e8vk
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): November 10, 2011
MCJUNKIN RED MAN HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
|
|
|
|
|
Delaware
|
|
333-153091
|
|
20-5956993 |
(State or other jurisdiction of
|
|
(Commission File Number)
|
|
(I.R.S. Employer |
incorporation)
|
|
|
|
Identification Number) |
2 Houston Center
909 Fannin, Suite 3100, Houston, TX 77010
(Address of principal executive offices,
including zip code)
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):
o |
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
o |
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
o |
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
|
o |
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
TABLE OF CONTENTS
Item 2.02 Results of Operations and Financial Condition
On
November 10, 2011, McJunkin Red Man Holding Corporation (the Company) issued a press release
announcing its financial results for the quarter ended September 30, 2011. A copy of the press
release is furnished as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.
The information in this Current Report on Form 8-K and Exhibit 99.1 attached hereto is being
furnished pursuant to Item 2.02 and Item 9.01 of Form 8-K and shall not be deemed filed by the
Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the
Exchange Act), or otherwise subject to the liabilities of that section, nor is it deemed
incorporated by reference into any registration statement or other document filed pursuant to the
Securities Act of 1933, as amended (the Securities Act), or any filing under the Exchange Act,
except as shall be expressly set forth by specific reference in such filing, if any.
The press release furnished as Exhibit 99.1 to this Current Report on Form 8-K may contain
forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E
of the Exchange Act and, as such, may involve known and unknown risks, uncertainties and
assumptions. Such forward-looking statements may relate to the Companys current expectations and
are subject to the limitations and qualifications set forth in the Companys other documents filed
with the U.S. Securities and Exchange Commission, including, without limitation, that actual events
and/or results may differ materially from those projected in such forward looking statements.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
The following exhibit is being furnished as part of this report:
99.1
Press Release of McJunkin Red Man Holding Corporation dated November 10, 2011
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:
November 10, 2011
|
|
|
|
|
|
MCJUNKIN RED MAN HOLDING CORPORATION
|
|
|
By: |
/s/ James F. Underhill
|
|
|
|
James F. Underhill |
|
|
|
Executive Vice President and Chief Financial
Officer |
|
|
INDEX TO EXHIBITS
|
|
|
Exhibit No. |
|
Description |
|
99.1
|
|
Press Release of McJunkin Red Man
Holding Corporation dated November 10, 2011 |
exv99w1
Exhibit 99.1
|
|
|
McJunkin Red Man Holding Corporation
|
|
Investor Contact:
Will James
Vice President Corporate Development and Investor Relations
will.james@mrcpvf.com
P: 832-308-2847 |
Announcement
McJunkin Red Man Holding Corporation Announces
Third Quarter 2011 Financial Results
Houston,
TX November 10, 2011: McJunkin Red Man Holding Corporation (MRC or the Company), the
largest global distributor of pipe, valves and fittings (PVF) and related products and services to
the energy and industrial sectors based on sales, today announced its third quarter 2011 financial
results.
For the third quarter of 2011, the Company generated sales of $1.37 billion, up 33% from sales of
$1.03 billion in the third quarter of 2010 and up 17% from sales of $1.17 billion in the second
quarter of 2011. For the first nine months of 2011, sales increased 25% to $3.53 billion from
$2.81 billion during the first nine months of 2010. These increases were primarily due to the
continued strengthening in MRCs upstream and midstream sectors, which have been driven by improved
activity levels in the oil and natural gas shale regions.
Gross margin was $201 million (14.7% of sales) in the third quarter of 2011, compared with
$137 million (13.3% of sales) in the third quarter of 2010, and $173 million (14.8% of sales) in
the second quarter of 2011. Gross margin for the first nine months of 2011 was $521 million (14.8%
of sales) compared to $384 million (13.7% of sales) for the same period in 2010.
Commenting on the Companys results, Andrew R. Lane, Chairman, President and Chief Executive
Officer, stated, Demand for our products and services remained very strong in the third quarter,
as evidenced by our $1.37 billion in sales and our 33% year-on-year growth. Our year-on-year
profitability continues to improve as we focus on margin improvement. During the quarter, we
strengthened our valve automation capabilities in the United States with the acquisition of Valve
Systems & Controls.
For the third quarter of 2011, selling, general and administrative expenses (SG&A) increased $19
million (16%) compared to the same quarter in 2010. Compared to the second quarter of 2011, SG&A
expenses increased $11 million (9%). For the first nine months of 2011, SG&A expenses increased
$41 million (12%) over the comparable period in 2010. These increases are attributable primarily
to an increase in variable personnel expenses, mid-2010 acquisitions expenses being included for
all of 2011, and the June 2011 acquisition of MRC SPF.
The Company generated operating income of $66 million in the third quarter of 2011, as compared to
$21 million for the third quarter of 2010 and $49 million in the second quarter of 2011. For the
first nine months of 2011, the Company generated operating income of $145 million, compared to
operating income of $48 million for the same period in 2010, an increase of $96 million.
The Companys net income for the third quarter of 2011 was $21.9 million, compared to a net loss of
$10.5 million for the third quarter of 2010 and net income of $4.7 million in the second quarter of
2011. For the first
nine months of 2011 the Companys net income was $25.4 million, compared to a net loss of $38.3
million for the same period in 2010.
Adjusted EBITDA was $110 million for the third quarter of 2011, compared to $64 million for the
same period in 2010 and $91 million for the second quarter of 2011. See the table attached hereto
for a reconciliation of Adjusted EBITDA to net income and net loss. Adjusted EBITDA was $260
million for the first nine months of 2011, compared to $169 million for the same period in 2010.
The increase in Adjusted EBITDA was due primarily to an increase in sales volume and gross margin,
offset partially by our increased operating expenses.
The Companys net working capital at September 30, 2011 was $1.04 billion, compared to $843 million
at December 31, 2010. The current year increase is the result of improving business conditions
requiring greater working capital. These working capital additions are seen in the cash used by
operations for the first nine months of 2011 which was $94.9 million.
Mr. Lane continued, Im very pleased with the overall financial results and significant
improvement over comparable 2010 results. We are executing well against our financial improvement
plans. We expect activity to remain strong in the fourth quarter. In addition, we completed the
exchange offer process for our 9.50% senior secured notes during the quarter. Most recently, we
announced several key executive management changes with the addition of Dan Churay as General
Counsel, Jim Underhill as COO- North America and Jim Braun as CFO. The additions of Dan Churay and
Jim Braun to MRC add considerable global public company, corporate experience to our executive team
and the move of our previous CFO, Jim Underhill, to COO North America allows him to focus his
over 30 years of MRC distribution expertise to further improving our North America operations
performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
www.mrcpvf.com |
|
|
|
|
|
|
|
Houston Corporate Headquarters
|
|
Charleston Corporate Office
|
|
Tulsa Corporate Office |
|
|
2 Houston Center
|
|
835 Hillcrest Drive
|
|
8023 E. 63rd Place |
|
|
909 Fannin, Suite 3100
|
|
Charleston, WV 25311
|
|
Tulsa, OK 74133 |
|
|
Houston, TX 77010
|
|
P: 800.624.8603 |
|
P: 800.666.3776 |
|
|
P: 877-294-7574 |
|
|
|
|
|
|
About McJunkin Red Man Holding Corporation
Headquartered in Houston, Texas, MRC is the largest global distributor of pipe, valves and
fittings (PVF) and related products and services to the energy and industrial sectors, based on
sales, and supplies these products and services across each of the upstream, midstream and
downstream markets.
Safe Harbor Statement
This announcement contains 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 Companys business strategy, its industry, its future
profitability, growth in the Companys various markets, activity remaining strong in the fourth
quarter of 2011, and the Companys expectations, beliefs, plans, strategies, objectives, prospects
and assumptions. 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
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 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 Companys
registration statement on Form S-4 related to our senior secured notes due 2016, which is available
on the SECs website at www.sec.gov and on the Companys website, www.mrcpvf.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 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
www.mrcpvf.com |
|
|
|
|
|
|
|
Houston Corporate Headquarters
|
|
Charleston Corporate Office
|
|
Tulsa Corporate Office |
|
|
2 Houston Center
|
|
835 Hillcrest Drive
|
|
8023 E. 63rd Place |
|
|
909 Fannin, Suite 3100
|
|
Charleston, WV 25311
|
|
Tulsa, OK 74133 |
|
|
Houston, TX 77010
|
|
P: 800.624.8603 |
|
P: 800.666.3776 |
|
|
P: 877-294-7574 |
|
|
|
|
|
|
McJunkin Red Man Holding Corporation
Condensed Consolidated Balance Sheet (Unaudited)
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2011 |
|
|
2010 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
41,447 |
|
|
$ |
56,202 |
|
Accounts receivables, net |
|
|
840,467 |
|
|
|
596,404 |
|
Inventories, net |
|
|
862,170 |
|
|
|
765,367 |
|
Income taxes receivable |
|
|
15,626 |
|
|
|
32,593 |
|
Other current assets |
|
|
11,276 |
|
|
|
10,209 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
1,770,986 |
|
|
|
1,460,775 |
|
|
|
|
|
|
|
|
|
|
Other assets: |
|
|
|
|
|
|
|
|
Debt issuance costs, net |
|
|
27,189 |
|
|
|
32,211 |
|
Assets held for sale |
|
|
1,447 |
|
|
|
12,722 |
|
Other assets |
|
|
12,226 |
|
|
|
14,212 |
|
|
|
|
|
|
|
|
|
|
|
40,862 |
|
|
|
59,145 |
|
Fixed Assets: |
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
106,090 |
|
|
|
104,725 |
|
|
|
|
|
|
|
|
|
|
Intangible assets: |
|
|
|
|
|
|
|
|
Goodwill |
|
|
565,911 |
|
|
|
549,384 |
|
Other intangible assets, net |
|
|
783,557 |
|
|
|
817,165 |
|
|
|
|
|
|
|
|
|
|
|
1,349,468 |
|
|
|
1,366,549 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,267,406 |
|
|
$ |
2,991,194 |
|
|
|
|
|
|
|
|
Liabilities and stockholders equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Trade accounts payable |
|
$ |
524,554 |
|
|
$ |
426,632 |
|
Accrued expenses and other liabilities |
|
|
135,334 |
|
|
|
102,807 |
|
Deferred revenue |
|
|
4,097 |
|
|
|
18,140 |
|
Deferred income taxes |
|
|
71,140 |
|
|
|
70,636 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
735,125 |
|
|
|
618,215 |
|
|
|
|
|
|
|
|
|
|
Long-term obligations: |
|
|
|
|
|
|
|
|
Long-term debt, net |
|
|
1,505,591 |
|
|
|
1,360,241 |
|
Deferred income taxes |
|
|
289,478 |
|
|
|
303,083 |
|
Other liabilities |
|
|
18,213 |
|
|
|
19,897 |
|
|
|
|
|
|
|
|
|
|
|
1,813,282 |
|
|
|
1,683,221 |
|
|
|
|
|
|
|
|
|
|
Stockholders equity |
|
|
718,999 |
|
|
|
689,758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,267,406 |
|
|
$ |
2,991,194 |
|
|
|
|
|
|
|
|
McJunkin Red Man Holding Corporation
Condensed Consolidated Statement of Operations (Unaudited)
(Dollars in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
June 30, |
|
|
September 30, |
|
|
September 30, |
|
|
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2011 |
|
|
2010 |
|
Sales |
|
$ |
1,366,202 |
|
|
$ |
1,025,455 |
|
|
$ |
1,168,039 |
|
|
$ |
3,526,054 |
|
|
$ |
2,810,642 |
|
Cost of sales |
|
|
1,165,076 |
|
|
|
888,680 |
|
|
|
995,341 |
|
|
|
3,005,264 |
|
|
|
2,426,975 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
|
201,126 |
|
|
|
136,775 |
|
|
|
172,698 |
|
|
|
520,790 |
|
|
|
383,667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
|
134,685 |
|
|
|
115,846 |
|
|
|
124,052 |
|
|
|
376,094 |
|
|
|
335,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
66,441 |
|
|
|
20,929 |
|
|
|
48,646 |
|
|
|
144,696 |
|
|
|
48,367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(34,348 |
) |
|
|
(35,018 |
) |
|
|
(34,524 |
) |
|
|
(102,372 |
) |
|
|
(104,707 |
) |
Write off of debt issuance costs |
|
|
|
|
|
|
|
|
|
|
(9,450 |
) |
|
|
(9,450 |
) |
|
|
|
|
Change in fair value of derivative instruments |
|
|
1,768 |
|
|
|
(1,049 |
) |
|
|
1,624 |
|
|
|
5,260 |
|
|
|
(6,670 |
) |
Other, net |
|
|
(821 |
) |
|
|
601 |
|
|
|
857 |
|
|
|
241 |
|
|
|
2,765 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(33,401 |
) |
|
|
(35,466 |
) |
|
|
(41,493 |
) |
|
|
(106,321 |
) |
|
|
(108,612 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) before income taxes |
|
|
33,040 |
|
|
|
(14,537 |
) |
|
|
7,153 |
|
|
|
38,375 |
|
|
|
(60,245 |
) |
Income tax (benefit) |
|
|
11,167 |
|
|
|
(4,080 |
) |
|
|
2,475 |
|
|
|
12,952 |
|
|
|
(21,965 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
21,873 |
|
|
$ |
(10,457 |
) |
|
$ |
4,678 |
|
|
$ |
25,423 |
|
|
$ |
(38,280 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Tax Rate |
|
|
33.8 |
% |
|
|
28.1 |
% |
|
|
34.6 |
% |
|
|
33.8 |
% |
|
|
36.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per common share |
|
$ |
0.13 |
|
|
$ |
(0.07 |
) |
|
$ |
0.03 |
|
|
$ |
0.15 |
|
|
$ |
(0.23 |
) |
Diluted income (loss) per common share |
|
$ |
0.13 |
|
|
$ |
(0.07 |
) |
|
$ |
0.03 |
|
|
$ |
0.15 |
|
|
$ |
(0.23 |
) |
Weighted-average common shares, basic |
|
|
168,836 |
|
|
|
168,766 |
|
|
|
168,836 |
|
|
|
168,833 |
|
|
|
168,762 |
|
Weighted-average common shares, diluted |
|
|
169,314 |
|
|
|
168,766 |
|
|
|
169,210 |
|
|
|
169,239 |
|
|
|
168,762 |
|
Dividends per common share |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
McJunkin Red Man Holding Corporation
Condensed Consolidated Statement of Cash Flows (Unaudited)
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2011 |
|
|
2010 |
|
Operating activities |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
25,423 |
|
|
$ |
(38,280 |
) |
Adjustments to reconcile net income (loss) to net cash used in operations: |
|
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
|
12,819 |
|
|
|
12,253 |
|
Amortization of intangibles |
|
|
37,799 |
|
|
|
40,970 |
|
Equity-based compensation expense |
|
|
6,264 |
|
|
|
2,368 |
|
Deferred income tax (benefit) expense |
|
|
(14,099 |
) |
|
|
4,385 |
|
Amortization of debt issuance costs |
|
|
8,057 |
|
|
|
8,849 |
|
Write off of debt issuance costs |
|
|
9,450 |
|
|
|
|
|
Increase in LIFO reserve |
|
|
46,000 |
|
|
|
56,750 |
|
Change in fair value of derivative instruments |
|
|
(5,260 |
) |
|
|
6,670 |
|
Hedge termination |
|
|
|
|
|
|
(25,038 |
) |
Provision for uncollectible accounts |
|
|
733 |
|
|
|
(1,760 |
) |
Write-down of inventory |
|
|
|
|
|
|
362 |
|
Nonoperating losses and other items not using cash |
|
|
3,663 |
|
|
|
1,533 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(223,475 |
) |
|
|
(93,168 |
) |
Inventories |
|
|
(112,100 |
) |
|
|
14,273 |
|
Income taxes |
|
|
16,911 |
|
|
|
(12,050 |
) |
Other current assets |
|
|
83 |
|
|
|
1,852 |
|
Accounts payable |
|
|
78,624 |
|
|
|
29,180 |
|
Deferred revenue |
|
|
(13,975 |
) |
|
|
(8,029 |
) |
Accrued expenses and other current liabilities |
|
|
28,135 |
|
|
|
26,893 |
|
|
|
|
|
|
|
|
Net cash used in operations |
|
|
(94,948 |
) |
|
|
28,013 |
|
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
|
(10,068 |
) |
|
|
(11,608 |
) |
Proceeds from the disposition of assets |
|
|
1,511 |
|
|
|
1,765 |
|
Acquisitions,
net of cash acquired of $1,900 and $781 for 2011 and 2010,
respectively |
|
|
(39,865 |
) |
|
|
(11,939 |
) |
Proceeds from the sale of assets held for sale |
|
|
10,594 |
|
|
|
4,048 |
|
Other investment and notes receivable transactions |
|
|
(246 |
) |
|
|
(164 |
) |
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(38,074 |
) |
|
|
(17,898 |
) |
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
Net advances from (payments on) revolving credit facilities |
|
|
125,708 |
|
|
|
(56,141 |
) |
Proceeds from issuance of senior secured notes |
|
|
|
|
|
|
47,897 |
|
Debt issuance costs paid |
|
|
(9,690 |
) |
|
|
(3,858 |
) |
Proceeds from exercise of stock options |
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities |
|
|
116,021 |
|
|
|
(12,102 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in cash |
|
|
(17,001 |
) |
|
|
(1,987 |
) |
Effect of foreign exchange rate on cash |
|
|
2,246 |
|
|
|
274 |
|
Cash beginning of period |
|
|
56,202 |
|
|
|
56,244 |
|
|
|
|
|
|
|
|
Cash end of period |
|
$ |
41,447 |
|
|
$ |
54,531 |
|
|
|
|
|
|
|
|
McJunkin Red Man Holding Corporation
Supplemental Information (Unaudited)
Calculation of Adjusted Gross Margin
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
June 30, |
|
|
September 30, |
|
|
September 30, |
|
|
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2011 |
|
|
2010 |
|
Gross margin, as reported |
|
$ |
201.1 |
|
|
$ |
136.8 |
|
|
$ |
172.7 |
|
|
$ |
520.8 |
|
|
$ |
383.7 |
|
Depreciation and amortization |
|
|
4.7 |
|
|
|
4.1 |
|
|
|
4.2 |
|
|
|
12.8 |
|
|
|
12.2 |
|
Amortization of intangibles |
|
|
12.7 |
|
|
|
13.6 |
|
|
|
12.7 |
|
|
|
37.8 |
|
|
|
41.0 |
|
Increase in LIFO reserve |
|
|
18.3 |
|
|
|
19.8 |
|
|
|
17.6 |
|
|
|
46.0 |
|
|
|
56.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Gross Margin |
|
$ |
236.8 |
|
|
$ |
174.3 |
|
|
$ |
207.2 |
|
|
$ |
617.4 |
|
|
$ |
493.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note to above:
The Company defines Adjusted Gross Margin as reported gross margin plus depreciation and
amortization, amortization of intangibles, and LIFO expense. The Company has included Adjusted
Gross Margin as a supplemental disclosure because management believes Adjusted Gross Margin is a
meaningful indicator of its operating performance without regard to items such as amortization of
intangibles and LIFO impacts on cost of sales, that can vary substantially from company to company
depending upon the nature and extent of acquisitions they have been involved in and inventory
costing methodology.
The Company sometimes uses information derived from its consolidated financial information but not
presented in its financial statements prepared in accordance with U.S. generally accepted
accounting principles (GAAP). Certain of these data are considered non-GAAP financial measures
under the U.S. Securities and Exchange Commission rules. These non-GAAP financial measures
supplement our GAAP disclosures and should not be considered an alternative to GAAP measures.
Above is a presentation of Adjusted Gross Margin including a reconciliation to gross margin, as
reported, the most comparable GAAP measure. The following page includes a presentation of Adjusted
EBITDA including a reconciliation to net income.
McJunkin Red Man Holding Corporation
Supplemental Information (Unaudited)
Calculation of Adjusted EBITDA
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
June 30, |
|
|
September 30, |
|
|
September 30, |
|
|
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2011 |
|
|
2010 |
|
Net income (loss) |
|
$ |
21.9 |
|
|
$ |
(10.5 |
) |
|
$ |
4.7 |
|
|
$ |
25.4 |
|
|
$ |
(38.3 |
) |
Income tax expense (benefit) |
|
|
11.1 |
|
|
|
(4.0 |
) |
|
|
2.5 |
|
|
|
12.9 |
|
|
|
(22.0 |
) |
Interest expense |
|
|
34.3 |
|
|
|
35.0 |
|
|
|
34.5 |
|
|
|
102.4 |
|
|
|
104.7 |
|
Write off of debt issuance costs |
|
|
|
|
|
|
|
|
|
|
9.5 |
|
|
|
9.5 |
|
|
|
|
|
Depreciation and amortization |
|
|
4.7 |
|
|
|
4.1 |
|
|
|
4.2 |
|
|
|
12.8 |
|
|
|
12.2 |
|
Amortization of intangibles |
|
|
12.7 |
|
|
|
13.6 |
|
|
|
12.7 |
|
|
|
37.8 |
|
|
|
41.0 |
|
Increase in LIFO reserve |
|
|
18.3 |
|
|
|
19.8 |
|
|
|
17.6 |
|
|
|
46.0 |
|
|
|
56.8 |
|
Change in fair value of derivative
instruments |
|
|
(1.8 |
) |
|
|
1.0 |
|
|
|
(1.6 |
) |
|
|
(5.3 |
) |
|
|
6.7 |
|
Share based compensation expense |
|
|
3.8 |
|
|
|
0.2 |
|
|
|
1.0 |
|
|
|
6.3 |
|
|
|
2.4 |
|
Legal and consulting expenses |
|
|
1.5 |
|
|
|
1.8 |
|
|
|
3.4 |
|
|
|
6.1 |
|
|
|
2.7 |
|
Joint venture termination |
|
|
1.7 |
|
|
|
|
|
|
|
|
|
|
|
1.7 |
|
|
|
|
|
Other non-recurring and non-cash
expenses (1) |
|
|
1.4 |
|
|
|
2.9 |
|
|
|
2.1 |
|
|
|
4.5 |
|
|
|
2.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(2) |
|
$ |
109.6 |
|
|
$ |
63.9 |
|
|
$ |
90.6 |
|
|
$ |
260.1 |
|
|
$ |
168.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Other non-recurring and non-cash expenses include transaction-related expenses, pre-acquisition EBITDA of MRC SPF, and other items added
back to net income pursuant to our debt agreements. |
|
(2) |
|
For purposes of computing Adjusted EBITDA, the Company has added back the increase in its LIFO reserve for all periods presented. These amounts
would not be added back for similar calculations computed for purposes of the indenture governing the Companys senior secured notes. |
Note to above:
Adjusted EBITDA consists of net income plus interest, income taxes, depreciation and amortization,
amortization of intangibles and other non-recurring, non-cash charges (such as gains/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 our LIFO costing methodology. The Company elected to
adjust for the impact of the its LIFO inventory costing methodology beginning in the second quarter
of 2011 based on the non-cash nature of the charge and the significance of the charge to our
results. Adjusted EBITDA referenced herein for prior periods has been revised to reflect
the results on a consistent basis. The Company has included Adjusted EBITDA as a
supplemental disclosure because we believe Adjusted EBITDA is an important measure under the
indenture governing our notes and ABL credit facility and provides investors a helpful measure for
comparing its operating performance with the performance of other companies that have different
financing and capital structures or tax rates.