HOUSTON, Aug. 3, 2015 /PRNewswire/ -- MRC Global Inc.
(NYSE: MRC), the largest global distributor, based on sales, of
pipe, valves and fittings (PVF) and related products and services
to the energy industry, today announced second quarter 2015
results.
The company's sales were $1.198
billion for the second quarter of 2015, which were 20% lower
than the second quarter of 2014 and 7.3% lower than the first
quarter of 2015. The decline was driven primarily by reduced
activity in the upstream sector. Sales were also negatively
impacted by the strengthening of the U.S. dollar, which reduced
reported sales by $40.8 million. Net
income available to common stockholders, which is net income less
dividends attributable to preferred stockholders, for the second
quarter of 2015 was $15.0 million, or
$0.15 per diluted share, compared to
$39.3 million, or $0.38 per diluted share for the second quarter of
2014. Adjusted net income available to common stockholders,
adjusted for certain severance, restructuring and finance charges
for the second quarter of 2015, was $23.0 million, or $0.22 per diluted share, compared to $42.9 million, or $0.42 per diluted share for the second quarter of
2014. Please refer to the reconciliation of adjusted net income
available to common stockholders (a non‑GAAP measure) to net income
available to common stockholders (a GAAP measure) in this
release.
Andrew R. Lane, MRC Global's
chairman, president and chief executive officer, stated, "The
second quarter results reflect the impact of the unfavorable
commodity environment and related decline in our customers'
activity. We have taken actions to reduce our costs, lower our
working capital levels and pay down our debt, the impact of which
is reflected in our results. We have generated $277 million in cash from operations this year,
and used these funds plus the proceeds from our recent preferred
stock issuance to repay $606 million
of debt; bringing our net debt balance down to $815 million. For the full year, we now expect
cash from operations to be $400 million to
$475 million and total debt reduction to be $700 million to $775 million. These steps have
strengthened our business, and we are well positioned to continue
our global expansion."
"Despite the volatile commodity environment, MRC Global is
successfully executing on its core strategy of building long-term
relationships with companies in the energy industry. We are gaining
market share and solidifying our position as the global leader in
PVF distribution. Our recent contract wins, with customers
such as SABIC and California Resources, underscore MRC Global's
leading position. We continue to focus on identifying opportunities
for strategic expansion to further strengthen our offering and
footprint."
MRC Global's second quarter 2015 gross profit was $205.9 million, or 17.2% of sales, a decline from
second quarter 2014 gross profit of $259.4
million, or 17.3% of sales. Gross profit for the second
quarter 2015 and 2014 reflected a benefit of $14.8 million and a charge of $0.8 million, respectively, in cost of sales
relating to the use of the last-in, first out ("LIFO") method of
inventory cost accounting. Changes in sales mix and pricing
pressures had a negative impact on gross profit margins in the
second quarter of 2015.
Selling, general and administrative ("SG&A") expenses were
$158.9 million, or 13.3% of sales,
for the second quarter of 2015 compared to $185.3 million, or 12.4% of sales, for the same
period of 2014. SG&A expenses were reduced by 14.2%
versus the prior year, primarily due to the cost savings measures
undertaken in 2014 and 2015. These measures included headcount
reductions totaling 680 since a peak in 2014, of which 180 occurred
in the second quarter of 2015. The favorable impact on
expenses from weaker foreign currencies of $10.3 million also benefitted the quarter,
partially offset by incremental expenses from acquisitions in 2014.
SG&A expenses for the second quarter of 2015 included
$6.9 million of pre-tax
severance and restructuring charges resulting from cost reduction
efforts, compared to $5.0 in the
second quarter of 2014.
Adjusted EBITDA was $63.2 million
in the second quarter of 2015 compared to $106.2 million for the same period in 2014.
Please refer to the reconciliation of adjusted EBITDA (a
non-GAAP measure) to net income (a GAAP measure) in this
release.
The effective tax rate in the second quarter of 2015 was 44.6%
as a result of a higher expected tax rate for the full year of
36.6% due to lower than previously forecasted international pretax
profits.
Sales by Segment
U.S. sales in the second quarter of 2015 were $956.3 million, down 14.3% from the same quarter
in 2014. The decrease was attributable to reduced customer spending
in the upstream sector. From the first quarter of 2015, U.S. sales
declined only 2% as compared to a 35% decline in average U.S. rig
count over the same period reflecting market share gains, growth in
the midstream sector and a modest decline in the downstream
sector.
Canadian sales in the second quarter of 2015 were $77.6 million, down 48.3% from the same quarter
in 2014. The decrease in Canadian sales reflected a $65 million decrease in the upstream business due
to a decline in customer spending. Sales were negatively impacted
by $9.9 million as a result of the
stronger U.S. dollar.
International sales in the second quarter of 2015 were
$164.2 million, a decrease of
29.1% from the same period in 2014. The decrease was due primarily
to less customer spending in the U.K., Norway and Australia, partially offset by acquisitions,
which added $10.5 million. Sales were
negatively impacted by $30.9 million
due to the strengthening of the U.S. dollar.
Sales by Sector
Upstream sales in the second quarter of 2015 decreased 37.9%
from the second quarter of 2014 to $434.7 million, or 36% of total sales. The
decline in upstream sales was across all segments and was a
result of reduced customer activity.
Midstream sales in the second quarter of 2015 were $418.7 million, or 35% of total sales,
approximately equal to the second quarter of 2014. Sales to
transmission customers were down 17% while sales to gas utility
customers were up by 30% over the same quarter in 2014.
Downstream sales in the second quarter of 2015 decreased 8.6%
from the second quarter of 2014 to $344.7 million, or 29% of total sales. The
decline in the downstream sector was in the International segment
as a result of lower sales in Australia and Europe. Sales in the U.S. were up slightly
despite lower spring turnaround activity as a result of the
refinery strikes.
Balance Sheet
During the second quarter the company reduced debt by
$525.3 million to total debt
outstanding of $848 million at
June 30, 2015. The debt
repayment was funded by the issuance of the 363,000 shares of
Series A Convertible Perpetual Preferred Stock and cash provided by
operations. The Series A Convertible Perpetual Preferred
Stock provided net proceeds of $355.5 million. Cash provided by
operations was $161.2 million during
the second quarter of 2015 and benefitted from a planned reduction
in working capital. In addition, cash balances were $32.9 million at June 30,
2015 compared to $25.1 million
at the end of 2014. Debt, net of cash, was $815 million at June 30,
2015.
Conference Call
The Company will hold a conference call to discuss its second
quarter 2015 results at 10:00 a.m. Eastern
Time (9:00 a.m. Central Time)
on August 4, 2015. To
participate in the call, please dial 412-902-0003 and ask for
the MRC Global conference call at least 10 minutes prior to the
start time. To access the conference call live over the Internet,
please log onto the web at http://www.mrcglobal.com and go to the
"Investor Relations" page of the company's website at least fifteen
minutes early to register, download and install any necessary audio
software. For those who cannot listen to the live call, a replay
will be available through August 18,
2015 and may be accessed by dialing 201-612-7415 and using
pass code 13612017#. Also, an archive of the webcast will be
available shortly after the call at http://www.mrcglobal.com for 90
days.
About MRC Global Inc.
Headquartered in Houston,
Texas, MRC Global, a Fortune 500 company, is the largest
global distributor, based on sales, of pipe, valves and fittings
(PVF) and related products and services to the energy industry and
supplies these products and services across each of the upstream,
midstream and downstream sectors. More information about MRC Global
can be found on our website mrcglobal.com.
This news release 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, tax rate, capital
expenditures and cash flow, the company's expectations regarding
the pay down of its debt, 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.
These risks and uncertainties include (among others)
decreases in oil and natural gas prices; 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; the company's ability to
compete successfully with other companies in MRC
Global's industry; the risk that manufacturers of the
products the company distributes will sell a substantial amount of
goods directly to end users in the industry sectors the
company serves; unexpected supply
shortages; cost increases by the company's
suppliers; the company's lack of long-term contracts with most of
its suppliers; suppliers' price reductions of products that the
company sells, which could cause the value of the
company's inventory to decline;
decreases in steel prices, which could
significantly lower MRC Global's profit;
increases in steel prices, which the
company may be unable to pass along to its customers which
could significantly lower its profit; the company's lack of
long-term contracts with many of its customers and the
company's lack of contracts with customers that require
minimum purchase volumes; changes in the
company's customer and product mix; risks
related to the company's customers' creditworthiness;
the success of the company's acquisition strategies; the
potential adverse effects associated with integrating acquisitions
into the company's business and whether these acquisitions will
yield their intended benefits; the company's significant
indebtedness; the dependence on the company's
subsidiaries for cash to meet its debt obligations; changes
in the company's credit profile; a decline in
demand for certain of the products the company distributes if
import restrictions on these products are lifted; environmental,
health and safety laws and regulations and the
interpretation or implementation thereof; the sufficiency of
the company's insurance policies to cover losses, including
liabilities arising from litigation; product
liability claims against the company; pending
or future asbestos-related claims against the company; the
potential loss of key personnel; interruption in the proper
functioning of the company's information systems and
the occurrence of cyber security incidents; 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; adverse changes in political or economic
conditions in the countries in which the company operates;
exposure to U.S. and international laws and regulations, including
the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act and
other economic sanction programs; risks associated with
international stability and geopolitical developments; risks
relating to ongoing evaluations of internal controls required by
Section 404 of the Sarbanes-Oxley Act; the impact on us of
changes in generally accepted accounting principles or tax laws or
adverse positions taken by taxing authorities in the countries in
which the company operates; and compliance with and changes
in laws and regulations in the countries in which we
operate.
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.
Contact:
Monica
Broughton
Investor
Relations
MRC Global
Inc.
Monica.Broughton@mrcglobal.com
832-308-2847
MRC Global
Inc.
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
2015
|
|
2014
|
|
|
|
|
|
(In thousands,
except per share amounts)
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash
|
$
32,942
|
|
$
25,064
|
Accounts receivable,
net
|
750,500
|
|
974,454
|
Inventories,
net
|
1,033,451
|
|
1,186,946
|
Other current
assets
|
35,367
|
|
35,698
|
Total current
assets
|
1,852,260
|
|
2,222,162
|
|
|
|
|
Other
assets
|
26,887
|
|
28,534
|
|
|
|
|
Property, plant and
equipment, net
|
115,134
|
|
116,001
|
|
|
|
|
Intangible
assets:
|
|
|
|
Goodwill,
net
|
792,478
|
|
806,006
|
Other intangible
assets, net
|
664,993
|
|
701,118
|
|
|
|
|
|
$
3,451,752
|
|
$
3,873,821
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities:
|
|
|
|
Trade accounts
payable
|
$
422,981
|
|
$
538,943
|
Accrued expenses and
other current liabilities
|
116,367
|
|
167,825
|
Deferred income
taxes
|
68,389
|
|
69,435
|
Current portion of
long-term debt
|
7,935
|
|
7,935
|
Total current
liabilities
|
615,672
|
|
784,138
|
|
|
|
|
Long-term
obligations:
|
|
|
|
Long-term debt,
net
|
840,101
|
|
1,445,709
|
Deferred income
taxes
|
213,172
|
|
223,705
|
Other
liabilities
|
23,031
|
|
23,054
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
6.5% Series A
Convertible Perpetual Preferred Stock, $0.01 par value; authorized
363 shares; 363 and no issued and
outstanding, respectively
|
355,467
|
|
-
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
Common stock, $0.01 par
value per share: 500,000 shares authorized, 102,179
and 102,095 issued and outstanding,
respectively
|
1,022
|
|
1,022
|
Additional paid-in
capital
|
1,660,473
|
|
1,655,696
|
Retained
deficit
|
(78,578)
|
|
(122,625)
|
Accumulated other
comprehensive loss
|
(178,608)
|
|
(136,878)
|
|
1,404,309
|
|
1,397,215
|
|
$
3,451,752
|
|
$
3,873,821
|
MRC Global
Inc.
|
Condensed
Consolidated Statements of Income (Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
(In thousands,
except per share amounts)
|
Sales
|
$
1,198,064
|
|
$
1,497,295
|
|
$
2,490,354
|
|
$
2,802,974
|
Cost of
sales
|
992,147
|
|
1,237,873
|
|
2,064,515
|
|
2,311,420
|
Gross
profit
|
205,917
|
|
259,422
|
|
425,839
|
|
491,554
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
158,903
|
|
185,287
|
|
318,351
|
|
356,676
|
Operating
income
|
47,014
|
|
74,135
|
|
107,488
|
|
134,878
|
|
|
|
|
|
|
|
|
Other
expense:
|
|
|
|
|
|
|
|
Interest
expense
|
(13,699)
|
|
(15,363)
|
|
(28,295)
|
|
(30,511)
|
Write off of debt
issuance costs
|
(3,249)
|
|
-
|
|
(3,249)
|
|
-
|
Change in fair value of
derivative instruments
|
(393)
|
|
(697)
|
|
(1,136)
|
|
(4,260)
|
Other, net
|
(315)
|
|
2,026
|
|
(3,248)
|
|
(3,284)
|
Income before income
taxes
|
29,358
|
|
60,101
|
|
71,560
|
|
96,823
|
Income tax
expense
|
13,083
|
|
20,801
|
|
26,220
|
|
34,003
|
Net income
|
16,275
|
|
39,300
|
|
45,340
|
|
62,820
|
Series A preferred
stock dividends
|
1,293
|
|
-
|
|
1,293
|
|
-
|
Net income available
to common stockholders
|
$
14,982
|
|
$
39,300
|
|
$
44,047
|
|
$
62,820
|
|
|
|
|
|
|
|
|
Basic earnings per
common share
|
$
0.15
|
|
$
0.39
|
|
$
0.43
|
|
$
0.62
|
Diluted earnings per
common share
|
$
0.15
|
|
$
0.38
|
|
$
0.43
|
|
$
0.61
|
Weighted-average
common shares, basic
|
102,168
|
|
101,986
|
|
102,142
|
|
101,955
|
Weighted-average
common shares, diluted
|
102,786
|
|
102,978
|
|
102,605
|
|
102,893
|
MRC Global
Inc.
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
|
|
|
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2015
|
|
2014
|
|
|
|
|
Operating
activities
|
(In
thousands)
|
Net income
|
$
45,340
|
|
$
62,820
|
Adjustments to
reconcile net income to net cash provided by (used in)
operations:
|
|
|
|
Depreciation and
amortization
|
10,214
|
|
10,574
|
Amortization of
intangibles
|
30,943
|
|
33,880
|
Equity-based
compensation expense
|
5,373
|
|
4,066
|
Deferred income tax
benefit
|
(15,688)
|
|
(15,338)
|
Amortization of debt
issuance costs
|
2,267
|
|
2,704
|
Write off of debt
issuance costs
|
3,249
|
|
-
|
(Decrease) increase in
LIFO reserve
|
(15,092)
|
|
2,067
|
Change in fair value
of derivative instruments
|
1,136
|
|
4,260
|
Provision for
uncollectible accounts
|
1,842
|
|
561
|
Foreign currency
losses (gains)
|
5,532
|
|
(3,117)
|
Other non-cash
items
|
665
|
|
1,232
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
207,134
|
|
(128,760)
|
Inventories
|
151,640
|
|
(90,702)
|
Income taxes
payable
|
(7,440)
|
|
8,245
|
Other current
assets
|
400
|
|
(2,463)
|
Accounts
payable
|
(111,375)
|
|
64,222
|
Accrued expenses and
other current liabilities
|
(39,305)
|
|
(6,105)
|
Net cash provided by
(used in) operations
|
276,835
|
|
(51,854)
|
|
|
|
|
Investing
activities
|
|
|
|
Purchases of
property, plant and equipment
|
(12,713)
|
|
(4,586)
|
Proceeds from the
disposition of property, plant and equipment
|
756
|
|
836
|
Acquisitions, net of
cash acquired
|
-
|
|
(346,672)
|
Other investment and
notes receivable transactions
|
(3,353)
|
|
(774)
|
Net cash used in
investing activities
|
(15,310)
|
|
(351,196)
|
|
|
|
|
Financing
activities
|
|
|
|
Payments on revolving
credit facilities
|
(764,774)
|
|
(806,768)
|
Proceeds from
revolving credit facilities
|
411,854
|
|
1,221,386
|
Payments on long-term
obligations
|
(253,968)
|
|
(3,968)
|
Proceeds from
issuance of preferred stock, net of issuance costs
|
355,467
|
|
-
|
Debt issuance costs
paid
|
(1,345)
|
|
(349)
|
Proceeds from
exercise of stock options
|
100
|
|
1,498
|
Tax benefit on stock
options
|
-
|
|
141
|
Other
|
753
|
|
-
|
Net cash (used in)
provided by financing activities
|
(251,913)
|
|
411,940
|
|
|
|
|
Increase in
cash
|
9,612
|
|
8,890
|
Effect of foreign
exchange rate on cash
|
(1,734)
|
|
2,413
|
Cash -- beginning of
period
|
25,064
|
|
25,188
|
Cash -- end of
period
|
$
32,942
|
|
$
36,491
|
MRC Global
Inc.
|
Supplemental
Information (Unaudited)
|
Reconciliation of
Adjusted Net Income to Net Income
|
|
|
|
|
|
|
|
|
|
June 30,
2015
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
Net
Income
|
|
Per
Share*
|
|
Net
Income
|
|
Per
Share
|
|
|
|
|
|
|
|
|
|
(In thousands,
except per share amounts)
|
Net income available
to common stockholders
|
$
14,982
|
|
$
0.15
|
|
$
44,047
|
|
$
0.43
|
Write off of debt
issuance costs (1)
|
2,058
|
|
0.02
|
|
2,058
|
|
0.02
|
Severance and
restructuring charges (2)
|
5,995
|
|
0.06
|
|
7,262
|
|
0.07
|
Adjusted net income
available to common stockholders
|
$
23,035
|
|
$
0.22
|
|
$
53,367
|
|
$
0.52
|
|
|
|
|
|
|
|
|
|
June 30,
2014
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
Net
Income
|
|
Per
Share
|
|
Net
Income
|
|
Per
Share
|
|
|
|
|
|
|
|
|
|
(In thousands,
except per share amounts)
|
Net income
|
$
39,300
|
|
$
0.38
|
|
$
62,820
|
|
$
0.61
|
Loss on sale of
Canadian PCP business (3)
|
-
|
|
-
|
|
5,012
|
|
0.05
|
Employee severance
(2)
|
3,618
|
|
0.04
|
|
3,618
|
|
0.04
|
Adjusted net
income
|
$
42,918
|
|
$
0.42
|
|
$
71,450
|
|
$
0.70
|
|
Notes to
above:
|
(1)
|
Charge (after-tax)
related to the early repayment of debt with the proceeds from the
issuance of Series A preferred stock.
|
(2)
|
Charge (after-tax)
related to employee severance and restructuring charges associated
with the company's cost reduction initiatives recorded in
SG&A.
|
(3)
|
Charge (after-tax)
related to the sale of the company's progressive cavity pump
distribution and servicing business in Canada recorded in Other,
net.
|
|
|
* Column does not
foot due to rounding.
|
|
The company presents
adjusted net income and adjusted net income per share because the
company believes these measures are useful indicators of what the
company's net income and net income per share would have been
without the impact of these events being included and believes that
many analysts and investors will want to know this information when
comparing the company's results against the results of other
companies. Adjusted net income and adjusted net income per share,
however, do not represent and should not be considered as an
alternative to net income and net income per share calculated and
presented in accordance with U.S. generally accepted accounting
principles (GAAP). Because adjusted net income and adjusted net
income per share do not account for certain expenses, its utility
as a measure of our performance has material limitations. Because
of these limitations, management does not view adjusted net income
and net income per share in isolation or as a primary performance
measure and also uses other measures, such as net income and net
income per share, to measure performance.
|
MRC Global
Inc.
|
Supplemental
Information (Unaudited)
|
Reconciliation of
Adjusted EBITDA to Net Income
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
(In
millions)
|
Net income
|
$
16.3
|
|
$
39.3
|
|
$
45.4
|
|
$
62.8
|
Income tax
expense
|
13.0
|
|
20.8
|
|
26.2
|
|
34.0
|
Interest
expense
|
13.7
|
|
15.3
|
|
28.3
|
|
30.5
|
Depreciation and
amortization
|
5.1
|
|
5.4
|
|
10.2
|
|
10.5
|
Amortization of
intangibles
|
15.1
|
|
18.1
|
|
30.9
|
|
33.9
|
(Decrease) increase
in LIFO reserve
|
(14.8)
|
|
0.8
|
|
(15.1)
|
|
2.1
|
Change in fair value
of derivative instruments
|
0.4
|
|
0.7
|
|
1.1
|
|
4.3
|
Equity-based
compensation expense (1)
|
2.9
|
|
2.3
|
|
5.4
|
|
4.0
|
Loss on sale of
Canadian PCP business (2)
|
-
|
|
-
|
|
-
|
|
6.2
|
Write off of debt
issuance costs (3)
|
3.2
|
|
-
|
|
3.2
|
|
-
|
Severance and
restructuring charges (4)
|
6.9
|
|
5.0
|
|
8.7
|
|
5.0
|
Foreign currency
losses (gains)
|
1.4
|
|
(1.5)
|
|
5.5
|
|
(3.1)
|
Adjusted
EBITDA
|
$
63.2
|
|
$
106.2
|
|
$
149.8
|
|
$
190.2
|
|
|
Notes to
above:
|
(1)
|
Recorded in
SG&A.
|
(2)
|
Charge (pre-tax)
related to the sale of the company's progressive cavity pump
distribution and servicing business in Canada recorded in Other,
net.
|
(3)
|
Charge (pre-tax)
related to the early repayment of debt with the proceeds from the
issuance of Series A preferred stock.
|
(4)
|
Charge (pre-tax) for
employee severance and restructuring charges associated with the
company's cost reduction initiatives recorded in
SG&A.
|
|
|
The company defines
Adjusted EBITDA as net income plus interest, income taxes,
depreciation and amortization, amortization of intangibles, and
certain other expenses (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 the company believes Adjusted EBITDA is a
useful indicator of the company's operating performance. Among
other things, Adjusted EBITDA measures the company's operating
performance without regard to certain non-recurring, non-cash or
transaction-related expenses. Adjusted EBITDA, however, does not
represent and should not be considered as an alternative to net
income, cash flow from operations or any other measure of financial
performance calculated and presented in accordance with GAAP.
Because Adjusted EBITDA does not account for certain expenses, its
utility as a measure of the company's operating performance has
material limitations. Because of these limitations, the company
does not view Adjusted EBITDA in isolation or as a primary
performance measure and also uses other measures, such as net
income and sales, to measure operating performance. See the
Company's Annual Report filed on Form 10-K for a more thorough
discussion of the use of Adjusted EBITDA.
|
MRC Global
Inc.
|
Supplemental
Information (Unaudited)
|
Reconciliation of
Adjusted Gross Profit to Gross Profit
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
June
30,
|
|
Percentage
|
|
June
30,
|
|
Percentage
|
|
2015
|
|
of
Revenue
|
|
2014
|
|
of
Revenue
|
|
|
|
|
|
|
|
|
|
(Dollars in
millions)
|
Gross profit, as
reported
|
$
205.9
|
|
17.2%
|
|
$
259.4
|
|
17.3%
|
Depreciation and
amortization
|
5.1
|
|
0.4%
|
|
5.4
|
|
0.4%
|
Amortization of
intangibles
|
15.1
|
|
1.2%
|
|
18.1
|
|
1.2%
|
(Decrease) increase
in LIFO reserve
|
(14.8)
|
|
(1.2%)
|
|
0.8
|
|
0.1%
|
Adjusted gross
profit
|
$
211.3
|
|
17.6%
|
|
$
283.7
|
|
19.0%
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
June
30,
|
|
Percentage
|
|
June
30,
|
|
Percentage
|
|
2015
|
|
of
Revenue
|
|
2014
|
|
of
Revenue
|
|
|
|
|
|
|
|
|
|
(Dollars in
millions)
|
Gross profit, as
reported
|
$
425.9
|
|
17.1%
|
|
$
491.6
|
|
17.5%
|
Depreciation and
amortization
|
10.2
|
|
0.4%
|
|
10.5
|
|
0.4%
|
Amortization of
intangibles
|
30.9
|
|
1.2%
|
|
33.9
|
|
1.2%
|
(Decrease) increase
in LIFO reserve
|
(15.1)
|
|
(0.6%)
|
|
2.1
|
|
0.1%
|
Adjusted gross
profit
|
$
451.9
|
|
18.1%
|
|
$
538.1
|
|
19.2%
|
|
Notes to
above:
|
|
The company defines
Adjusted Gross Profit as sales, less cost of sales, plus
depreciation and amortization, plus amortization of intangibles,
and plus or minus the impact of its LIFO inventory costing
methodology. The company presents Adjusted Gross Profit because the
company believes it is a useful indicator of the company's
operating performance without regard to items, such as amortization
of intangibles, that can vary substantially from company to company
depending upon the nature and extent of acquisitions they have been
involved in. Similarly, the impact of the LIFO inventory costing
method can cause results to vary substantially from company to
company depending upon whether they elect to utilize LIFO and
depending upon which method they may elect. The company uses
Adjusted Gross Profit as a key performance indicator in managing
its business. The company believes that gross profit is the
financial measure calculated and presented in accordance with U.S.
generally accepted accounting principles that is most directly
comparable to Adjusted Gross Profit.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/mrc-global-announces-second-quarter-2015-results-300122683.html
SOURCE MRC Global Inc.