other current liabilities |
(10,364) |
(7,184) |
|
Net cash used in operations |
(46,614) |
(57,356) |
|
Investing activities |
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Purchases of property, plant and equipment |
(14,857) |
(5,318) |
|
Proceeds from the disposition of property, plant and equipment |
1,910 |
612 |
|
Acquisitions, net of cash acquired $0 and $1,900 for 2012 and 2011, respectively |
(89,893) |
(35,305) |
|
Proceeds from the sale of assets held for sale |
- |
10,594 |
|
Other investment and notes receivable transactions |
(2,988) |
961 |
|
Net cash used in investing activities |
(105,828) |
(28,456) |
|
Financing activities |
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Proceeds from the sale of common stock |
333,422 |
- |
|
Net proceeds (payments) from/on revolving credit facilities |
(40,532) |
77,676 |
|
Purchase of senior secured notes |
(110,442) |
- |
|
Payments on long term obligations |
(31,456) |
- |
|
Debt issuance costs paid |
(7,722) |
(9,131) |
|
Proceeds from exercise of stock options |
20 |
3 |
|
Tax benefit on stock options |
422 |
- |
|
Net cash provided by financing activities |
143,712 |
68,548 |
|
Decrease in cash |
(8,730) |
(17,264) |
|
Effect of foreign exchange rate on cash |
2,598 |
499 |
|
Cash - beginning of period |
46,127 |
56,202 |
|
Cash - end of period |
$ 39,995 |
$ 39,437 |
MRC Global Inc. |
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Three Months Ended |
Six Months Ended |
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June 30, |
June 30, |
June 30, |
June 30, |
|||||
2012 |
2011 |
2012 |
2011 |
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Net income |
$ 31.3 |
$ 4.7 |
$ 68.9 |
$ 3.6 |
||||
Income tax expense |
16.4 |
2.5 |
37.5 |
1.8 |
||||
Interest expense |
30.7 |
34.5 |
64.4 |
68.0 |
||||
Loss on early extinguishment of debt |
11.4 |
- |
11.4 |
- |
||||
Write off of debt issuance costs |
- |
9.5 |
1.7 |
9.5 |
||||
Depreciation and amortization |
4.5 |
4.2 |
8.6 |
8.2 |
||||
Amortization of intangibles |
12.5 |
12.7 |
24.8 |
25.1 |
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Increase in LIFO reserve |
11.6 |
17.6 |
18.5 |
27.7 |
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Change in fair value of derivative instruments |
1.2 |
(1.6) |
(0.9) |
(3.5) |
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Equity-based compensation expense |
1.8 |
1.0 |
3.6 |
2.5 |
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Legal and consulting expenses |
- |
3.4 |
(1.2) |
4.6 |
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Foreign currency translations loss (gains) |
2.2 |
(0.5) |
1.5 |
(0.5) |
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Other non-cash expenses |
- |
2.6 |
- |
3.6 |
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Adjusted EBITDA |
$ 123.6 |
$ 90.6 |
$ 238.8 |
$ 150.6 |
Note to above:
MRC ("the Company") defines Adjusted EBITDA as net income plus interest, income taxes, depreciation and amortization, amortization of intangibles, and other non-recurring and non-cash charges (such as gain/losses on the early extinguishment of debt, changes in the fair value of derivative instruments and goodwill impairment) and plus or minus the impact of its LIFO inventory costing methodology. The Company presents Adjusted EBITDA because it is an important measure used to determine the interest rate and commitment fee paid under its Global ABL Facility. In addition, management believes it is a useful indicator of the company's operating performance. See the Company's Annual Report filed on Form 10-K and the quarterly report filed on Form 10-Q for a more thorough discussion of the use of Adjusted EBITDA.
Contacts:
and Chief Financial Officer
Jim.Braun@mrcpvf.com
832-308-2845
ksdennard@drg-l.com
713-529-6600
SOURCE