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 4, 2013
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”) executive management will make a presentation on November 4, 2013 to attendees of the Baird’s 2013 Industrial Conference regarding, among other things, MRC’s operations and performance. A copy of the materials to be used at the presentation (the “Presentation Materials”) is included as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. The Presentation Materials, possibly with modifications, will also be used from time to time after November 4, 2013 in presentations about MRC’s operations and performance to current and potential investors, lenders, creditors, insurers, vendors, customers, employees and others with an interest in MRC and its business.
The information contained in the Presentation Materials is summary information that should be considered in the context of MRC’s filings with the Securities and Exchange Commission and other public announcements that MRC 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 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 specifically disclaims any obligation to do so. The Presentation Materials will also be posted in the Investor Relations section of MRC’s website, http://www.mrcglobal.com for 90 days.
The information referenced under Item 7.01 (including Exhibit 99.1 referenced in the 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 (the “Exchange Act”), 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 in Item 9.01 below) shall not be incorporated by reference into any registration statement, report or other document filed by MRC pursuant to the Securities Act of 1933, as amended (the “Securities Act”), except as shall be expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| 99.1 | Presentation Materials, dated November 4, 2013 |
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: November 4, 2013
| 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 | Presentation Materials, dated November 4, 2013 | |
4
 1
November 4, 2013
Baird’s 2013 Industrial Conference
Andrew Lane
Chairman, President & CEO
Exhibit 99.1 |
 2
Baird’s 2013 Industrial Conference
November 4, 2013
2
This presentation 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 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. 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. For a discussion of key risk factors, please see the risk
factors disclosed in the Company’s annual report on Form 10-K for the year ended December 31, 2012 and
the registration statement (including a prospectus and prospectus supplement) for the offering to
which this communication relates, 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 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.
Statement Regarding Use of Non-GAAP Measures:
The Non-GAAP financial measures contained in this presentation (EBITDA, Adjusted EBITDA, Adjusted
Gross Profit and variations thereof) are
not
measures
of
financial
performance
calculated
in
accordance
with
GAAP
and
should
not
be
considered
as
alternatives
to
net
income
(loss) or any other performance measure derived in accordance with GAAP or as alternatives to cash
flows from operating activities as a measure
of
our
liquidity.
They
should
be
viewed
in
addition
to,
and
not
as
a
substitute
for,
analysis
of
our
results
reported
in
accordance
with
GAAP, or as alternative measures of liquidity. Management believes that certain non-GAAP
financial measures provide a view to measures similar to those used in evaluating our
compliance with certain financial covenants under our credit facilities and provide financial statement
users meaningful comparisons between current and prior year period results. They are also used
as a metric to determine certain components of performance-based compensation. The
adjustments and Adjusted EBITDA are based on currently available information and certain
adjustments that we believe are reasonable and are presented as an aid in understanding our operating results. They are not
necessarily indicative of future results of operations that may be obtained by the Company.
Forward Looking Statements and Non-GAAP Disclaimer |
 Company
Snapshot MRO
72%
Projects
28%
U.S.
76%
Canada
13%
Europe / Asia Pacific
11%
MRC is the largest global distributor of pipe, valves and fittings (PVF) to the
energy industry 1.
Percentage of sales for the nine months ended September 30, 2013
2.
MRO revenue generated from broad based contracts covering both ongoing capital and
operating needs of customers. By the Numbers
Industry Sectors
Product Categories
Business Model
1
2013
Revenue
Guidance
$5.16B+
Upstream
Line Pipe / OCTG
Locations
400+
Countries
44+
Midstream
Valves
Customers
18,000+
Suppliers
18,000+
Downstream/
Industrial
Fittings / Flanges
SKU’s
175,000+
3
Baird’s 2013 Industrial Conference
November 4, 2013
2 |
 MRC
Revenue Diversification by Industry Sector Chemical
5%
Gas Utility
11%
Refining
7%
Other /
Industrial
16%
Transmission
17%
Drilling &
Completion
Tubulars
9%
Production
Infrastructure,
Materials &
Supplies
35%
Note: Percentage of sales for the nine months ended September 30, 2013.
Upstream
44%
Downstream 28%
28% Midstream
4
Baird’s 2013 Industrial Conference
November 4, 2013 |
 By
Product Line MRC Revenue Diversification
Note: Percentage of sales for the nine months ended September 30, 2013.
By Geography
5
Baird’s 2013 Industrial Conference
November 4, 2013
11%
13%
24%
25%
27%
Asia / Europe
Canada
Eastern US
Western US
Gulf Coast
28%
22%
21%
20%
9%
Valves
Fittings & Flanges
Other
Line Pipe
OCTG
28%
22%
20%
21%
9% |
 Why
customers Choose Distribution & MRC Generating savings and efficiencies
for our customers while enabling them to focus on their core
competencies 6
Baird’s 2013 Industrial Conference
November 4, 2013
Benefits of MRC
Integrated Supply Chain Services
Supplier Registration / Preferred Supplier List
Global delivery footprint
$1B+ in global inventory
Global sourcing from 35+ countries
Cost Savings and Efficiencies
Technical Assistance / Product Recommendation
Warehouse and Logistics Management
Inventory Consignment / Just-in-Time Delivery
Customized IT Solutions |
 MRC
plays a critical role in the complex, technical, global energy supply chain
Long-Term Customer & Supplier Relationships
CUSTOMERS
SUPPLIERS
7
Baird’s 2013 Industrial Conference
November 4, 2013 |
 Where Our
Customers Need Us To Be Leading
industrial
distributor
of
PVF
globally
to
the
energy
and
industrials
sectors
Houston, TX
Edmonton, AB
Bradford, UK
Singapore
Perth, AU
8
Baird’s 2013 Industrial Conference
November 4, 2013
North America
International
Branches
U.S. = 144+
Canada = 45+
49+
Distribution Centers
U.S.= 8
Canada = 1
U.K. = 1
Singapore = 1
Australia = 2
Netherlands = 1
Valve Automation Centers
U.S. =13
Canada = 1
12
Pipe Yards
U.S. = 95+
Canada = 25+
9 |
 29%
22%
49%
1. Percentage of sales for the nine months ended September 30, 2013.
9
Baird’s 2013 Industrial Conference
November 4, 2013
Strategic
Objectives
Execute Global Preferred
Supplier Contracts
•
2012: North American PVF & Global Valve
Contract for Shell
•
2013
:
•
Global Celanese PVF
•
NiSource US MRO PVF
•
Williams, US PVF, Midstream
•
Chevron Phillips Chemical, PVF, Downstream
Rebalance Product Mix to
Higher Margin Items
•
Focus on valve and valve automation
•
Strengthen offerings in stainless and
alloy PFF
•
Lowered OCTG as a percentage of
inventory / sales
Growth from Mergers & Acquisitions
•
Add product lines to complete global PVF
offerings
•
2012:
Production
Specialty
Services
–
Permian
Basin
•
2013: Flow Control Products, Permian Basin –
Valve & valve automation
•
Service
customers
where
they
spend
–
currently
an international focus
•
NAWAH –
Iraqi alliance
Organic Growth
•
Target
Accounts
: develop the “next 75”
customers
•
Top
25
customers
represent
49%
of
revenue¹
All Other
-
18,000+ customers
Targeted Growth Accounts
Top 1 -
25
Customer Mix
-
Revenue |
 10
Baird’s 2013 Industrial Conference
November 4, 2013
End Market Opportunities
Global E&P Spending²
1.
Percentage of sales for the nine months ended September 30, 2013.
2.
Source: Barclays 2013 E&P Spending Outlook Mid Year Update.
3.
Source: Pipeline Safety and Hazardous Materials Administration, Wall Street Journal,
for Top 10 states by pipeline mileage. 4.
Source: Industrial Info Resources: October 2013.
Petroleum Refining & Chemical
Processing Spend in North
America
4
millions
millions
MRC
Revenue
Mix
by
End
Market
63%
Built
Before
1970
37%
Built
After
1970
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
2011A
2012A
2013E
2014E
2015E
United States
Canada
Outside North America
Upstream 44%
Midstream 28%
Downstream 28%
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
2012A
2013E
2014E
2015E
2016E
2017E
1
>
New North American Shale
Infrastructure
>
Aging U.S. Infrastructure and New
Legislation To Drive Pipeline
Replacement and Additional
Automated Valve Sales³ |
 Today
10 –
15 Years Ago
Next 1 to 5 Years
Changing PVF Energy Distribution Landscape
Consolidating energy industry benefits global players
Decentralized
Procurement
•
Separate contracts by
product class
•
PVF purchasing
handled locally
Centralized
Procurement
•
Purchasing more
consolidated
•
Contracts by end segment
•
Contracts cover PVF
•
Customers align with
suppliers with size/scale
•
Global upstream /
midstream / downstream
PVF contracts
Global
Procurement
11
Baird’s 2013 Industrial Conference
November 4, 2013 |
 12
Baird’s 2013 Industrial Conference
November 4, 2013
Note: Reflects reported revenues for the year of acquisition
M&A -
Track Record of Strategic Acquisitions
•
•
•
•
Branch platforms/infrastructure for North American shale plays
Global valve and valve automation
Global stainless/alloys
International
branch
platform
for
“super
majors”
E&P
spend
Acquisition Priorities |
 13
Baird’s 2013 Industrial Conference
November 4, 2013
Financial Overview |
 14
Baird’s 2013 Industrial Conference
November 4, 2013
Financial Metrics
Sales
Adjusted Gross Profit and % Margin
Adjusted EBITDA and % Margin
($ in millions, except per share data)
Y-o-Y
Growth
61%
29%
(14%)
5.8%
7.5%
8.3%
7.8%
7.5%
8.5%
7.7%
Longer term revenue growth and improving profitability
Y-o-Y
Growth
26%
15%
(6%)
Diluted EPS
Y-o-Y
Growth
NM
259%
43%
Nine months
ended Sept 30
$1,046
$3,846
$4,832
$5,571
$5,160
$4,264
$3,887
2010
2011
2012
2013
Guidance
2012
2013
$5,300
Nine months
ended Sept 30
$663
$850
$1,058
$994
$809
$763
2010
2011
2012
2013
Guidance
2012
2013
Nine months
ended Sept 30
Y-o-Y
Growth
28%
24%
(4%)
17.2%
17.6%
19.0%
20%
19%
19.0%
19.6%
$(0.61)
$0.34
$1.22
$1.65
$1.31
$1.26
2010
2011
2012
2013
Guidance
2012
2013
$ 1.85
Nine months
ended Sept 30
$224
$360
$463
$385
$364
$299
2010
2011
2012
2013
Guidance
2012
2013
$415 |
 15
Baird’s 2013 Industrial Conference
November 4, 2013
Balance Sheet Metrics
Total Debt
Capital Structure
Cash Flow from Operations
Net Leverage
($ in millions)
Strong balance sheet and cash flow
Sept 30, 2013
Cash and Cash Equivalents
$ 33
Total Debt (including current portion):
Term Loan B due 2019, net of discount
638
Global ABL Facility due 2017
406
Total Debt
$ 1,044
Total Equity
1,317
Total Capitalization
$ 2,361
Nine months
ended Sept 30
$1,360
$1,527
$1,257
$1,044
2010
2011
2012
Sep-13
$113
$(103)
$240
$250
$66
$241
2010
2011
2012
2013
Guidance
2012
2013
$280
5.8 x
4.1 x
2.6x
2.5x
2010
2011
2012
Sep-13 |
 16
Baird’s 2013 Industrial Conference
November 4, 2013
Macro drivers
•
Growth in global energy consumption
driving investment
•
Increased global production
•
Need for additional energy infrastructure
•
Expansion of downstream energy
conversion businesses
Investment Thesis Summary
Leading global PVF distributor to the energy sector
MRC attributes
•
Ability to capitalize on global energy
investment across all sectors
•
Long term global customer & supplier
relationships
•
Strong balance sheet |
 17
Baird’s 2013 Industrial Conference
November 4, 2013
Appendix |
 18
Baird’s 2013 Industrial Conference
November 4, 2013
Nine months ended
Sept 30
December 31
($ in millions)
2013
2012
2012
2011
2010
Net income (loss)
$ 128.8
$ 124.4
$ 118.0
$ 29.0
$ (51.8)
Income tax expense (benefit)
65.5
67.8
63.7
26.8
(23.4)
Interest expense
46.0
92.6
112.5
136.8
139.6
(Decrease) increase in LIFO reserve
(21.2)
3.1
(24.1)
73.7
74.6
Write off of debt issuance costs
-
1.7
1.7
9.5
-
Loss on early extinguishment of debt
-
21.7
114.0
-
-
Depreciation and amortization
16.8
13.2
18.6
17.0
16.6
Amortization of intangibles
39.1
37.2
49.5
50.7
53.9
Change in fair value of derivative instruments
(0.6)
(1.8)
(2.2)
(7.0)
4.9
Equity based compensation expense
8.6
5.9
8.5
8.4
3.7
Executive separation expense (cash portion)
0.8
-
-
-
-
Insurance charge
2.0
-
-
-
-
Foreign currency losses (gains)
12.0
(0.5)
(0.8)
(0.6)
0.3
Inventory write-down
-
-
-
-
0.4
M&A transaction & integration expenses
-
-
-
0.5
1.4
Pension settlement
-
-
4.4
-
-
Legal and consulting expenses
-
-
-
9.9
4.2
Joint venture termination
-
-
-
1.7
-
Provision for uncollectible accounts
-
-
-
0.4
(2.0)
Severance and related costs
-
-
-
1.1
3.2
Franchise taxes
-
-
-
0.4
0.7
Closed locations
-
-
-
-
(0.7)
Other expenses
1.4
(1.2)
(0.6)
2.2
(1.4)
Adjusted EBITDA
$ 299.2
$ 364.1
$ 463.2
$ 360.5
$ 224.2
Adjusted EBITDA Reconciliation |
 19
Baird’s 2013 Industrial Conference
November 4, 2013
Nine months ended
Sept 30
December 31
($ in millions)
2013
2012
2012
2011
2010
Gross Profit
$ 728.8
$ 755.4
$ 1,013.7
$ 708.2
$ 518.1
Depreciation and amortization
16.8
13.2
18.6
17.0
16.6
Amortization of intangibles
39.1
37.2
49.5
50.7
53.9
(Decrease) increase in LIFO reserve
(21.2)
3.1
(24.1)
73.7
74.6
Adjusted Gross Profit
$ 763.5
$ 808.9
$ 1,057.7
$ 849.6
$ 663.2
Adjusted Gross Profit GAAP Reconciliation
|