HOUSTON, Feb. 22, 2016 /PRNewswire/ -- MRC Global
Inc. (NYSE: MRC), the largest global distributor, based on sales,
of pipe, valves and fittings and related products and services to
the energy industry, today announced fourth quarter and annual 2015
results.
The company's sales were $967
million for the fourth quarter of 2015, which were 36% lower
than the fourth quarter of 2014 and 10% lower than the third
quarter of 2015. As compared to last year, reduced customer
activity across all segments and sectors drove the decline.
Net loss attributable to common stockholders for the fourth
quarter of 2015 was $(398.8) million,
or $(3.92) per diluted share,
compared to net income attributable to common stockholder of
$31.2 million, or $0.30 per diluted share for the fourth quarter of
2014. The fourth quarter 2015 results include pre-tax charges for
the impairment of goodwill and intangible assets and other items of
$475.0 million. Adjusted net income
attributable to common stockholders for the fourth quarter of 2015
was $12.0 million, or $0.12 per
diluted share, compared to $33.8 million, or $0.33 per diluted share for the fourth quarter of
2014. Please refer to the reconciliation of adjusted net income (a
non-GAAP measure) to net income (a GAAP measure) included in this
release.
Andrew R. Lane, MRC Global's
chairman, president and chief executive officer stated, "We
generated $690 million of cash from operations in 2015, and
combined with the proceeds from our preferred stock offering, we
reduced net debt by $974 million
exceeding the goals we set out at the beginning of the year. We
also made progress under our stock repurchase program, as our solid
balance sheet and liquidity position allowed us to repurchase
$11.5 million in stock during the
fourth quarter. The strategic divestiture of our U.S. OCTG business
is the culmination of our multi-year strategy to reduce our
exposure to upstream drilling volatility.
"We remain focused on our long-term strategy of taking care of
customers and growing market share as well as managing this cycle
by reducing costs and continuing to strengthen our balance sheet.
While we expect 2016 to also be challenging, MRC Global is
positioned to perform well through the cycle," Mr. Lane added.
MRC Global's fourth quarter 2015 gross profit was $175.1 million, or 18.1% of sales, a decrease
from fourth quarter 2014 gross profit of $248.5 million, or 16.4% of sales. Gross profit
for the fourth quarter 2015 and 2014 reflected a benefit of
$23.2 million and a charge of
$5.9 million, respectively, in cost
of sales relating to the use of the last-in, first out ("LIFO")
method of inventory cost accounting.
Selling, general and administrative ("SG&A") expenses were
$146.1 million, or 15.1% of sales,
for the fourth quarter of 2015 compared to $174.4 million, or 11.5% of sales, for the same
period of 2014. SG&A expenses were reduced by 16% versus the
fourth quarter 2014, primarily due to cost reduction measures. A
favorable impact on expenses from a stronger U.S. dollar of
$7.9 million also benefitted the
quarter. SG&A expenses for the fourth quarter of 2015 included
$5.1 million of severance and
restructuring charges. There were no such charges in the fourth
quarter of 2014.
Adjusted EBITDA was $33.7 million
in the fourth quarter of 2015 compared to $101.5 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 fourth quarter 2015 was 12.6% and
was significantly impacted by the goodwill and intangible asset
impairment charge, the majority of which is not tax deductible.
Sales by Segment
U.S. sales in the fourth quarter of 2015 were $778.2 million, down $380.5 million or 32.8% from the same quarter in
2014. The decrease reflected a $227.8 million, or 47% decrease in the
upstream sector, a $135.3 million, or 31% decrease in the
midstream sector and $17.4 million,
or 7% in the downstream sector. The decreases were attributable to
reduced customer spending.
Canadian sales in the fourth quarter of 2015 were $66.2 million, down $88.8
million or 57.3% from the same quarter in 2014. The decrease
in Canadian sales reflected a $77.0
million decrease in the upstream business due to a
significant decline in customer spending. Sales were also
negatively impacted by $11 million as
a result of a stronger U.S. dollar.
International sales in the fourth quarter of 2015 were
$122.7 million, down
$75.7 million or 38.2% from the same
period in 2014. The decrease was due to lower project activity and
deferral of maintenance, repair and operations expenditures
particularly in Norway,
Australia, Singapore and the U.K. Sales were also
negatively impacted by $19 million
due to the strengthening of the U.S. dollar.
Sales by Sector
Upstream sales in the fourth quarter of 2015 decreased 48.7%
from the fourth quarter of 2014 to $368.8 million, or 38% of total sales. The
decline in upstream sales was across all segments and was a result
of reduced customer activity. U.S. upstream sales declined 47% in
the fourth quarter of 2015 from the fourth quarter 2014 as compared
to a 61% decline in the average U.S. rig count over the same
period. International upstream sales declined 41% in the fourth
quarter of 2015 from the fourth quarter 2014.
Midstream sales in the fourth quarter of 2015 decreased 30.1%
from the fourth quarter of 2014 to $316.5 million, or 33% of total sales. Sales
to transmission customers were down 54% while sales to gas utility
customers were up by 10% over the same quarter in 2014.
Downstream sales in the fourth quarter of 2015 decreased 17.3%
from the fourth quarter of 2014 to $281.8 million, or 29% of total sales. The
decline in the downstream sector was due primarily to Europe and Australia. Sales in the U.S. were down 7.3%. A
stronger U.S. dollar was responsible for 14% of the sales
decline.
Balance Sheet
During the fourth quarter, the company reduced debt by
$140.1 million to total debt
outstanding of $523.7 million at
December 31, 2015. The debt repayment
was funded by $209.3 million of cash
provided by operations during the fourth quarter of 2015 and
benefitted from a planned reduction in working capital. In
addition, cash balances were $69.0
million at December 31, 2015
compared to $25.1 million at the end
of 2014. Debt, net of cash, was $454.7
million at December 31,
2015.
Share Repurchase Program Update
In November 2015, the board of
directors authorized a share repurchase program for common stock of
up to $100 million. As of
December 31, 2015, the company has
repurchased $11.5 million of its
common stock at an average price of $14.12 per share.
The program is scheduled to expire on December 31, 2017. The shares may be repurchased
at management's discretion in the open market. Depending on market
conditions and other factors, these repurchases may be commenced or
suspended from time to time without prior notice.
Conference Call
The Company will hold a conference call to discuss its fourth
quarter and annual 2015 results at 10:00
a.m. Eastern Time (9:00 a.m. Central
Time) on February 23, 2016. 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 March 8,
2016 and can be accessed by dialing 201-612-7415 and using
pass code 13627595#. Also, an archive of the webcast will be
available shortly after the call at 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)
|
|
|
|
|
|
December
31,
|
|
2015
|
|
2014
|
|
|
|
|
|
(In thousands,
except per share amounts)
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash
|
$
68,997
|
|
$
25,064
|
Accounts receivable,
net
|
532,609
|
|
974,454
|
Inventories,
net
|
781,108
|
|
1,186,946
|
Other current
assets
|
22,591
|
|
32,638
|
Total current
assets
|
1,405,305
|
|
2,219,102
|
|
|
|
|
Other
assets
|
26,924
|
|
33,520
|
|
|
|
|
Property, plant and
equipment, net
|
126,742
|
|
116,001
|
|
|
|
|
Intangible
assets:
|
|
|
|
Goodwill,
net
|
483,775
|
|
806,006
|
Other intangible
assets, net
|
458,800
|
|
701,118
|
|
|
|
|
|
$
2,501,546
|
|
$
3,875,747
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities:
|
|
|
|
Trade accounts
payable
|
$
326,813
|
|
$
538,943
|
Accrued expenses and
other current liabilities
|
109,618
|
|
167,825
|
Current portion of
long-term debt
|
7,935
|
|
7,935
|
Total current
liabilities
|
444,366
|
|
714,703
|
|
|
|
|
Long-term
obligations:
|
|
|
|
Long-term debt,
net
|
515,720
|
|
1,445,709
|
Deferred income
taxes
|
208,470
|
|
295,066
|
Other
liabilities
|
21,678
|
|
23,054
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
6.5% Series A Convertible Perpetual Preferred Stock,
$0.01 par value; authorized 363 shares; 363 and no shares
issued and outstanding, respectively
|
355,467
|
|
-
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
Common stock, $0.01 par value per share: 500,000
shares authorized, 102,203 and 102,095 issued and
outstanding, respectively
|
1,022
|
|
1,022
|
Additional paid-in
capital
|
1,665,726
|
|
1,655,696
|
Retained
deficit
|
(467,378)
|
|
(122,625)
|
Less: Treasury stock at
cost: 816 and no shares, respectively
|
(11,526)
|
|
-
|
Accumulated other
comprehensive loss
|
(231,999)
|
|
(136,878)
|
|
955,845
|
|
1,397,215
|
|
$
2,501,546
|
|
$
3,875,747
|
MRC Global
Inc.
Condensed
Consolidated Statements of Operations (Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Year Ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
(In thousands,
except per share amounts)
|
Sales
|
$
967,070
|
|
$
1,512,092
|
|
$
4,528,613
|
|
$
5,933,212
|
Cost of
sales
|
791,999
|
|
1,263,583
|
|
3,742,548
|
|
4,915,106
|
Gross
profit
|
175,071
|
|
248,509
|
|
786,065
|
|
1,018,106
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
146,108
|
|
174,440
|
|
606,503
|
|
715,958
|
Goodwill and
intangible asset impairment
|
461,908
|
|
-
|
|
461,908
|
|
-
|
Operating (loss)
income
|
(432,945)
|
|
74,069
|
|
(282,346)
|
|
302,148
|
|
|
|
|
|
|
|
|
Other
expense:
|
|
|
|
|
|
|
|
Interest
expense
|
(9,175)
|
|
(16,316)
|
|
(47,540)
|
|
(61,752)
|
Write
off of debt issuance costs
|
-
|
|
-
|
|
(3,249)
|
|
-
|
Other,
net
|
(7,364)
|
|
(4,822)
|
|
(9,234)
|
|
(14,450)
|
|
|
|
|
|
|
|
|
(Loss) income before
income taxes
|
(449,484)
|
|
52,931
|
|
(342,369)
|
|
225,946
|
Income tax (benefit)
expense
|
(56,546)
|
|
21,775
|
|
(10,790)
|
|
81,836
|
Net (loss)
income
|
(392,938)
|
|
31,156
|
|
(331,579)
|
|
144,110
|
Series A preferred
stock dividends
|
5,899
|
|
-
|
|
13,174
|
|
-
|
Net (loss) income
attributable to common stockholders
|
$
(398,837)
|
|
$
31,156
|
|
$
(344,753)
|
|
$
144,110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings
per common share
|
$
(3.92)
|
|
$
0.31
|
|
$
(3.38)
|
|
$
1.41
|
Diluted (loss)
earnings per common share
|
$
(3.92)
|
|
$
0.30
|
|
$
(3.38)
|
|
$
1.40
|
Weighted-average
common shares, basic
|
101,802
|
|
102,078
|
|
102,067
|
|
102,006
|
Weighted-average
common shares, diluted
|
101,802
|
|
102,376
|
|
102,067
|
|
102,790
|
MRC Global
Inc.
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
|
|
|
|
|
Year Ended
December 31,
|
|
2015
|
|
2014
|
|
(In
thousands)
|
Operating
activities
|
|
|
|
Net (loss)
income
|
$
(331,579)
|
|
$
144,110
|
Adjustments to
reconcile net income to net cash provided by (used in)
operations:
|
|
|
|
Depreciation and
amortization
|
20,551
|
|
22,459
|
Amortization of
intangibles
|
60,021
|
|
67,799
|
Equity-based
compensation expense
|
10,567
|
|
8,973
|
Deferred income tax
benefit
|
(87,333)
|
|
(34,200)
|
Amortization of debt
issuance costs
|
4,419
|
|
5,008
|
Write off of debt
issuance costs
|
3,249
|
|
-
|
Goodwill and
intangible asset impairment
|
461,908
|
|
-
|
(Decrease) increase in
LIFO reserve
|
(53,319)
|
|
11,860
|
Change in fair value
of derivative instruments
|
897
|
|
1,087
|
Provision for
uncollectible accounts
|
1,763
|
|
1,727
|
Foreign currency
losses
|
3,344
|
|
2,462
|
Other non-cash
items
|
9,442
|
|
7,673
|
Changes in operating
assets and liabilities, net of acquisitions:
|
|
|
|
Accounts
receivable
|
412,237
|
|
(132,127)
|
Inventories
|
419,399
|
|
(208,711)
|
Other current
assets
|
6,490
|
|
2,405
|
Income taxes
payable
|
(13,017)
|
|
13,296
|
Accounts
payable
|
(198,525)
|
|
(29,747)
|
Accrued expenses and
other current liabilities
|
(40,619)
|
|
9,548
|
Net cash provided by
(used in) operations
|
689,895
|
|
(106,378)
|
|
|
|
|
Investing
activities
|
|
|
|
Purchases of
property, plant and equipment
|
(38,722)
|
|
(20,078)
|
Proceeds from the
disposition of property, plant and equipment
|
1,311
|
|
1,335
|
Acquisitions, net of
cash acquired
|
-
|
|
(343,928)
|
Other investing
activities
|
(3,775)
|
|
700
|
Net cash used in
investing activities
|
(41,186)
|
|
(361,971)
|
|
|
|
|
Financing
activities
|
|
|
|
Payments on revolving
credit facilities
|
(1,343,496)
|
|
(1,501,122)
|
Proceeds from
revolving credit facilities
|
669,916
|
|
1,977,162
|
Payments on long-term
obligations
|
(257,935)
|
|
(7,935)
|
Debt issuance costs
paid
|
(1,395)
|
|
(3,713)
|
Purchases of common
stock
|
(11,526)
|
|
-
|
Proceeds from
issuance of preferred stock, net of issuance costs
|
355,467
|
|
-
|
Dividends paid on
preferred stock
|
(10,159)
|
|
-
|
Proceeds from
exercise of stock options
|
314
|
|
2,699
|
Tax benefit on stock
options
|
-
|
|
150
|
Other financing
activities
|
(377)
|
|
-
|
Net cash (used in)
provided by financing activities
|
(599,191)
|
|
467,241
|
|
|
|
|
Increase (decrease)
in cash
|
49,518
|
|
(1,108)
|
Effect of foreign
exchange rate on cash
|
(5,585)
|
|
984
|
Cash -- beginning of
year
|
25,064
|
|
25,188
|
Cash -- end of
year
|
$
68,997
|
|
$
25,064
|
|
|
|
|
MRC Global
Inc.
Supplemental
Information (Unaudited)
Reconciliation of
Adjusted Net Income to Net Income
|
|
|
|
|
|
|
|
|
|
December 31,
2015
|
|
Three Months
Ended
|
|
Year
Ended
|
|
Net
Income
|
|
Per
Share
|
|
Net
Income
|
|
Per
Share
|
|
|
|
|
|
|
|
|
|
(In thousands,
except per share amounts)
|
Net loss attributable
to common stockholders
|
$
(398,837)
|
|
$
(3.92)
|
|
$
(344,753)
|
|
$
(3.38)
|
Goodwill and
intangible asset impairment
|
401,924
|
|
3.95
|
|
401,924
|
|
3.94
|
Write off of debt
issuance costs (1)
|
-
|
|
-
|
|
2,058
|
|
0.02
|
Severance and
restructuring charges (2)
|
3,619
|
|
0.04
|
|
11,380
|
|
0.11
|
Litigation accrual
(3)
|
2,157
|
|
0.02
|
|
2,157
|
|
0.02
|
Loss on disposition
of non-core product lines (4)
|
3,167
|
|
0.03
|
|
3,167
|
|
0.03
|
Adjusted net income
attributable to common stockholders
|
$
12,030
|
|
$
0.12
|
|
$
75,933
|
|
$
0.74
|
|
|
|
|
|
|
|
|
|
December 31,
2014
|
|
Three Months
Ended
|
|
Year
Ended
|
|
Net
Income
|
|
Per
Share
|
|
Net
Income
|
|
Per
Share
|
|
|
|
|
|
|
|
|
|
(In thousands,
except per share amounts)
|
Net income
attributable to common stockholders
|
$ 31,156
|
|
$
0.30
|
|
$ 144,110
|
|
$
1.40
|
Loss on disposition
of non-core product lines (4)
|
2,681
|
|
0.03
|
|
7,693
|
|
0.08
|
Severance and
restructuring charges (2)
|
-
|
|
-
|
|
5,676
|
|
0.06
|
Cancellation of
executive employment agreements (5)
|
-
|
|
-
|
|
3,614
|
|
0.03
|
Adjusted net income
attributable to common stockholders
|
$ 33,837
|
|
$
0.33
|
|
$ 161,093
|
|
$
1.57
|
|
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 Weatherford claim as described in the company's SEC
filings recorded in Other, net.
|
(4)
|
Charge (after-tax)
related to the sale of the company's OCTG business in 2015, the
sale of progressive cavity pump distribution and servicing business
in Canada in 2014 and the disposition of the Rolled and Welded
business in 2014, all recorded in Other, net.
|
(5)
|
Charge (after-tax)
related to the cancellation of executive employment agreements
recorded in SG&A, including both equity-based compensation and
cash components.
|
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
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
(In
millions)
|
Net (loss)
income
|
$
(392.9)
|
|
$
31.1
|
|
$
(331.5)
|
|
$
144.1
|
Income tax
expense
|
(56.5)
|
|
21.8
|
|
(10.8)
|
|
81.8
|
Interest
expense
|
9.2
|
|
16.3
|
|
47.5
|
|
61.8
|
Depreciation and
amortization
|
5.4
|
|
5.4
|
|
20.6
|
|
22.5
|
Amortization of
intangibles
|
14.1
|
|
14.6
|
|
60.0
|
|
67.8
|
(Decrease) increase
in LIFO reserve
|
(23.2)
|
|
5.9
|
|
(53.3)
|
|
11.9
|
Goodwill and
intangible asset impairment
|
461.9
|
|
-
|
|
461.9
|
|
-
|
Equity-based
compensation expense (1)
|
2.3
|
|
1.5
|
|
10.6
|
|
8.9
|
Severance and
restructuring charges (2)
|
5.1
|
|
-
|
|
14.5
|
|
7.5
|
Loss on disposition
of non-core product lines (3)
|
5.0
|
|
4.1
|
|
5.0
|
|
10.3
|
Foreign currency
losses
|
(1.0)
|
|
0.7
|
|
3.3
|
|
2.5
|
Write off of debt
issuance costs (4)
|
-
|
|
-
|
|
3.2
|
|
-
|
Litigation matter
(5)
|
2.9
|
|
-
|
|
2.9
|
|
-
|
Change in fair value
of derivative instruments
|
1.4
|
|
(0.5)
|
|
0.9
|
|
1.1
|
Cancellation of
executive employment agreements (cash portion) (6)
|
-
|
|
-
|
|
-
|
|
3.2
|
Other
expense
|
-
|
|
0.6
|
|
-
|
|
0.6
|
Adjusted
EBITDA
|
$
33.7
|
|
$
101.5
|
|
$
234.8
|
|
$
424.0
|
|
Notes to
above:
|
(1)
|
Recorded in
SG&A
|
(2)
|
Charge (pre-tax)
related to employee severance and restructuring charges associated
with the company's cost reduction initiatives recorded in
SG&A
|
(3)
|
Charge (pre-tax)
related to the sale of the company's OCTG business in 2015, the
sale of progressive cavity pump distribution and servicing business
in Canada in 2014 and the disposition of the Rolled and Welded
business in 2014, all recorded in Other, net
|
(4)
|
Charge (pre-tax)
related to the early repayment of debt with the proceeds from the
issuance of Series A preferred stock
|
(5)
|
Charge (pre-tax)
related to the Weatherford claim as described in the company's SEC
filings recorded in Other, net
|
(6)
|
Cash compensation
charges (pre-tax) associated with the cancellation of executive
employment agreements 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
|
|
December
31,
|
|
Percentage
|
|
December
31,
|
|
Percentage
|
|
2015
|
|
of
Revenue
|
|
2014
|
|
of
Revenue
|
|
|
|
|
|
|
|
|
|
(Dollars in
millions)
|
Gross profit, as
reported
|
$
175.1
|
|
18.1%
|
|
$
248.5
|
|
16.4%
|
Depreciation and
amortization
|
5.4
|
|
0.6%
|
|
5.4
|
|
0.3%
|
Amortization of
intangibles
|
14.1
|
|
1.5%
|
|
14.6
|
|
1.0%
|
(Decrease) increase
in LIFO reserve
|
(23.2)
|
|
(2.4%)
|
|
5.9
|
|
0.4%
|
Adjusted gross
profit
|
$
171.4
|
|
17.7%
|
|
$
274.4
|
|
18.1%
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
December
31,
|
|
Percentage
|
|
December
31,
|
|
Percentage
|
|
2015
|
|
of
Revenue
|
|
2014
|
|
of
Revenue
|
|
|
|
|
|
|
|
|
|
(Dollars in
millions)
|
Gross profit, as
reported
|
$
786.1
|
|
17.4%
|
|
$
1,018.1
|
|
17.2%
|
Depreciation and
amortization
|
20.6
|
|
0.5%
|
|
22.5
|
|
0.4%
|
Amortization of
intangibles
|
60.0
|
|
1.3%
|
|
67.8
|
|
1.1%
|
(Decrease) increase
in LIFO reserve
|
(53.3)
|
|
(1.2%)
|
|
11.9
|
|
0.2%
|
Adjusted gross
profit
|
$
813.4
|
|
18.0%
|
|
$
1,120.3
|
|
18.9%
|
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-fourth-quarter-2015-results-300223940.html
SOURCE MRC Global Inc.