8-K

 

 

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): February 27, 2014

 

 

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 presentations from time to time to current and potential investors, lenders, creditors, insurers, vendors, customers, employees and others with an interest in MRC and its business regarding, among other things, MRC’s operations and performance. A copy of the materials to be used at the presentations (the “Presentation Materials”) is included as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

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 under 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, 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 under 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, except as shall be expressly set forth by specific reference in such filing.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

99.1 Investor Presentation, dated February 27, 2014

 

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: February 27, 2014

 

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    Investor Presentation, dated February 27, 2014

 

4

EX-99.1
1
Investor Presentation
February 27, 2014
February 27, 2014
Investor Presentation
TM
Exhibit 99.1
***
***
***
***
***
***
***
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***


2
Investor Presentation
February 27, 2014
2
Forward Looking Statements and Non-GAAP Disclaimer
This
presentation
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”, “looking forward”, “guidance”
and similar expressions are intended to identify forward-looking statements. Statements
about the company’s business, including its strategy, its industry, the company’s future profitability, the company’s guidance on its sales, adjusted EBITDA,
adjusted gross profit, tax rate, capital expenditures and cash flow, 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 are based on management’s 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 our control, including the factors described in the company’s SEC filings that may cause our 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 SEC filings, 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
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.
Statement Regarding Use of Non-GAAP Measures:
The
Non-GAAP
financial
measures
contained
in
this
presentation
(Adjusted
EBITDA
and
Adjusted
Gross
Profit)
are
not
measures
of
financial
performance
calculated in accordance with U.S. Generally Accepted Accounting
Principles (GAAP) and should not be considered as alternatives to net income or gross
profit.  They should be viewed in addition to, and not as a substitute for, analysis of our results reported in accordance with GAAP.  Management believes
that these non-GAAP financial measures provide investors a view to measures similar to those used in evaluating our compliance with certain financial
covenants under our credit facilities and provide meaningful comparisons between current and prior year period results.  They are also used as a metric to
determine certain components of performance-based compensation. They are not necessarily indicative of future results of operations that may be obtained
by the Company.


3
Investor Presentation
February 27, 2014
By the Numbers
Industry Sectors
Product Categories
2014 Sales
Guidance
$5.65B
Upstream
Line Pipe / OCTG
Locations
400+
Countries
Operations
Direct Sales
19
45+
Midstream
Valves
Customers
19,000+
Suppliers
20,000+
Downstream/
Industrial
Fittings / Flanges
SKU’s
200,000+
Company Snapshot
MRC is the largest global distributor of pipe, valves and fittings (PVF) to the energy industry
1.
Percentage of sales for the year ended  December 31, 2013
2.
MRO revenue generated from broad based contracts covering both ongoing capital and operating needs of customers.


4
Investor Presentation
February 27, 2014
MRC Revenue Diversification by Industry Sector
Note: Percentage of sales for the year ended December 31, 2013.


5
Investor Presentation
February 27, 2014
By Product Line
MRC Revenue Diversification
Note: Percentage of sales for the year ended December 31, 2013.
By Geography


6
Investor Presentation
February 27, 2014
Benefits of MRC
Supplier Registration / Preferred Supplier List
Global delivery footprint
Approximately $1B in global inventory
Global sourcing from 35+ countries
Integrated Supply Chain Services
Cost Savings and Efficiencies
Technical Assistance / Product Recommendation
Warehouse and Logistics Management
Inventory Consignment / Just-in-Time Delivery
Customized IT Solutions
Why Customers Choose Distribution & MRC
Generating savings and efficiencies for our customers
while enabling them to focus on their core competencies


7
Investor Presentation
February 27, 2014
MRC plays a vital role in the complex, technical, global energy supply chain
Long-Term Supplier & Customer Relationships


8
Investor Presentation
February 27, 2014
Changing PVF Energy Distribution Landscape
Consolidating energy industry benefits global players
Decentralized
Procurement
PVF purchasing
handled locally
Separate contracts by
product class
Centralized
Procurement
Purchasing more
consolidated
Contracts by end segment
Contracts cover PVF
Customers align with
suppliers with size/scale
Global
Procurement
Global upstream /
midstream / downstream
PVF contracts


9
Investor Presentation
February 27, 2014
End Market Opportunities
1.
Percentage of sales for the year ended  December 31, 2013.
2.
Source: Barclays 2014 E&P Spending Outlook.
3.
Source: Pipeline Safety and Hazardous Materials Administration. Wall Street Journal article titled “Gas-Pipeline Operators Sweat Test”, September 8, 2011 for the 10 states with the most miles of natural-gas pipeline
built before 1970.
4.
Source: Industrial Info Resources: October 2013.


10
Investor Presentation
February 27, 2014
Where Our Customers Need Us To Be
Leading industrial distributor of PVF globally to the energy sectors


11
Investor Presentation
February 27, 2014
Strategic Objectives
Execute Global Preferred Supplier Contracts
2013:
2014:
Rebalance Product Mix to Higher
Margin Items
Growth from Mergers & Acquisitions
Add product lines to complete global PVF
offerings
2013:
Flow
Control
Products
Permian
Basin
2013:
Flangefitt
Stainless
UK
2014: Stream AS –
Norway
Organic Growth
Target  Accounts: develop the “next 75”
customers
1. Percentage of sales for the year ended December 31, 2013.
Celanese –
Global, PVF
NiSource –
U.S., MRO, PVF
Williams –
U.S., PVF, Midstream
Chevron Phillips Chemical –
U.S., PVF, Downstream
BP –
Global, PFF, Upstream, Projects
BP –
N.A., Downstream valves, Europe Downstream
Chevron –
Kazakhstan, PFF Future Growth Project,
Thailand & Australia, MRO, PVF
ConocoPhilips –
U.S., MRO, PVF
Focus on valve and valve automation
Strengthen offerings in stainless and
alloy PFF


12
Investor Presentation
February 27, 2014
Strategic Expansion into Offshore
Top 4 largest offshore markets = $100 billion E&P spend
Norway is the largest
MRC revenue mix
1. Source: Rystad Energy, 2013
Pre Stream
acquisition –
approx. 98% onshore, 2% offshore
Post Stream
acquisition –
approx. 93% onshore, 8% offshore


13
Investor Presentation
February 27, 2014
Note:  Reflects reported revenues for the year of acquisition
M&A -
Track Record of Strategic Acquisitions
International
branch
platform
for
“super
majors”
E&P
spend
Branch platforms/infrastructure for North American shale plays
Global valve and valve automation
Global stainless/alloys
Acquisition Priorities


14
Investor Presentation
February 27, 2014
Financial Overview


15
Investor Presentation
February 27, 2014
Financial Metrics
Sales
Adjusted Gross Profit and % Margin
Adjusted EBITDA and % Margin
($ in millions, except per share data)
Longer term revenue growth and improving profitability
Diluted EPS


16
Investor Presentation
February 27, 2014
Balance Sheet Metrics
Total Debt
Capital Structure
Cash Flow from Operations
Net Leverage
($ in millions)
December 31,
2013
Pro forma1
December 31,
2013
Cash and Cash Equivalents
$ 25
$ 25
Total Debt
(including current
portion):
Term Loan B due 2019, net of
discount
787
787
Global ABL Facility due 2017
200
446
Total Debt
$ 987
$ 1,233
Total Equity
$ 1,338
$ 1,338
Total Capitalization
$ 2,325
$2,571
1. Pro forma to include debt incurred for the acquisition of Stream in January 2014.


17
Investor Presentation
February 27, 2014
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 cash flow from operations
Strong balance sheet


18
Investor Presentation
February 27, 2014
Appendix


19
Investor Presentation
February 27, 2014
Adjusted EBITDA Reconciliation
December 31
($ in millions)
2013
2012
2011
Net income
$ 152.1
$ 118.0
$ 29.0
Income tax expense
84.8
63.7
26.8
Interest expense
60.7
112.5
136.8
(Decrease) increase in LIFO reserve
(20.2)
(24.1)
73.7
Expenses associated with refinancing
5.1
1.7
9.5
Loss on early extinguishment of debt
-
114.0
-
Depreciation and amortization
22.3
18.6
17.0
Amortization of intangibles
52.1
49.5
50.7
Change in fair value of derivative instruments
(4.7)
(2.2)
(7.0)
Equity based compensation expense
15.5
8.5
8.4
Executive separation expense (cash portion)
0.8
-
-
Insurance charge
2.0
-
-
Foreign currency losses (gains)
12.9
(0.8)
(0.6)
Pension settlement
-
4.4
-
Legal and consulting expenses
-
-
9.9
Joint venture termination
-
-
1.7
Other expense (income)
3.0
(0.6)
4.6
Adjusted EBITDA
$ 386.4
$ 463.2
$ 360.5


20
Investor Presentation
February 27, 2014
Adjusted Gross Profit Reconciliation
December 31
($ in millions)
2013
2012
2011
Gross Profit
$ 954.8
$ 1,013.7
$ 708.2
Depreciation and amortization
22.3
18.6
17.0
Amortization of intangibles
52.1
49.5
50.7
(Decrease) increase in LIFO reserve
(20.2)
(24.1)
73.7
Adjusted Gross Profit
$1,009.0
$ 1,057.7
$ 849.6