HOUSTON, Feb. 14, 2019 /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 full year
2018 results.
The company's sales were $1.009
billion for the fourth quarter of 2018, which was 12% higher
than the fourth quarter of 2017 and 6% lower than the third quarter
of 2018. As compared to 2017, the fourth quarter increase was
driven primarily by the upstream and downstream sectors.
Net income attributable to common stockholders for the fourth
quarter of 2018 was $4 million, or
$0.04 per diluted share, as compared
to the fourth quarter of 2017 of $29 million, or $0.30 per diluted share. The fourth quarter
results include severance and restructuring after-tax charges of
$3 million, or $ 0.03 per diluted share in 2018 and $14 million, or $0.15 per diluted share in 2017. The results for
the fourth quarter of 2017 include a provisional tax benefit of
$50 million, or $0.53 per diluted share, related to the
accounting for United States tax
reform legislation. Fourth quarter 2017 results also include
after-tax charges of $6 million or
$0.06 per diluted share for the write
off of inventory in the international segment related to reducing
our local presence in Iraq.
MRC Global's fourth quarter 2018 gross profit was $171 million, or 16.9% of sales, an increase from
fourth quarter 2017 gross profit of $141
million, or 15.6% of sales. Gross profit for the fourth
quarter of 2018 and 2017 reflects an expense of $14 million and $9
million, respectively, in cost of sales relating to the use
of the last-in, first out (LIFO) method of inventory cost
accounting. Gross profit for the fourth quarter of 2017 also
includes $6 million of non-cash inventory charges recorded in
cost of sales.
Andrew R. Lane, MRC Global's
president and chief executive officer stated, "The fourth quarter
2018 results were as we expected with revenue over $1.0 billion. All three geographic segments and
our valve product group drove strong growth in the fourth quarter
of 2018 over the same quarter in 2017. Our fourth quarter 2018
adjusted gross profit percentage of 20.0% and our adjusted EBITDA
of $63 million remained strong. We generated $135 million
in cash flow from operations, and we repurchased $75 million of common stock in the fourth
quarter."
Mr. Lane added, "I am very proud of our results for 2018, the
second year of the oil and gas industry recovery, as we continued
to successfully execute our long-term strategy. As compared to
2017, our 2018 revenue increased 14%, which includes more than
$900 million of e-commerce revenue.
Our 2018 adjusted gross profit percentage of 19.6% was the best
since 2008, and our 2018 adjusted EBITDA increased 56% over 2017.
We achieved adjusted EBITDA margins of 6.7% in 2018, the best since
2014. Our 2018 net income attributable to common stockholders
improved 92% to $50 million and our
diluted earnings per share improved 100% to $0.54 per share."
Selling, general and administrative (SG&A) expenses were
$148 million, or 14.7% of sales, for
the fourth quarter of 2018 compared to $148
million, or 16.4% of sales, for the same period of 2017.
SG&A expenses for the fourth quarter of 2018 and 2017 include
$4 million and $14 million of pre-tax severance and
restructuring charges, respectively.
Please refer to the reconciliation of non-GAAP measures
(adjusted gross profit and adjusted EBITDA) to GAAP measures (gross
profit, net income) in this release.
Sales by Segment
U.S. sales in the fourth quarter of 2018 were $778 million, up $63
million, or 9%, from the same quarter in 2017. Upstream
increased by $37 million, or 23%
primarily due to higher well completions. Downstream increased
$33 million, or 17% driven by project deliveries and market
share gains. Midstream declined slightly by $7 million, or 2% due primarily to non-recurring
project work.
Canadian sales in the fourth quarter of 2018 were $79 million, up $8
million, or 11%, from the same quarter in 2017 due to market
share gains in the upstream sector and project work in the
midstream sector. A weaker Canadian dollar relative to the U.S.
dollar unfavorably impacted sales by $3 million.
International sales in the fourth quarter of 2018 were
$152 million, up $35 million, or
30%, from the same period in 2017. The $19
million increase in upstream was driven primarily by project
deliveries in Kazakhstan and the
$15 million increase in downstream
was primarily due to increased refinery activity. Weaker foreign
currencies relative to the U.S. dollar unfavorably impacted sales
by $6 million.
Sales by Sector
Upstream sales in the fourth quarter of 2018 increased 22% over
the fourth quarter of 2017 to $339 million, or 34% of total
sales. The increase in upstream sales was across all segments.
Midstream sales in the fourth quarter of 2018 were
$373 million, or 37% of total sales, virtually flat with the
fourth quarter of 2017. Sales to gas utility customers were up by
26% due to an increase in integrity and growth project spending for
various customers, while sales to transmission and gathering
customers were down 21% over the same quarter in 2017 due primarily
to non-recurring project work.
Downstream sales in the fourth quarter of 2018 increased 18%
from the fourth quarter of 2017 to $297 million, or 29% of
total sales. The U.S. segment was the primary driver of the
increase followed by the international segment.
Balance Sheet
Cash balances were $43 million at
December 31, 2018. Debt, net of cash,
was $641 million as of
December 31, 2018 and excess availability under our
asset-based lending facility was $449
million. Cash provided from operations was $135 million in the fourth quarter of 2018. MRC
Global's liquidity position of $492
million is sufficient to support the business and capital
needs.
Share Repurchase Program Update
In October 2018, the board of
directors authorized a share repurchase program for common stock of
up to $150 million. During the fourth quarter, the company
purchased $75 million of its common
stock at an average price of $15.89
per share. In 2018, under both the current and prior
authorizations, the company repurchased $125
million of common stock at an average price of $16.46. In January
2019, the company purchased an additional $25 million of its common stock at an average
price of $14.24 per share, leaving
another $50 million under the current
authorization.
Since 2015, the company has repurchased $325 million (21.1 million shares) at an average
price of $15.40 per share. The
outstanding share count as of January 31,
2019 was 83.9 million shares.
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. The current program is scheduled to expire on
December 31, 2019.
Conference Call
The Company will hold a conference call to discuss its fourth
quarter 2018 results at 10:00 a.m. Eastern
Time (9:00 a.m. Central Time)
on February 15, 2019. 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 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 1,
2019 and can be accessed by dialing 201-612-7415 and using
pass code 13686236#. 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, 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 "expect,"
"expected," "intend," "believes," "well positioned," "strong
position," "looking forward," "guidance," "plans" 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, 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 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; risks
related to the company's intention not to pay dividends; and
risks arising from compliance with and changes in law in the
countries in which we operate, including (among others) changes in
tax law, tax rates and interpretation in tax laws. In addition, the
Company's intention to continue to repurchase shares of common
stock is also subject to the trading price of the stock being at
prices that the Company believes are favorable to stockholders and
to the Company's debt and liquidity levels being at levels the
Company deems sufficient to repurchase shares.
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)
|
(in
millions)
|
|
|
|
|
|
|
|
December
31,
|
|
2018
|
|
2017
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash
|
$
|
43
|
|
$
|
48
|
Accounts receivable,
net
|
|
587
|
|
|
522
|
Inventories,
net
|
|
797
|
|
|
701
|
Other current
assets
|
|
38
|
|
|
47
|
Total current
assets
|
|
1,465
|
|
|
1,318
|
|
|
|
|
|
|
Other
assets
|
|
23
|
|
|
21
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
140
|
|
|
147
|
|
|
|
|
|
|
Intangible
assets:
|
|
|
|
|
|
Goodwill,
net
|
|
484
|
|
|
486
|
Other intangible
assets, net
|
|
322
|
|
|
368
|
|
|
|
|
|
|
|
$
|
2,434
|
|
$
|
2,340
|
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Trade accounts
payable
|
$
|
435
|
|
$
|
415
|
Accrued expenses and
other current liabilities
|
|
130
|
|
|
143
|
Current portion of
long-term debt
|
|
4
|
|
|
4
|
Total current
liabilities
|
|
569
|
|
|
562
|
|
|
|
|
|
|
Long-term
obligations:
|
|
|
|
|
|
Long-term debt,
net
|
|
680
|
|
|
522
|
Deferred income
taxes
|
|
98
|
|
|
106
|
Other
liabilities
|
|
40
|
|
|
36
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
6.5% Series A
Convertible Perpetual Preferred Stock, $0.01 par value;
authorized 363,000 shares; 363,000 shares issued and
outstanding
|
|
355
|
|
|
355
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Common stock, $0.01 par
value per share: 500 million shares authorized, 104,953,693
and 103,099,692 issued, respectively
|
|
1
|
|
|
1
|
Additional paid-in
capital
|
|
1,721
|
|
|
1,691
|
Retained
deficit
|
|
(498)
|
|
|
(548)
|
Treasury stock at cost:
19,347,839 and 11,751,726 shares, respectively
|
|
(300)
|
|
|
(175)
|
Accumulated other
comprehensive loss
|
|
(232)
|
|
|
(210)
|
|
|
692
|
|
|
759
|
|
$
|
2,434
|
|
$
|
2,340
|
MRC Global
Inc.
|
Condensed
Consolidated Statements of Operations (Unaudited)
|
(in millions,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$
|
1,009
|
|
$
|
903
|
|
$
|
4,172
|
|
$
|
3,646
|
Cost of
sales
|
|
838
|
|
|
762
|
|
|
3,483
|
|
|
3,064
|
Gross
profit
|
|
171
|
|
|
141
|
|
|
689
|
|
|
582
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
148
|
|
|
148
|
|
|
562
|
|
|
536
|
Operating income
(loss)
|
|
23
|
|
|
(7)
|
|
|
127
|
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense)
income:
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(10)
|
|
|
(7)
|
|
|
(38)
|
|
|
(31)
|
Write
off of debt issuance costs
|
|
-
|
|
|
-
|
|
|
(1)
|
|
|
(8)
|
Other,
net
|
|
3
|
|
|
-
|
|
|
7
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
|
16
|
|
|
(14)
|
|
|
95
|
|
|
7
|
Income tax expense
(benefit)
|
|
6
|
|
|
(49)
|
|
|
21
|
|
|
(43)
|
Net income
|
|
10
|
|
|
35
|
|
|
74
|
|
|
50
|
Series A preferred
stock dividends
|
|
6
|
|
|
6
|
|
|
24
|
|
|
24
|
Net income
attributable to common stockholders
|
$
|
4
|
|
$
|
29
|
|
$
|
50
|
|
$
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
common share
|
$
|
0.05
|
|
$
|
0.31
|
|
$
|
0.55
|
|
$
|
0.28
|
Diluted earnings per
common share
|
$
|
0.04
|
|
$
|
0.30
|
(1)
|
$
|
0.54
|
|
$
|
0.27
|
Weighted-average
common shares, basic
|
|
88.6
|
|
|
93.4
|
|
|
90.1
|
|
|
94.3
|
Weighted-average
common shares, diluted
|
|
89.9
|
|
|
94.8
|
(1)
|
|
91.8
|
|
|
95.6
|
|
|
Notes to
above:
|
|
|
(1)
|
The preferred stock
shares (20.3 million shares) were dilutive in the fourth quarter of
2017 only. The diluted earnings per common share calculation
is calculated as net income of $35 million divided by 115.1 million
shares.
|
MRC Global
Inc.
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
(in
millions)
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
2018
|
|
2017
|
Operating
activities
|
|
|
|
|
|
Net income
|
$
|
74
|
|
$
|
50
|
Adjustments to
reconcile net income to net cash used in operations:
|
|
|
|
|
|
Depreciation and
amortization
|
|
23
|
|
|
22
|
Amortization of
intangibles
|
|
45
|
|
|
45
|
Equity-based
compensation expense
|
|
14
|
|
|
16
|
Deferred income tax
benefit
|
|
(9)
|
|
|
(78)
|
Amortization of debt
issuance costs
|
|
1
|
|
|
3
|
Inventory-related
charges
|
|
-
|
|
|
6
|
Write off of debt
issuance costs
|
|
1
|
|
|
8
|
Increase in LIFO
reserve
|
|
62
|
|
|
28
|
Change in fair value
of derivative instruments
|
|
(1)
|
|
|
1
|
Provision for
uncollectible accounts
|
|
1
|
|
|
1
|
Other non-cash
items
|
|
9
|
|
|
2
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
|
(74)
|
|
|
(118)
|
Inventories
|
|
(175)
|
|
|
(168)
|
Other current
assets
|
|
8
|
|
|
8
|
Accounts
payable
|
|
27
|
|
|
93
|
Accrued expenses and
other current liabilities
|
|
(17)
|
|
|
33
|
Net cash used in
operations
|
|
(11)
|
|
|
(48)
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
Purchases of
property, plant and equipment
|
|
(20)
|
|
|
(30)
|
Proceeds from the
disposition of property, plant and equipment
|
|
6
|
|
|
3
|
Net cash used in
investing activities
|
|
(14)
|
|
|
(27)
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
Payments on revolving
credit facilities
|
|
(1,118)
|
|
|
(696)
|
Proceeds from
revolving credit facilities
|
|
1,280
|
|
|
825
|
Payments on long-term
obligations
|
|
(4)
|
|
|
(18)
|
Debt issuance costs
paid
|
|
(1)
|
|
|
(8)
|
Purchases of common
stock
|
|
(125)
|
|
|
(68)
|
Dividends paid on
preferred stock
|
|
(24)
|
|
|
(24)
|
Proceeds from
exercise of stock options
|
|
21
|
|
|
1
|
Repurchase of shares
to satisfy tax withholdings
|
|
(5)
|
|
|
(3)
|
Net cash provided by
financing activities
|
|
24
|
|
|
9
|
|
|
|
|
|
|
Decrease in
cash
|
|
(1)
|
|
|
(66)
|
Effect of foreign
exchange rate on cash
|
|
(4)
|
|
|
5
|
Cash beginning of
year
|
|
48
|
|
|
109
|
Cash end of
year
|
$
|
43
|
|
$
|
48
|
MRC Global
Inc.
|
Supplemental
Information (Unaudited)
|
Reconciliation of
Net Income to Adjusted EBITDA (a non-GAAP measure)
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
10
|
|
$
|
35
|
|
$
|
74
|
|
$
|
50
|
Income tax expense
(benefit) (1)
|
|
6
|
|
|
(49)
|
|
|
21
|
|
|
(43)
|
Interest
expense
|
|
10
|
|
|
7
|
|
|
38
|
|
|
31
|
Depreciation and
amortization
|
|
6
|
|
|
6
|
|
|
23
|
|
|
22
|
Amortization of
intangibles
|
|
11
|
|
|
11
|
|
|
45
|
|
|
45
|
Increase in LIFO
reserve
|
|
14
|
|
|
9
|
|
|
62
|
|
|
28
|
Inventory-related
charges (2)
|
|
-
|
|
|
6
|
|
|
-
|
|
|
6
|
Equity-based
compensation expense (3)
|
|
3
|
|
|
4
|
|
|
14
|
|
|
16
|
Severance and
restructuring charges (4)
|
|
4
|
|
|
14
|
|
|
4
|
|
|
14
|
Foreign currency
losses (gains)
|
|
(1)
|
|
|
-
|
|
|
(1)
|
|
|
(2)
|
Write off of debt
issuance costs (5)
|
|
-
|
|
|
-
|
|
|
1
|
|
|
8
|
Litigation matter
(6)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3
|
Change in fair value
of derivative instruments
|
|
-
|
|
|
-
|
|
|
(1)
|
|
|
1
|
Adjusted
EBITDA
|
$
|
63
|
|
$
|
43
|
|
$
|
280
|
|
$
|
179
|
|
Notes to
above:
|
|
|
(1)
|
Amounts in 2017
include a provisional tax benefit of $50 million related to the
accounting for United States tax reform.
|
(2)
|
Non-cash charges
(pre-tax) recorded in cost of goods sold. Charges in 2017, recorded
in the international segment, are related to reducing our local
presence in Iraq.
|
(3)
|
Recorded in
SG&A
|
(4)
|
Charges (pre-tax)
related to employee severance and restructuring charges recorded in
SG&A. 2018 charges relate to the partial closure and relocation
of a corporate office and the termination of an executive's
employment. The 2017 charges relate to cost reduction initiatives
to improve profitability in our international segment.
|
(5)
|
Charge (pre-tax)
related to the write off of debt issuance costs related to the
refinancing of our senior secured Term Loan in 2018. Charge
(pre-tax) related to the refinancing of our senior secured term
loan and our asset based lending facility in 2017.
|
(6)
|
Charge (pre-tax)
related to the settlement of litigation with Weatherford Canada
Partnership in the second quarter 2017 recorded in Other,
net. The company previously recognized a charge of $3 million
associated with this matter in the fourth quarter of
2015.
|
|
|
The company defines
Adjusted EBITDA as net income plus interest, income taxes,
depreciation and amortization, amortization of intangibles, and
certain other expenses, including non-cash expenses, (such as
equity-based compensation, severance and restructuring, changes in
the fair value of derivative instruments and asset impairments,
including inventory) 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
Gross Profit to Adjusted Gross Profit (a non-GAAP
measure)
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
December
31,
|
|
Percentage
|
|
December
31,
|
|
Percentage
|
|
2018
|
|
of
Revenue
|
|
2017
|
|
of
Revenue
|
|
|
|
|
|
|
|
|
|
|
Gross profit, as
reported
|
$
|
171
|
|
16.9%
|
|
$
|
141
|
(1)
|
15.6%
|
Depreciation and
amortization
|
|
6
|
|
0.6%
|
|
|
6
|
|
0.7%
|
Amortization of
intangibles
|
|
11
|
|
1.1%
|
|
|
11
|
|
1.2%
|
Increase in LIFO
reserve
|
|
14
|
|
1.4%
|
|
|
9
|
|
1.0%
|
Adjusted Gross
Profit
|
$
|
202
|
|
20.0%
|
|
$
|
167
|
(1)
|
18.5%
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
December
31,
|
|
Percentage
|
|
December
31,
|
|
Percentage
|
|
2018
|
|
of
Revenue*
|
|
2017
|
|
of
Revenue
|
|
|
|
|
|
|
|
|
|
|
Gross profit, as
reported
|
$
|
689
|
|
16.5%
|
|
$
|
582
|
(1)
|
16.0%
|
Depreciation and
amortization
|
|
23
|
|
0.6%
|
|
|
22
|
|
0.6%
|
Amortization of
intangibles
|
|
45
|
|
1.1%
|
|
|
45
|
|
1.2%
|
Increase in LIFO
reserve
|
|
62
|
|
1.5%
|
|
|
28
|
|
0.8%
|
Adjusted Gross
Profit
|
$
|
819
|
|
19.6%
|
|
$
|
677
|
(1)
|
18.6%
|
|
Notes to
above:
|
*
|
Column does not foot
due to rounding.
|
|
|
(1)
|
Includes $6 million
of non-cash charges (pre-tax) recorded in cost of goods sold in our
international segment are related to reducing our local presence in
Iraq, for each of the three months and year ended December 31,
2017.
|
|
Excluding these
charges for the three months ended December 31, 2017 gross profit,
as reported would be $147 million (16.3%) and adjusted gross profit
would be $173 million (19.2%). Excluding these charges for the year
ended December 31, 2017 gross profit, as reported would be $588
million (16.1%) and adjusted gross profit would be $683 million
(18.7%).
|
|
|
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 of which they
have been involved. 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.
|
MRC Global
Inc.
|
Supplemental Sales
Information (Unaudited)
|
(in
millions)
|
|
Disaggregated
Sales by Segment
|
Three Months
Ended
|
December
31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
Canada
|
|
International
|
|
Total
|
2018:
|
|
|
|
|
|
|
|
|
|
|
|
Upstream
|
$
|
197
|
|
$
|
59
|
|
$
|
83
|
|
$
|
339
|
Midstream
|
|
355
|
|
|
15
|
|
|
3
|
|
|
373
|
Downstream
|
|
226
|
|
|
5
|
|
|
66
|
|
|
297
|
|
$
|
778
|
|
$
|
79
|
|
$
|
152
|
|
$
|
1,009
|
2017:
|
|
|
|
|
|
|
|
|
|
|
|
Upstream
|
$
|
160
|
|
$
|
53
|
|
$
|
64
|
|
$
|
277
|
Midstream
|
|
362
|
|
|
11
|
|
|
2
|
|
|
375
|
Downstream
|
|
193
|
|
|
7
|
|
|
51
|
|
|
251
|
|
$
|
715
|
|
$
|
71
|
|
$
|
117
|
|
$
|
903
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
December
31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
Canada
|
|
International
|
|
Total
|
2018:
|
|
|
|
|
|
|
|
|
|
|
|
Upstream
|
$
|
777
|
|
$
|
239
|
|
$
|
270
|
|
$
|
1,286
|
Midstream
|
|
1,608
|
|
|
48
|
|
|
21
|
|
|
1,677
|
Downstream
|
|
936
|
|
|
28
|
|
|
245
|
|
|
1,209
|
|
$
|
3,321
|
|
$
|
315
|
|
$
|
536
|
|
$
|
4,172
|
2017:
|
|
|
|
|
|
|
|
|
|
|
|
Upstream
|
$
|
623
|
|
$
|
222
|
|
$
|
204
|
|
$
|
1,049
|
Midstream
|
|
1,496
|
|
|
50
|
|
|
57
|
|
|
1,603
|
Downstream
|
|
741
|
|
|
22
|
|
|
231
|
|
|
994
|
|
$
|
2,860
|
|
$
|
294
|
|
$
|
492
|
|
$
|
3,646
|
Sales by Product
Line
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
Type
|
|
2018
|
|
2017
(1)
|
|
2018
|
|
2017
(1)
|
Line pipe
|
|
$
|
172
|
|
$
|
168
|
|
$
|
728
|
|
$
|
685
|
Carbon steel fittings
and flanges
|
|
|
152
|
|
|
143
|
|
|
683
|
|
|
548
|
Total carbon steel pipe,
fittings and flanges
|
|
|
324
|
|
|
311
|
|
|
1,411
|
|
|
1,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valves, automation,
measurement and instrumentation
|
|
|
407
|
|
|
332
|
|
|
1,553
|
|
|
1,319
|
Gas products
|
|
|
136
|
|
|
113
|
|
|
561
|
|
|
485
|
Stainless steel alloy
pipe and fittings
|
|
|
46
|
|
|
47
|
|
|
196
|
|
|
183
|
General oilfield
products
|
|
|
96
|
|
|
100
|
|
|
451
|
|
|
426
|
|
|
$
|
1,009
|
|
$
|
903
|
|
$
|
4,172
|
|
$
|
3,646
|
|
Notes to
above:
|
(1)
|
$14 million and $69
million of sales for the three and twelve months ended December 31,
2017, respectively, have been reclassified from gas products to
general oilfield products to conform with the current year
presentation.
|
MRC Global
Inc.
|
Supplemental
Information (Unaudited)
|
Reconciliation of
Net Income Attributable to Common Stockholders to
|
Adjusted Net
Income Attributable to Common Stockholders (a non-GAAP
measure)
|
(in millions,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2018
|
|
Three Months
Ended
|
|
Year
Ended
|
|
Net
Income
|
|
Per
Share*
|
|
Net
Income
|
|
Per
Share*
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
$
|
4
|
|
$
|
0.04
|
|
$
|
50
|
|
$
|
0.54
|
Increase in LIFO
reserve, net of tax
|
|
11
|
|
|
0.12
|
|
|
48
|
|
|
0.52
|
Adjusted net income
attributable to common stockholders
|
$
|
15
|
|
$
|
0.17
|
|
$
|
98
|
|
$
|
1.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2017
|
|
Three Months
Ended
|
|
Year
Ended
|
|
Net
Income
|
|
Per
Share
|
|
Net
Income
|
|
Per
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
$
|
29
|
|
$
|
0.30
|
|
$
|
26
|
|
$
|
0.27
|
Increase in LIFO
reserve, net of tax
|
|
6
|
|
|
0.06
|
|
|
18
|
|
|
0.19
|
Adjusted net income
attributable to common stockholders
|
$
|
35
|
|
$
|
0.36
|
|
$
|
44
|
|
$
|
0.46
|
|
Notes to
above:
|
* Column does not
foot due to rounding.
|
|
The Company defines
Adjusted Net Income Attributable to Common Stockholders (a non-GAAP
measure) as Net Income Attributable to Common Stockholders plus or
minus the after-tax impact of its LIFO inventory costing
methodology. The Company presents Adjusted Net Income Attributable
to Common Stockholders and related per share amounts because
the Company believes it provides useful comparisons of the
Company's operating results to other companies, including those
companies with whom we compete in the distribution of pipe, valves
and fittings to the energy industry, without regard to the LIFO
inventory costing methodology. The impact of the LIFO inventory
costing methodology 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 believes that Net Income Attributable to Common
Stockholders is the financial measure calculated and presented in
accordance with U.S. generally accepted accounting principles that
is most directly compared to Adjusted Net Income Attributable to
Common Stockholders.
|
View original
content:http://www.prnewswire.com/news-releases/mrc-global-announces-fourth-quarter-and-full-year-2018-results-300796201.html
SOURCE MRC Global Inc.