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): May 8, 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)
Registrants 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 Global) 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 Global and its business regarding, among other things, MRC Globals 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 Globals filings with the Securities and Exchange Commission and other public announcements that MRC Global 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 Global 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 Global specifically disclaims any obligation to do so. The Presentation Materials will also be posted in the Investor Relations section of MRC Globals 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 Global 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 May 8, 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: May 8, 2014
MRC GLOBAL INC. | ||
By: | /s/ James E. Braun | |
James E. Braun | ||
Executive Vice President and Chief Financial Officer |
3
INDEX TO EXHIBITS
Exhibit |
Description | |
99.1 | Investor Presentation, dated May 8, 2014 |
4
1
Investor Presentation
May 8, 2014
May 8, 2014
Investor Presentation
TM
Exhibit 99.1 |
2
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 companys business, including its strategy, its industry, the
companys future profitability, the companys guidance on its sales, adjusted EBITDA,
adjusted gross profit, tax rate, capital expenditures and cash flow, growth in the
companys various markets and the companys expectations, beliefs, plans,
strategies, objectives, prospects and assumptions 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 our control, including the factors described in the
companys 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 companys SEC filings, which are available on the SECs website at
www.sec.gov
and
on
the
companys
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 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.
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.
2
Investor Presentation
May 8, 2014
Forward Looking Statements and Non-GAAP Disclaimer
|
By the
Numbers Industry Sectors
Product
Categories
Business
2014 Sales
Guidance
$5.65B
Upstream
Line Pipe / OCTG
Locations
400+
Countries
Operations
Direct Sales
(>$100,000)
All countries
19
45+
90+
Midstream
Valves
Customers
19,000+
Suppliers
20,000+
Downstream/
Industrial
Fittings / Flanges
SKUs
230,000+
Company Snapshot
MRO
73%
Projects
27%
U.S.
75%
Canada
13%
Europe / Asia
Pacific
12%
MRC is the largest global distributor of pipe, valves and fittings (PVF) to the
energy industry 1.
Percentage of sales for the twelve months ended March 31, 2014.
2.
MRO revenue generated from broad based contracts covering both ongoing capital and
operating needs of customers. 3
Investor Presentation
May 8, 2014
Model
1
2 |
4
Investor Presentation
May 8, 2014
MRC Revenue Diversification by Industry Sector
Transmission
17%
Drilling &
Completion
Tubulars
8%
Production
Infrastructure,
Materials &
Supplies
37%
Gas Utility
11%
Other/
Industrial
15%
Refining
7%
Chemical
5%
Note: Percentage of sales for the twelve months ended March 31, 2014.
Upstream
45%
Downstream 27%
28% Midstream |
By
Product Line MRC Revenue Diversification
Note: Percentage of sales for the twelve months ended March 31, 2014.
By Geography
Houston, TX
Edmonton, AB
Bradford, UK
Singapore
Perth, AU
Stavanger, NO
12%
13%
17%
17%
18%
23%
Asia / Europe
Canada
Gulf Coast
Southwest
Western US
Eastern US
29%
22%
21%
19%
9%
Valves
Fittings & Flanges
General Oilfield
Products
Line Pipe
OCTG
29%
21%
22%
19%
5
Investor Presentation
May 8, 2014
9% |
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
6
Investor Presentation
May 8, 2014 |
Downstream
Midstream
Upstream
MRC plays a vital role in the complex, technical, global energy supply chain
Long-Term Supplier & Customer Relationships
CUSTOMERS
SUPPLIERS
IOCs
Phillips 66
Valero
DOW
DuPont
Marathon
Petroleum
Access
Midstream
AGL
Resources
Atmos
NiSource
PG&E
Williams
DCP
Midstream
Chesapeake
Energy
ConocoPhillips
Devon
Apache
Anadarko
CNRL
Hess
Husky
Energy
Marathon
Oil
Statoil
Energy Carbon Steel
Tubular Products
Valves
Fittings, Flanges and General
Use Products
Tenaris
TMK-
IPSCO
U.S.
Steel
CSI Tubular
JMC
Wheatland
Balon
Cameron
Flowserve
Kitz
Neway
Velan
Boltex
Bonney
Forge
Chevron
Phillips
Chemical
Tube
Forgings of
America
WL Plastics
7
Investor Presentation
May 8, 2014 |
8
Investor Presentation
May 8, 2014
Today
10
15 Years Ago
Next 1 to 5 Years
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 |
Where Our
Customers Need Us To Be Leading industrial distributor of PVF globally to the
energy sectors North America
International
Branches
U.S. = 130+
Canada = 40+
55+
Distribution Centers
U.S.= 8
Canada = 1
U.K. = 1
Singapore = 1
Australia = 2
Netherlands = 1
Norway = 1
Valve Automation Centers
U.S. =13
Canada = 1
13
Pipe Yards
U.S. = 95+
Canada = 20+
10
9
Investor Presentation
May 8, 2014 |
End
Market Opportunities Global
E&P
Spending
2
1.
Percentage of sales for the twelve months ended March 31, 2014.
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.
millions
millions
Upstream 45%
Midstream 28%
Downstream 27%
MRC
Revenue
Mix
by
End
Market
1
63%
Built
Before
1970
37%
Built
After
1970
10
Investor Presentation
May 8, 2014
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
2012A
2013E
2014E
2015E
2016E
2017E
United States
Canada
Outside North America
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
2012A
2013E
2014E
2015E
2016E
2017E
>
New North American Shale
Infrastructure
>
Aging U.S. Infrastructure and New
Legislation To Drive Pipeline
Replacement and Additional
Automated
Valve
Sales
3
Petroleum Refining & Chemical
Processing Spend in North
America
4 |
11
Investor Presentation
May 8, 2014
Strategic Objectives
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
2014:
Chevron
Kazakhstan, PFF Future Growth
Project, Thailand & Australia, MRO, PVF
ConocoPhillips
Lower 48 & Canada, MRO,
PVF
Execute Global Preferred Supplier Contracts |
Strategic
Objectives Growth from Mergers & Acquisitions
1. Percentage of sales for the twelve months ended March 31, 2014.
Organic Growth
All Other
-
19,000+ customers
Targeted Growth Accounts
Top 1 -
25
Customer
Mix
Sales
1
12
Investor Presentation
May 8, 2014
23%
50%
Focus on valve and valve automation
Strengthen offerings in stainless and alloy
PFF
Rebalance Product Mix to Higher
Margin Items
Add product lines to complete global PVF
offerings and geographies for scale and expertise
2013:
Flow Control Products
Permian Basin
Flangefitt Stainless
UK
2014:
Stream AS
Norway
NAWAH/MRC/US Steel Tubular Products
consortium
Iraq
27%
Target Accounts: develop the
next 75
customers |
Strategic
Expansion into Offshore
Top 4 largest offshore markets = $100 billion E&P spend
Norway is the largest
MRC revenue mix
Pre Stream
acquisition
approx. 98% onshore, 2% offshore
Post Stream
acquisition
approx. 92% onshore, 8% offshore
1. Source: Rystad Energy, 2013
($billions)
13
Investor Presentation
May 8, 2014
$32
$30
$23
$23
$15
$14
$13
$12
$10
$8
Norway
Brazil
USA
Great Britain
Angola
Mexico
Kingdom of Saudi Arabia
Nigeria
Australia
Malaysia
Stream 2013 Sales by Division
Valve
Management
38%
Instrumentation
36%
Pipe, Fittings
& Flanges
26%
Top
10
Global
Offshore
E&P
Markets
(2012)
1 |
Note: Reflects reported revenues for the year of acquisition
M&A -
Track Record of Strategic Acquisitions
Acquisition Priorities
International branch platform for super majors
E&P spend
Branch
platforms/infrastructure for
North
American
shale
plays
Global valve and valve automation
Global stainless/alloys
14
Investor Presentation
May 8, 2014
|
Financial
Overview 15
Investor Presentation
May 8, 2014 |
16
Investor Presentation
May 8, 2014
1Q 2014 Highlights
($ millions)
3/31/2014
12/31/2013
3/31/2013
U.S.
$ 625
$ 470
$ 456
Canada
88
90
69
International
318
198
163
$ 1,031
$ 758
$ 688
16
Investor Presentation
May 8, 2014
Stream acquisition closed
January 2014
Backlog increased
SG&A cost saving initiatives |
17
Investor Presentation
May 8, 2014
Financial Metrics
Sales
Adjusted Gross Profit and % Margin
Adjusted EBITDA and % Margin
7.0%
8.5%
($ in millions, except per share data)
Y-o-Y
Growth
24%
(5%)
12%
Y-o-Y
Growth
29%
(17%)
10%
7.5%
8.3%
7.4%
7.8% -
7.3%
8.0%
6.4%
Y-o-Y
Growth
15%
(6%)
8%
Diluted EPS
Y-o-Y
Growth
259%
21%
17.6%
19.0%
19.3%
20.5% -
19.5%
20.1%
19.5%
$1,190
Three Months Ended
March 31
Three Months Ended
March 31
Three Months Ended
March 31
Three Months Ended
March 31
$4,832
$5,571
$5,231
$5,500
$1,305
$1,306
2011
2012
2013
2014
Guidance
2013
2014
$5,800
$850
$1,058
$1,009
$1,070
$262
$254
2011
2012
2013
2014
Guidance
2013
2014
$360
$463
$386
$400
$104
$84
2011
2012
2013
2014
Guidance
2013
2014
$450
$0.34
$1.22
$1.48
$0.45
$0.23
2011
2012
2013
2013
2014 |
Balance
Sheet Metrics Total Debt
Capital Structure
Cash Flow from Operations
Net Leverage
($ in millions)
March 31, 2014
Cash and Cash Equivalents
$ 30
Total Debt
Term Loan B due 2019, net of discount
785
Global ABL Facility due 2017
529
Total Debt
$ 1,314
Total Equity
$ 1,366
Total Capitalization
$ 2,680
Three Months Ended
March 31
1. The net leverage ratio is 3.3x pro forma for the acquisition of Stream and
Flangefitt 18
Investor Presentation
May 8, 2014
$1,527
$1,257
$987
$1,314
2011
2012
2013
March 31, 2014
$(103)
$240
$324
$174
$(74)
2011
2012
2013
2014
Guidance
2013
2014
$200
4.1x
2.6x
2.5x
3.5x
2011
2012
2013
March 31, 2014
3x
2x
(including current portion):
Target range 2x-3x
1
$175 |
19
Investor Presentation
May 8, 2014
Macro drivers
Growth in global energy consumption
driving investment
Increased global production
Need for additional energy infrastructure
Expansion of downstream energy
conversion businesses
Investment Thesis Summary
Leading global PVF distributor to the energy sector
MRC attributes
Ability to capitalize on global energy
investment across all sectors
Long term global customer & supplier
relationships
Strong cash flow from operations
Strong balance sheet
19
Investor Presentation
May 8, 2014 |
Appendix
20
Investor Presentation
May 8, 2014 |
21
Investor Presentation
May 8, 2014
Adjusted EBITDA Reconciliation
March
31
December
31
($ in millions)
2014
2013
2013
2012
2011
Net
income
$ 23.5
$ 46.2
$ 152.1
$ 118.0
$ 29.0
Income tax
expense
13.2
25.0
84.8
63.7
26.8
Interest expense
15.1
15.3
60.7
112.5
136.8
Increase (Decrease)
in LIFO reserve
1.3
(3.1)
(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
5.2
5.4
22.3
18.6
17.0
Amortization of
intangibles
15.7
13.2
52.1
49.5
50.7
Change in fair value of derivative instruments
3.6
(0.6)
(4.7)
(2.2)
(7.0)
Equity-based compensation expense
1.8
1.9
15.5
8.5
8.4
Loss on sale of Canadian progressive cavity pump business
6.2
-
Executive
separation expense (cash portion)
-
-
0.8
-
-
Insurance charge
-
-
2.0
-
-
Foreign
currency losses (gains)
(1.6)
(0.2)
12.9
(0.8)
(0.6)
Pension settlement
-
-
-
4.4
-
Legal and consulting expenses
-
-
-
-
9.9
Joint venture termination
-
-
-
-
1.7
Other expense
(income)
-
0.8
3.0
(0.6)
4.6
Adjusted EBITDA
$ 84.0
$ 103.9
$ 386.4
$ 463.2
$ 360.5 |
22
Investor Presentation
May 8, 2014
March 31
December 31
($ in millions)
2014
2013
2013
2012
2011
Gross Profit
$ 232.1
$ 246.6
$ 954.8
$ 1,013.7
$ 708.2
Depreciation and amortization
5.2
5.4
22.3
18.6
17.0
Amortization of intangibles
15.7
13.2
52.1
49.5
50.7
Increase (Decrease) in LIFO reserve
1.3
(3.1)
(20.2)
(24.1)
73.7
Adjusted Gross Profit
$ 254.3
$ 262.1
$1,009.0
$ 1,057.7
$ 849.6
Adjusted Gross Profit Reconciliation |