HOUSTON, Feb. 13, 2020 /PRNewswire/ -- MRC Global Inc.
(NYSE: MRC), the largest global distributor, based on sales, of
pipe, valves and fittings and other infrastructure products and
services to the energy industry, today announced fourth quarter and
full year 2019 results.
The company's sales were $766
million for the fourth quarter of 2019, which was 19% lower
than the third quarter of 2019 and 24% lower than the fourth
quarter of 2018. Sales declined both sequentially and as compared
to the fourth quarter of 2018 across all segments and
end-markets.
Net loss attributable to common stockholders for the fourth
quarter of 2019 was $(30) million, or
$(0.37) per diluted share, as
compared to income of $4 million, or $0.04 per diluted share in the fourth quarter of
2018. The fourth quarter results include after-tax charges related
to severance and restructuring and asset write offs of
$19 million, or $0.23 per
diluted share and $3 million related
to severance and restructuring charges, or $0.03 per diluted share in 2019 and 2018,
respectively.
Andrew R. Lane, MRC Global's
president and chief executive officer stated, "Customer spending
levels in the fourth quarter were significantly lower than expected
as budget exhaustion and capital discipline drove customer
behavior. Despite sales being down this quarter, we generated
$108 million in cash from operations and $242 million for
the year, above our stated goal. Our free cash flow for 2019 was
$200 million, resulting in a free
cash flow yield of approximately 20%, based on today's stock price.
We also completed our most recent share buyback program in the
fourth quarter. Since we began repurchasing shares in 2015, we have
returned $375 million to shareholders and repurchased 24.2
million shares. Our cost and debt reduction efforts have also been
successful. Excluding certain items, we reduced our SG&A in
2019 by $25 million and our outstanding debt by $133 million, as compared to last year. SG&A
reductions in 2019 were taken by streamlining operations in
alignment with lower activity levels, which included closing
locations and other cost reduction efforts, all resulting in a
reduction in headcount of 360 or 10%, including 130 in the fourth
quarter."
"Due to continued weakness in market conditions, we expect 2020
activity levels to be lower than 2019. However, we remain committed
to delivering the highest returns for shareholders through cost and
debt reduction, operational and working capital efficiencies and a
strategy of pursuing higher margin opportunities. Our business
model is resilient, and we expect to continue generating strong
operating cash flow with a minimum target of $110 million in 2020." Mr. Lane added.
MRC Global's fourth quarter 2019 gross profit was $131 million, or 17.1% of sales, as compared to
gross profit of $171 million, or
16.9% of sales, in the fourth quarter of 2018. Gross profit for the
fourth quarter of 2019 and 2018 reflects expense of $1 million and $14
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 2019 was also
negatively impacted by $8 million of pre-tax charges related
to the final settlement of a multi-year customer project and the
non-cash write-off of excess and obsolete inventory in our
international segment. Excluding the impact of these charges, gross
profit and adjusted gross profit would have been 18.1% and 20.0% in
the fourth quarter of 2019, respectively.
Selling, general and administrative expenses were $141 million, or 18.4% of sales, for the fourth
quarter of 2019 compared to $148
million, or 14.7% of sales, for the same period of 2018.
SG&A expenses for the fourth quarter of 2019 and 2018 each
include $4 million of pre-tax
severance and restructuring charges. SG&A expenses for the
fourth quarter of 2019 also include $5
million of pre-tax charges related to the doubtful
collection of a product claim against a foreign supplier and
$3 million for an end of year
adjustment for insurance receivables.
The effective tax rate for the fourth quarter of 2019 reflects
tax expense of $5 million on a
$19 million pre-tax loss. This is due
primarily to losses incurred in foreign jurisdictions with no
corresponding tax benefit and additional taxes related to recent
changes in tax regulations.
Adjusted EBITDA was $23 million in
the fourth quarter of 2019 compared to $63
million for the same period in 2018. Please refer to the
reconciliation of non-GAAP measures (adjusted gross profit and
adjusted EBITDA) to GAAP measures (gross profit and net income) in
this release.
Sales by Segment
U.S. sales in the fourth quarter of 2019 were $608 million, down $170
million, or 22%, from the same quarter in 2018. Midstream
declined $74 million, or 21%,
primarily due to lower sales in the transmission and gathering
sub-sector. Upstream declined $57
million, or 29%, as a result of end of year budget
exhaustion and increased capital discipline by our customers.
Downstream declined by $39 million, or 17%, due primarily to
non-recurring project work that resulted in a $20 million
decrease in sales.
Canadian sales in the fourth quarter of 2019 were $43 million, down $36
million, or 46%, from the same quarter in 2018 driven by the
upstream sector, which continues to be negatively impacted by low
Canadian oil prices and government-imposed production limits.
International sales in the fourth quarter of 2019 were
$115 million, down $37 million,
or 24%, from the same period in 2018 reflecting the conclusion of a
major upstream project in Kazakhstan, as well as, the impact of weaker
foreign currencies relative to the U.S. dollar, which unfavorably
impacted sales by $4 million.
Excluding the impact of the project and weaker foreign currencies,
sales increased $5 million, or 5%,
due to improved market conditions, particularly in Norway and the United Kingdom.
Sales by Sector
Upstream sales in the fourth quarter of 2019 were
$224 million, or 29% of total sales, down $115 million, or 34%, from the fourth quarter of
2018. The decrease in upstream sales was across all geographic
segments, as described above.
Midstream sales in the fourth quarter of 2019 were
$298 million, or 39% of total sales, down $75 million, or 20%, from the fourth quarter
of 2018. Sales to transmission and gathering customers were down
34% over the same quarter in 2018 due to customer capital
discipline while sales to gas utility customers were down 9% for
the quarter primarily due to the timing of deliveries and lower
activity levels for a couple of customers. Gas utility sales were
up 3% in 2019 over 2018, as the company continues to grow its share
in this end market.
Downstream sales in the fourth quarter of 2019 were $244 million, or 32% of total sales, down
$53 million, or 18%, from the fourth
quarter of 2018 due primarily to the U.S. segment as described
above.
Balance Sheet and Cash Flow
Cash balances were $32 million at
December 31, 2019. Debt, net of cash,
was $519 million and excess
availability under the company's asset-based lending facility was
$451 million as of December 31, 2019. Cash provided by operations
was $108 million in the fourth quarter of 2019 resulting in
$242 million of cash provided by
operations in 2019. Free cash flow (cash provided by operations
less capital expenditures less preferred stock dividends) was
$200 million in 2019. The company
believes MRC Global's liquidity position of $483 million is sufficient to support the
business and capital needs of the company.
Share Repurchase Programs
In October 2018, the board of
directors authorized a share repurchase program for common stock of
up to $150 million, which was completed in the fourth quarter
of 2019. During the fourth quarter of 2019, the company purchased
the remaining $12 million of its
common stock at an average price of $15.15 per share. In 2019, the company purchased
$75 million of its common stock at an
average price of $15.38 per
share.
Since 2015, the company has purchased $375 million or 24.2 million shares at an average
price of $15.48 per share. The
outstanding share count as of December 31,
2019 was 81.4 million shares.
2020 Annual Guidance
The company has the following expectations regarding its results
in 2020:
|
Low
|
|
High
|
Revenue
|
$3,200
million
|
|
$3,700
million
|
Net income (before
preferred stock dividends)
|
$40
million
|
|
$70
million
|
Diluted income per
common share
|
$0.19
|
|
$0.56
|
Adjusted
EBITDA
|
$160
million
|
|
$200
million
|
Cash flow from
operations
|
$110
million
|
|
$160
million
|
|
Please refer to the
reconciliation of Net income to Adjusted EBITDA in this
release.
|
Conference Call
The company will hold a conference call to discuss its fourth
quarter 2019 results at 10:00 a.m. Eastern
Time (9:00 a.m. Central Time)
on February 14, 2020. 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 February 28,
2020 and can be accessed by dialing 201-612-7415 and using
pass code 13697753#. Also, an archive of the webcast will be
available shortly after the call at www.mrcglobal.com for 90
days.
About MRC Global Inc.
MRC Global is the largest distributor of pipe, valves and
fittings (PVF) and other infrastructure products and services to
the energy industry, based on sales. Through approximately 260
service locations worldwide, approximately 3,200 employees and with
nearly 100 years of history, MRC Global provides innovative supply
chain solutions and technical product expertise to customers
globally across diversified end-markets including the upstream,
midstream (including gas utilities) and downstream (including
industrials). MRC Global manages a complex network of over 200,000
SKUs and 10,000 suppliers simplifying the supply chain for its over
14,000 customers. With a focus on technical products, value-added
services, a global network of valve and engineering centers and an
unmatched quality assurance program, MRC Global is the trusted PVF
expert. Find out more at
www.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,"
"expectations," "believes," "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,
revenue, net income and adjusted EBITDA, the company's expectations
regarding its sales, including (without limitation) sales to
utility customers, sales through e-commerce, sales from services
provided by the company's Valve Engineering & Modification
Center and sales of valves, adjusted EBITDA, tax rate, achievement
of working capital targets, capital expenditures, savings from cost
reductions and cash from operations, 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;
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 or imposed; significant substitution of alternative fuels
for oil and gas; 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; adverse health
events such as a pandemic; 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.
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,
|
|
2019
|
|
2018
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash
|
$
|
32
|
|
$
|
43
|
Accounts receivable,
net
|
|
459
|
|
|
587
|
Inventories,
net
|
|
701
|
|
|
797
|
Other current
assets
|
|
26
|
|
|
38
|
Total current
assets
|
|
1,218
|
|
|
1,465
|
|
|
|
|
|
|
Long-term
assets:
|
|
|
|
|
|
Operating lease
assets
|
|
186
|
|
|
-
|
Property, plant and
equipment, net
|
|
138
|
|
|
140
|
Other assets
|
|
19
|
|
|
23
|
|
|
|
|
|
|
Intangible
assets:
|
|
|
|
|
|
Goodwill,
net
|
|
483
|
|
|
484
|
Other intangible
assets, net
|
|
281
|
|
|
322
|
|
$
|
2,325
|
|
$
|
2,434
|
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Trade accounts
payable
|
$
|
357
|
|
$
|
435
|
Accrued expenses and
other current liabilities
|
|
91
|
|
|
130
|
Operating lease
liabilities
|
|
34
|
|
|
-
|
Current portion of
long-term debt
|
|
4
|
|
|
4
|
Total current
liabilities
|
|
486
|
|
|
569
|
|
|
|
|
|
|
Long-term
obligations:
|
|
|
|
|
|
Long-term debt,
net
|
|
547
|
|
|
680
|
Operating lease
liabilities
|
|
167
|
|
|
-
|
Deferred income
taxes
|
|
91
|
|
|
98
|
Other
liabilities
|
|
37
|
|
|
40
|
|
|
|
|
|
|
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,
|
|
|
|
|
|
105,624,750 and
104,953,693 issued, respectively
|
|
1
|
|
|
1
|
Additional paid-in
capital
|
|
1,731
|
|
|
1,721
|
Retained
deficit
|
|
(483)
|
|
|
(498)
|
Treasury stock at cost:
24,216,330 and 19,347,839 shares, respectively
|
|
(375)
|
|
|
(300)
|
Accumulated other
comprehensive loss
|
|
(232)
|
|
|
(232)
|
|
|
642
|
|
|
692
|
|
$
|
2,325
|
|
$
|
2,434
|
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,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$
|
766
|
|
$
|
1,009
|
|
$
|
3,662
|
|
$
|
4,172
|
Cost of
sales
|
|
635
|
|
|
838
|
|
|
3,009
|
|
|
3,483
|
Gross
profit
|
|
131
|
|
|
171
|
|
|
653
|
|
|
689
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
141
|
|
|
148
|
|
|
550
|
|
|
562
|
Operating (loss)
income
|
|
(10)
|
|
|
23
|
|
|
103
|
|
|
127
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense)
income:
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(9)
|
|
|
(10)
|
|
|
(40)
|
|
|
(38)
|
Write
off of debt issuance costs
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1)
|
Other,
net
|
|
-
|
|
|
3
|
|
|
3
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
|
(19)
|
|
|
16
|
|
|
66
|
|
|
95
|
Income tax
expense
|
|
5
|
|
|
6
|
|
|
27
|
|
|
21
|
Net income
|
|
(24)
|
|
|
10
|
|
|
39
|
|
|
74
|
Series A preferred
stock dividends
|
|
6
|
|
|
6
|
|
|
24
|
|
|
24
|
Net (loss) income
attributable to common stockholders
|
$
|
(30)
|
|
$
|
4
|
|
$
|
15
|
|
$
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings
per common share
|
$
|
(0.37)
|
|
$
|
0.05
|
|
$
|
0.18
|
|
$
|
0.55
|
Diluted (loss)
earnings per common share
|
$
|
(0.37)
|
|
$
|
0.04
|
|
$
|
0.18
|
|
$
|
0.54
|
Weighted-average
common shares, basic
|
|
81.8
|
|
|
88.6
|
|
|
83.0
|
|
|
90.1
|
Weighted-average
common shares, diluted
|
|
81.8
|
|
|
89.9
|
|
|
83.9
|
|
|
91.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MRC Global
Inc.
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
(in
millions)
|
|
|
Year Ended
December 31,
|
|
2019
|
|
2018
|
Operating
activities
|
|
|
|
|
|
Net income
|
$
|
39
|
|
$
|
74
|
Adjustments to
reconcile net income to net cash provided by (used in)
operations:
|
|
|
|
|
|
Depreciation and
amortization
|
|
21
|
|
|
23
|
Amortization of
intangibles
|
|
42
|
|
|
45
|
Equity-based
compensation expense
|
|
16
|
|
|
14
|
Deferred income tax
benefit
|
|
(5)
|
|
|
(9)
|
Amortization of debt
issuance costs
|
|
1
|
|
|
1
|
Inventory-related
charges
|
|
5
|
|
|
-
|
Write off of debt
issuance costs
|
|
-
|
|
|
1
|
(Decrease) increase in
LIFO reserve
|
|
(2)
|
|
|
62
|
Change in fair value
of derivative instruments
|
|
-
|
|
|
(1)
|
Provision for
uncollectible accounts
|
|
2
|
|
|
1
|
Other non-cash
items
|
|
5
|
|
|
9
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
|
127
|
|
|
(74)
|
Inventories
|
|
95
|
|
|
(175)
|
Other current
assets
|
|
10
|
|
|
8
|
Accounts
payable
|
|
(79)
|
|
|
27
|
Accrued expenses and
other current liabilities
|
|
(35)
|
|
|
(17)
|
Net cash provided by
(used in) operations
|
|
242
|
|
|
(11)
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
Purchases of
property, plant and equipment
|
|
(18)
|
|
|
(20)
|
Proceeds from the
disposition of property, plant and equipment
|
|
1
|
|
|
6
|
Other investing
activities
|
|
1
|
|
|
-
|
Net cash used in
investing activities
|
|
(16)
|
|
|
(14)
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
Payments on revolving
credit facilities
|
|
(1,145)
|
|
|
(1,118)
|
Proceeds from
revolving credit facilities
|
|
1,016
|
|
|
1,280
|
Payments on long-term
obligations
|
|
(4)
|
|
|
(4)
|
Debt issuance costs
paid
|
|
-
|
|
|
(1)
|
Purchases of common
stock
|
|
(75)
|
|
|
(125)
|
Dividends paid on
preferred stock
|
|
(24)
|
|
|
(24)
|
Proceeds from
exercise of stock options
|
|
-
|
|
|
21
|
Repurchase of shares
to satisfy tax withholdings
|
|
(6)
|
|
|
(5)
|
Net cash (used in)
provided by financing activities
|
|
(238)
|
|
|
24
|
|
|
|
|
|
|
Decrease in
cash
|
|
(12)
|
|
|
(1)
|
Effect of foreign
exchange rate on cash
|
|
1
|
|
|
(4)
|
Cash beginning of
year
|
|
43
|
|
|
48
|
Cash end of
year
|
$
|
32
|
|
$
|
43
|
|
|
|
|
|
|
MRC Global
Inc.
|
Supplemental
Information (Unaudited)
|
Reconciliation of
Net Income to Adjusted EBITDA (a non-GAAP measure)
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected for
the
|
|
Three Months
Ended
|
|
Year
Ended
|
|
Year
Ending
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
December 31,
2020
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
(mid-point)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
|
(24)
|
|
$
|
10
|
|
$
|
39
|
|
$
|
74
|
|
$
|
55
|
Income tax
expense
|
|
5
|
|
|
6
|
|
|
27
|
|
|
21
|
|
|
20
|
Interest
expense
|
|
9
|
|
|
10
|
|
|
40
|
|
|
38
|
|
|
33
|
Depreciation and
amortization
|
|
5
|
|
|
6
|
|
|
21
|
|
|
23
|
|
|
22
|
Amortization of
intangibles
|
|
9
|
|
|
11
|
|
|
42
|
|
|
45
|
|
|
28
|
Increase (decrease)
in LIFO reserve
|
|
1
|
|
|
14
|
|
|
(2)
|
|
|
62
|
|
|
5
|
Inventory-related
charges (1)
|
|
5
|
|
|
-
|
|
|
5
|
|
|
-
|
|
|
-
|
Equity-based
compensation expense (2)
|
|
4
|
|
|
3
|
|
|
16
|
|
|
14
|
|
|
17
|
Severance and
restructuring charges (3)
|
|
4
|
|
|
4
|
|
|
9
|
|
|
4
|
|
|
-
|
Foreign currency
gains
|
|
-
|
|
|
(1)
|
|
|
(1)
|
|
|
(1)
|
|
|
-
|
Write off of debt
issuance costs (4)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1
|
|
|
-
|
Supplier bad debt
(5)
|
|
5
|
|
|
-
|
|
|
5
|
|
|
-
|
|
|
-
|
Change in fair value
of derivative instruments
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1)
|
|
|
-
|
Adjusted
EBITDA
|
$
|
23
|
|
$
|
63
|
|
$
|
201
|
|
$
|
280
|
|
$
|
180
|
|
Notes to
above:
|
(1)
|
Non-cash charges
(pre-tax) for excess and obsolete inventory in the international
segment.
|
(2)
|
Recorded in
SG&A
|
(3)
|
Charges (pre-tax)
related to employee severance and restructuring charges recorded in
SG&A.
|
(4)
|
Charge (pre-tax)
related to the write off of debt issuance costs related to the
refinancing of our senior secured Term Loan in 2018.
|
(5)
|
Non-cash charges
(pre-tax) recorded in SG&A related to the doubtful collection
of a product claim against a foreign supplier.
|
|
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
|
|
2019
|
|
of
Revenue
|
|
2018
|
|
of
Revenue
|
|
|
|
|
|
|
|
|
|
|
Gross profit, as
reported
|
$
|
131
|
(1)
|
17.1%
|
|
$
|
171
|
|
16.9%
|
Depreciation and
amortization
|
|
5
|
|
0.7%
|
|
|
6
|
|
0.6%
|
Amortization of
intangibles
|
|
9
|
|
1.2%
|
|
|
11
|
|
1.1%
|
Increase in LIFO
reserve
|
|
1
|
|
0.1%
|
|
|
14
|
|
1.4%
|
Adjusted Gross
Profit
|
$
|
146
|
(1)
|
19.1%
|
|
$
|
202
|
|
20.0%
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
December
31,
|
|
Percentage
|
|
December
31,
|
|
Percentage
|
|
2019
|
|
of
Revenue*
|
|
2018
|
|
of
Revenue*
|
|
|
|
|
|
|
|
|
|
|
Gross profit, as
reported
|
$
|
653
|
(1)
|
17.8%
|
|
$
|
689
|
|
16.5%
|
Depreciation and
amortization
|
|
21
|
|
0.6%
|
|
|
23
|
|
0.6%
|
Amortization of
intangibles
|
|
42
|
|
1.1%
|
|
|
45
|
|
1.1%
|
(Decrease) increase
in LIFO reserve
|
|
(2)
|
|
(0.1%)
|
|
|
62
|
|
1.5%
|
Adjusted Gross
Profit
|
$
|
714
|
(1)
|
19.5%
|
|
$
|
819
|
|
19.6%
|
|
Notes to
above:
|
*
|
Column does not foot
due to rounding.
|
|
|
(1)
|
Includes $5 million
of non-cash charges (pre-tax) recorded in cost of goods sold in our
international segment for excess and obsolete inventory, and $3
million of charges (pre-tax) recorded in sales for the final
settlement of a multi-year customer project, for each of the three
months and year ended December 31, 2019. Excluding these
charges for the three months ended December 31, 2019 gross profit,
as reported would be $139 million (18.1%) and adjusted gross profit
would be $154 million (20.0%). Excluding these charges for the year
ended December 31, 2019 gross profit, as reported would be $661
million (18.0%) and adjusted gross profit would be $722 million
(19.7%).
|
|
|
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
|
2019:
|
|
|
|
|
|
|
|
|
|
|
|
Upstream
|
$
|
140
|
|
$
|
32
|
|
$
|
52
|
|
$
|
224
|
Midstream
|
|
281
|
|
|
7
|
|
|
10
|
|
|
298
|
Downstream
|
|
187
|
|
|
4
|
|
|
53
|
|
|
244
|
|
$
|
608
|
|
$
|
43
|
|
$
|
115
|
|
$
|
766
|
2018:
|
|
|
|
|
|
|
|
|
|
|
|
Upstream
|
$
|
197
|
|
$
|
59
|
|
$
|
83
|
|
$
|
339
|
Midstream
|
|
355
|
|
|
15
|
|
|
3
|
|
|
373
|
Downstream
|
|
226
|
|
|
5
|
|
|
66
|
|
|
297
|
|
$
|
778
|
|
$
|
79
|
|
$
|
152
|
|
$
|
1,009
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
December
31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
Canada
|
|
International
|
|
Total
|
2019:
|
|
|
|
|
|
|
|
|
|
|
|
Upstream
|
$
|
723
|
|
$
|
162
|
|
$
|
222
|
|
$
|
1,107
|
Midstream
|
|
1,379
|
|
|
42
|
|
|
29
|
|
|
1,450
|
Downstream
|
|
854
|
|
|
22
|
|
|
229
|
|
|
1,105
|
|
$
|
2,956
|
|
$
|
226
|
|
$
|
480
|
|
$
|
3,662
|
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
|
Sales by Product
Line
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
Type
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Line pipe
|
|
$
|
92
|
|
$
|
172
|
|
$
|
560
|
|
$
|
728
|
Carbon steel fittings
and flanges
|
|
|
109
|
|
|
152
|
|
|
565
|
|
|
683
|
Total carbon steel pipe,
fittings and flanges
|
|
|
201
|
|
|
324
|
|
|
1,125
|
|
|
1,411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valves, automation,
measurement and instrumentation
|
|
|
309
|
|
|
407
|
|
|
1,434
|
|
|
1,553
|
Gas products
|
|
|
126
|
|
|
136
|
|
|
551
|
|
|
561
|
Stainless steel alloy
pipe and fittings
|
|
|
42
|
|
|
46
|
|
|
177
|
|
|
196
|
General oilfield
products
|
|
|
88
|
|
|
96
|
|
|
375
|
|
|
451
|
|
|
$
|
766
|
|
$
|
1,009
|
|
$
|
3,662
|
|
$
|
4,172
|
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,
2019
|
|
Three Months
Ended
|
|
Year
Ended
|
|
Net
Income
|
|
Per
Share*
|
|
Net
Income
|
|
Per
Share*
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
$
|
(30)
|
|
$
|
(0.37)
|
|
$
|
15
|
|
$
|
0.18
|
Increase (decrease)
in LIFO reserve, net of tax
|
|
1
|
|
|
0.01
|
|
|
(2)
|
|
|
(0.02)
|
Adjusted net income
attributable to common stockholders
|
$
|
(29)
|
|
$
|
(0.35)
|
|
$
|
13
|
|
$
|
0.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
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-2019-results-301004840.html
SOURCE MRC Global Inc.