MRC Global Inc. (NYSE: MRC), the leading global distributor of
pipe, valves and fittings and related infrastructure products and
services to diversified end-markets, today announced
second quarter 2021 results.
The company’s sales were $686 million for
the second quarter of 2021, which was
13% higher than the first quarter of
2021 and 14% higher than the second quarter of
2020. Sequentially, gas utilities led the revenue
growth as customers continued executing integrity
upgrade plans on their natural gas distribution networks. As
compared to the second quarter of 2020, broad economic
recovery drove improvement in sales across all sectors,
except midstream pipeline.
Net loss attributable to common stockholders for
the second quarter of 2021 was ($2) million, or
($0.02) per diluted share, as compared to the
second quarter of 2020 net loss of
($287) million, or ($3.50) per diluted share.
Rob Saltiel, MRC Global’s president and chief
executive officer stated, “Our second quarter results were
strong with 13% higher revenue sequentially, led by gains in
our industry-leading gas utilities business. Increased revenue,
along with continued emphasis on cost control, resulted in higher
adjusted EBITDA margins of 5.2%, positive cash flow generation of
$23 million and a significantly improved leverage ratio of 2.2
times. Our financial results reflect improving market conditions
and our commitment to superior customer service and operational
efficiency. We are increasingly optimistic about our outlook
across all of our end-markets, including the energy transition
space, through the second half of 2021 and into 2022."
MRC Global’s second quarter
of 2021 gross profit was $112 million, or
16.3% of sales, as compared to the second quarter of
2020 gross profit of $79 million, or 13.1% of sales.
Gross profit for the second quarter of 2021 includes
$11 million of expense in cost of sales relating to the
use of the last-in, first-out (LIFO) method of inventory cost
accounting as compared to the second quarter
of 2020, which reduced cost of sales by $6 million.
Adjusted gross profit, which excludes the impact of LIFO was
$134 million, or 19.5% of revenue, for the
second quarter of 2021 and was $118 million,
or 19.6% of revenue, for the second quarter
of 2020.
Please refer to the reconciliation of non-GAAP
measures (adjusted gross profit, adjusted SG&A, adjusted
EBITDA) to GAAP measures (gross profit, SG&A, net income) in
this release.
Selling, general and administrative (SG&A)
expenses were $102 million, or 14.9% of sales, for the
second quarter of 2021 compared to $126 million,
or 20.9% of sales, for the same period in 2020. Adjusted
SG&A of $101 million for the second quarter of 2021
excludes $1 million of facility closure costs in the
International segment.
Income tax expense was $1 million for
the second quarter of 2021, with an effective tax
rate of 20%, as compared to an income tax benefit
of $17 million for the second quarter of
2020. The company’s rates generally differ from the U.S.
federal statutory rate of 21% as a result of state income taxes and
differing foreign income tax rates.
Sales by Geographic Segment
U.S. sales in the second quarter of
2021 were $558 million, up $84 million, or 18%,
from the same quarter in 2020. The gas utilities sector drove
the increase, followed by the upstream production sector, due
to improving economic conditions and higher customer
activity levels. Gas utilities sector revenue
improved $67 million, or 34%, as a new customer contract
was fully implemented and activity increased as pandemic
restrictions eased, and customers continued to execute their
integrity upgrade programs from the low point in the
second quarter of 2020. Upstream production sector sales
increased by $15 million, or 23%, primarily due to increased
customer spending driven by improved commodity prices and a
corresponding increase in well completions. Downstream and
industrial sector sales increased $10 million, or 8%, due
to increased turnaround and small project spending. Midstream
pipeline sector sales declined $8 million, or 10%, due to the
completion of non-repeatable project activity in 2020.
Canada sales in the second quarter of
2021 were $30 million, up $2 million, or 7%,
from the same quarter in 2020, driven by the net effect of a
stronger Canadian dollar, and an improvement in the upstream
production and downstream and industrial sectors.
Improved commodity pricing, the easing of pandemic
restrictions, as well as small projects and turnaround
activity all contributed to the increase.
International sales in the second quarter
of 2021 were $98 million, down $2 million, or 2%,
from the same period in 2020 driven by the net effect of lower
activity levels in the upstream sector, partially offset
by stronger foreign currencies.
Sales by End-Market Sector
Gas utilities sector sales in the
second quarter of 2021 were $269 million, or
39% of total sales, an increase of $64 million,
or 31%, from the second quarter of 2020, driven by the
U.S. segment.
Downstream and industrial sector sales in the
second quarter of 2021 were $191 million, or
28% of total sales, an increase of $15 million, or 9%,
from the second quarter of 2020. The increase in the
downstream and industrial sector sales was across all
segments, led by the U.S. segment. Sequentially, downstream
and industrial sector sales were down slightly at 2% due to
less turnaround work as well as elevated sales in the first
quarter of 2021 from recovery work related to inclement weather
in February.
Upstream production sector sales in the
second quarter of 2021 were $143 million, or
21% of total sales, an
improvement of $9 million, or 7%, from the
second quarter of 2020. The increase in upstream production
sales was led by the U.S. segment. Sequentially, upstream
production sector sales increased $16 million, or 13%, also
driven by the U.S. as customers increased spending for
completions and facility construction.
Midstream pipeline sector sales in the
second quarter of 2021 were $83 million, or
12% of total sales, a reduction of $4 million, or 5%,
from the second quarter of 2020, driven by the U.S. segment.
Sequentially, midstream pipeline sector sales increased $5 million,
or 6%, due to improving market conditions and small projects.
Balance Sheet
Cash provided by operations was
$23 million in the second quarter of 2021. As
of June 30, 2021, the cash balance was $63 million.
Also, long-term debt was $297 million, and net debt was
$234 million, both the lowest in our public company history.
As of June 30, 2021, availability under the company’s asset-based
lending facility was $444 million and available liquidity
was $507 million. An $86 million excess
cash flow payment was made in late April 2021.
Please refer to the reconciliation of non-GAAP
measures (Net Debt) to GAAP measures (Long-term Debt) in this
release.
Conference Call
The company will hold a conference call to
discuss its second quarter 2021 results at 10:00 a.m.
Eastern Time (9:00 a.m. Central Time) on July 30, 2021. 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 August 13,
2021 and can be accessed by dialing 201-612-7415 and using
pass code 13720269#. 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
(NYSE: MRC) is the leading global distributor of pipe, valves and
fittings (PVF) and related infrastructure products and services to
diversified end-markets including gas utilities, downstream and
industrial, upstream production, midstream pipeline as well as
green energy and decarbonization. With over 100 years of
experience, MRC Global has provided customers with innovative
supply chain solutions, technical product expertise and a robust
digital platform from a worldwide network of 220 locations
including valve and engineering centers. The company’s unmatched
quality assurance program offers 200,000 SKUs from 10,000
suppliers, simplifying the supply chain for over 12,000 customers.
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 “will,”
“expect,” “expected,” “intend,” “believes,” "on-track," “well
positioned,” “strong position,” “looking forward,” “guidance,”
“plans,” “can,” "target," "targeted" 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, achieving cost savings
and cash flow, debt reduction, liquidity, 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 MRC Global’s
control, including the factors described in the company’s SEC
filings that may cause the company’s 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 the company’s 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. MRC Global’s filings and
other important information are also available on the Investor
Relations page of the company’s 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,
except shares)
|
|
June 30, |
|
|
December 31, |
|
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
63 |
|
|
$ |
119 |
|
Accounts receivable, net |
|
|
382 |
|
|
|
319 |
|
Inventories, net |
|
|
484 |
|
|
|
509 |
|
Other current assets |
|
|
32 |
|
|
|
19 |
|
Total current assets |
|
|
961 |
|
|
|
966 |
|
|
|
|
|
|
|
|
|
|
Long-term assets: |
|
|
|
|
|
|
|
|
Operating lease assets |
|
|
190 |
|
|
|
200 |
|
Property, plant and equipment, net |
|
|
95 |
|
|
|
103 |
|
Other assets |
|
|
19 |
|
|
|
19 |
|
|
|
|
|
|
|
|
|
|
Intangible assets: |
|
|
|
|
|
|
|
|
Goodwill, net |
|
|
264 |
|
|
|
264 |
|
Other intangible assets, net |
|
|
216 |
|
|
|
229 |
|
|
|
$ |
1,745 |
|
|
$ |
1,781 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
stockholders' equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Trade accounts payable |
|
$ |
350 |
|
|
$ |
264 |
|
Accrued expenses and other current liabilities |
|
|
81 |
|
|
|
94 |
|
Operating lease liabilities |
|
|
34 |
|
|
|
37 |
|
Current portion of long-term debt |
|
|
1 |
|
|
|
4 |
|
Total current liabilities |
|
|
466 |
|
|
|
399 |
|
|
|
|
|
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
|
|
|
|
Long-term debt, net |
|
|
296 |
|
|
|
379 |
|
Operating lease liabilities |
|
|
177 |
|
|
|
187 |
|
Deferred income taxes |
|
|
70 |
|
|
|
70 |
|
Other liabilities |
|
|
34 |
|
|
|
41 |
|
|
|
|
|
|
|
|
|
|
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, 106,881,767 and 106,315,296 issued, respectively |
|
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
|
1,744 |
|
|
|
1,739 |
|
Retained deficit |
|
|
(792 |
) |
|
|
(781 |
) |
Less: Treasury stock at cost: 24,216,330 shares |
|
|
(375 |
) |
|
|
(375 |
) |
Accumulated other comprehensive loss |
|
|
(231 |
) |
|
|
(234 |
) |
|
|
|
347 |
|
|
|
350 |
|
|
|
$ |
1,745 |
|
|
$ |
1,781 |
|
MRC Global Inc.Condensed
Consolidated Statements of Operations (Unaudited)(in
millions, except per share amounts)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
686 |
|
|
$ |
602 |
|
|
$ |
1,295 |
|
|
$ |
1,396 |
|
Cost of sales |
|
|
574 |
|
|
|
523 |
|
|
|
1,080 |
|
|
|
1,169 |
|
Gross profit |
|
|
112 |
|
|
|
79 |
|
|
|
215 |
|
|
|
227 |
|
Selling, general and
administrative expenses |
|
|
102 |
|
|
|
126 |
|
|
|
202 |
|
|
|
252 |
|
Goodwill and intangibles
impairment |
|
|
- |
|
|
|
242 |
|
|
|
- |
|
|
|
242 |
|
Operating income (loss) |
|
|
10 |
|
|
|
(289 |
) |
|
|
13 |
|
|
|
(267 |
) |
Other (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(6 |
) |
|
|
(7 |
) |
|
|
(12 |
) |
|
|
(15 |
) |
Other, net |
|
|
1 |
|
|
|
(2 |
) |
|
|
1 |
|
|
|
(2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes |
|
|
5 |
|
|
|
(298 |
) |
|
|
2 |
|
|
|
(284 |
) |
Income tax expense
(benefit) |
|
|
1 |
|
|
|
(17 |
) |
|
|
1 |
|
|
|
(12 |
) |
Net income (loss) |
|
|
4 |
|
|
|
(281 |
) |
|
|
1 |
|
|
|
(272 |
) |
Series A preferred stock
dividends |
|
|
6 |
|
|
|
6 |
|
|
|
12 |
|
|
|
12 |
|
Net loss attributable to
common stockholders |
|
$ |
(2 |
) |
|
$ |
(287 |
) |
|
$ |
(11 |
) |
|
$ |
(284 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per common
share |
|
$ |
(0.02 |
) |
|
$ |
(3.50 |
) |
|
$ |
(0.13 |
) |
|
$ |
(3.47 |
) |
Diluted loss per common
share |
|
$ |
(0.02 |
) |
|
$ |
(3.50 |
) |
|
$ |
(0.13 |
) |
|
$ |
(3.47 |
) |
Weighted-average common
shares, basic |
|
|
82.6 |
|
|
|
82.0 |
|
|
|
82.5 |
|
|
|
81.9 |
|
Weighted-average common
shares, diluted |
|
|
82.6 |
|
|
|
82.0 |
|
|
|
82.5 |
|
|
|
81.9 |
|
MRC Global Inc.Condensed
Consolidated Statements of Cash Flows (Unaudited)(in
millions)
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
Operating
activities |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
1 |
|
|
$ |
(272 |
) |
Adjustments to reconcile net
income (loss) to net cash provided by operations: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
10 |
|
|
|
10 |
|
Amortization of intangibles |
|
|
12 |
|
|
|
13 |
|
Equity-based compensation expense |
|
|
7 |
|
|
|
5 |
|
Deferred income tax benefit |
|
|
(1 |
) |
|
|
(8 |
) |
Amortization of debt issuance costs |
|
|
1 |
|
|
|
- |
|
Increase (decrease) in LIFO reserve |
|
|
15 |
|
|
|
(9 |
) |
Goodwill and intangible asset impairment |
|
|
- |
|
|
|
242 |
|
Lease impairment and abandonment |
|
|
- |
|
|
|
15 |
|
Inventory-related charges |
|
|
- |
|
|
|
34 |
|
Provision for credit losses |
|
|
- |
|
|
|
5 |
|
Other |
|
|
3 |
|
|
|
1 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(62 |
) |
|
|
69 |
|
Inventories |
|
|
8 |
|
|
|
41 |
|
Other current assets |
|
|
(17 |
) |
|
|
(10 |
) |
Accounts payable |
|
|
86 |
|
|
|
(51 |
) |
Accrued expenses and other current liabilities |
|
|
(16 |
) |
|
|
(1 |
) |
Net cash provided by
operations |
|
|
47 |
|
|
|
84 |
|
|
|
|
|
|
|
|
|
|
Investing
activities |
|
|
|
|
|
|
|
|
Purchases of property, plant
and equipment |
|
|
(4 |
) |
|
|
(5 |
) |
Other investing
activities |
|
|
2 |
|
|
|
- |
|
Net cash used in investing
activities |
|
|
(2 |
) |
|
|
(5 |
) |
|
|
|
|
|
|
|
|
|
Financing
activities |
|
|
|
|
|
|
|
|
Payments on revolving credit
facilities |
|
|
(125 |
) |
|
|
(460 |
) |
Proceeds from revolving credit
facilities |
|
|
125 |
|
|
|
389 |
|
Payments on long-term
obligations |
|
|
(87 |
) |
|
|
(4 |
) |
Purchase of common stock |
|
|
- |
|
|
|
- |
|
Dividends paid on preferred
stock |
|
|
(12 |
) |
|
|
(12 |
) |
Repurchases of shares to
satisfy tax withholdings |
|
|
(2 |
) |
|
|
(3 |
) |
Other |
|
|
- |
|
|
|
- |
|
Net cash used in financing
activities |
|
|
(101 |
) |
|
|
(90 |
) |
|
|
|
|
|
|
|
|
|
Decrease in cash |
|
|
(56 |
) |
|
|
(11 |
) |
Effect of foreign exchange
rate on cash |
|
|
- |
|
|
|
(2 |
) |
Cash -- beginning of
period |
|
|
119 |
|
|
|
32 |
|
Cash -- end of period |
|
$ |
63 |
|
|
$ |
19 |
|
MRC Global
Inc.Supplemental Sales Information
(Unaudited)(in millions)
Disaggregated Sales by Segment and
Sector
Three Months Ended |
June 30, |
|
|
U.S. |
|
|
Canada |
|
|
International |
|
|
Total |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas utilities |
|
$ |
267 |
|
|
$ |
2 |
|
|
$ |
- |
|
|
$ |
269 |
|
Downstream &
industrial |
|
|
136 |
|
|
|
5 |
|
|
|
50 |
|
|
|
191 |
|
Upstream production |
|
|
81 |
|
|
|
21 |
|
|
|
41 |
|
|
|
143 |
|
Midstream pipeline |
|
|
74 |
|
|
|
2 |
|
|
|
7 |
|
|
|
83 |
|
|
|
$ |
558 |
|
|
$ |
30 |
|
|
$ |
98 |
|
|
$ |
686 |
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas utilities |
|
$ |
200 |
|
|
$ |
5 |
|
|
$ |
- |
|
|
$ |
205 |
|
Downstream &
industrial |
|
|
126 |
|
|
|
2 |
|
|
|
48 |
|
|
|
176 |
|
Upstream production |
|
|
66 |
|
|
|
18 |
|
|
|
50 |
|
|
|
134 |
|
Midstream pipeline |
|
|
82 |
|
|
|
3 |
|
|
|
2 |
|
|
|
87 |
|
|
|
$ |
474 |
|
|
$ |
28 |
|
|
$ |
100 |
|
|
$ |
602 |
|
Six Months Ended |
June 30, |
|
|
U.S. |
|
|
Canada |
|
|
International |
|
|
Total |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas utilities |
|
$ |
476 |
|
|
$ |
3 |
|
|
$ |
- |
|
|
$ |
479 |
|
Downstream &
industrial |
|
|
274 |
|
|
|
9 |
|
|
|
102 |
|
|
|
385 |
|
Upstream production |
|
|
149 |
|
|
|
44 |
|
|
|
77 |
|
|
|
270 |
|
Midstream pipeline |
|
|
143 |
|
|
|
6 |
|
|
|
12 |
|
|
|
161 |
|
|
|
$ |
1,042 |
|
|
$ |
62 |
|
|
$ |
191 |
|
|
$ |
1,295 |
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas utilities |
|
$ |
399 |
|
|
$ |
8 |
|
|
$ |
- |
|
|
$ |
407 |
|
Downstream &
industrial |
|
|
316 |
|
|
|
8 |
|
|
|
103 |
|
|
|
427 |
|
Upstream production |
|
|
205 |
|
|
|
55 |
|
|
|
96 |
|
|
|
356 |
|
Midstream pipeline |
|
|
192 |
|
|
|
7 |
|
|
|
7 |
|
|
|
206 |
|
|
|
$ |
1,112 |
|
|
$ |
78 |
|
|
$ |
206 |
|
|
$ |
1,396 |
|
MRC Global
Inc.Supplemental Sales Information
(Unaudited)(in millions)
Sales by Product Line
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
Type |
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Line pipe |
|
$ |
100 |
|
|
$ |
80 |
|
|
$ |
165 |
|
|
$ |
180 |
|
Carbon fittings and
flanges |
|
|
88 |
|
|
|
73 |
|
|
|
173 |
|
|
|
188 |
|
Total carbon pipe, fittings and flanges |
|
|
188 |
|
|
|
153 |
|
|
|
338 |
|
|
|
368 |
|
Valves, automation,
measurement and instrumentation |
|
|
243 |
|
|
|
249 |
|
|
|
484 |
|
|
|
572 |
|
Gas products |
|
|
162 |
|
|
|
114 |
|
|
|
296 |
|
|
|
248 |
|
Stainless steel and alloy pipe
and fittings |
|
|
36 |
|
|
|
30 |
|
|
|
65 |
|
|
|
67 |
|
General products |
|
|
57 |
|
|
|
56 |
|
|
|
112 |
|
|
|
141 |
|
|
|
$ |
686 |
|
|
$ |
602 |
|
|
$ |
1,295 |
|
|
$ |
1,396 |
|
MRC Global
Inc.Supplemental Information
(Unaudited)Reconciliation of Gross Profit to
Adjusted Gross Profit (a non-GAAP measure)(in
millions)
|
|
Three Months Ended |
|
|
|
June 30, |
|
|
Percentage |
|
|
June 30, |
|
|
Percentage |
|
|
|
2021 |
|
|
of Revenue |
|
|
2020 |
|
|
of Revenue* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit, as reported |
|
$ |
112 |
|
|
|
16.3 |
% |
|
$ |
79 |
|
|
|
13.1 |
% |
Depreciation and
amortization |
|
|
5 |
|
|
|
0.7 |
% |
|
|
5 |
|
|
|
0.8 |
% |
Amortization of
intangibles |
|
|
6 |
|
|
|
0.9 |
% |
|
|
6 |
|
|
|
1.0 |
% |
Increase (decrease) in LIFO
reserve |
|
|
11 |
|
|
|
1.6 |
% |
|
|
(6 |
) |
|
|
(1.0 |
)% |
Inventory-related charges
(1) |
|
|
- |
|
|
|
0.0 |
% |
|
|
34 |
|
|
|
5.6 |
% |
Adjusted Gross Profit |
|
$ |
134 |
|
|
|
19.5 |
% |
|
$ |
118 |
|
|
|
19.6 |
% |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
Percentage |
|
|
June 30, |
|
|
Percentage |
|
|
|
2021 |
|
|
of Revenue |
|
|
2020 |
|
|
of Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit, as reported |
|
$ |
215 |
|
|
|
16.6 |
% |
|
$ |
227 |
|
|
|
16.3 |
% |
Depreciation and
amortization |
|
|
10 |
|
|
|
0.8 |
% |
|
|
10 |
|
|
|
0.7 |
% |
Amortization of
intangibles |
|
|
12 |
|
|
|
0.9 |
% |
|
|
13 |
|
|
|
0.9 |
% |
Increase (decrease) in LIFO
reserve |
|
|
15 |
|
|
|
1.2 |
% |
|
|
(9 |
) |
|
|
(0.6 |
)% |
Inventory-related charges
(1) |
|
|
- |
|
|
|
0.0 |
% |
|
|
34 |
|
|
|
2.4 |
% |
Adjusted Gross Profit |
|
$ |
252 |
|
|
|
19.5 |
% |
|
$ |
275 |
|
|
|
19.7 |
% |
Notes to above:
* Does not foot due to rounding
(1 |
) |
Non-cash charges (pre-tax) for
inventory recorded in cost of goods sold. Charges of $19 million in
the U.S. and $1 million in Canada relate to excess and obsolete
inventory as a result of the market outlook for certain
products. International segment charges of $14 million relate to
increased reserves for excess and obsolete inventory as well as the
exit of the Thailand business. |
The company defines Adjusted Gross Profit as
sales, less cost of sales, plus depreciation and amortization, plus
amortization of intangibles, plus inventory-related
charges 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 Information
(Unaudited)Reconciliation of Selling, General and
Administrative Expenses to Adjusted Selling,
General and Administrative Expenses (a non-GAAP
measure)(in millions)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
$ |
102 |
|
|
$ |
126 |
|
|
$ |
202 |
|
|
$ |
252 |
|
Severance and restructuring
(1) |
|
|
- |
|
|
|
(7 |
) |
|
|
- |
|
|
|
(7 |
) |
Facility closures (2) |
|
|
(1 |
) |
|
|
(15 |
) |
|
|
(1 |
) |
|
|
(15 |
) |
Employee separation (3) |
|
|
- |
|
|
|
- |
|
|
|
(2 |
) |
|
|
- |
|
Adjusted Selling, general and
administrative expenses |
|
$ |
101 |
|
|
$ |
104 |
|
|
$ |
199 |
|
|
$ |
230 |
|
Notes to above:
(1 |
) |
Charges (pre-tax) related to
employee severance and restructuring charges associated with the
company’s cost reduction initiatives recorded in SG&A, of which
$6 million is in the U.S. segment and $1 million is in the
International segment. |
(2 |
) |
2021: Charges (pre-tax) $1
million associated with the exit of the Korea business recorded in
the International segment. 2020: Charges (pre-tax) of $15
million for lease impairments and abandonments related to facility
closures, substantially non-cash, recorded in SG&A. $12 million
is recorded in the International segment, $2 million in the U.S.
segment and $1 million in the Canada segment. |
(3 |
) |
Charges (pre-tax) related to
employee separation of which $1 million is non-cash share-based
compensation. |
The company defines Adjusted Selling, general
and administrative (SG&A) expenses as SG&A, less
severance and restructuring expenses, employee separation
costs, facility closures plus the recovery of supplier bad
debt. The company presents Adjusted SG&A because the company
believes it is a useful indicator of the company’s operating
performance without regard to items that can vary substantially
from company to company. The company presents Adjusted SG&A
because the company believes Adjusted SG&A is a useful
indicator of the company’s operating performance. Among other
things, Adjusted SG&A measures the company’s operating
performance without regard to certain non-recurring, non-cash or
transaction-related expenses. The company uses Adjusted
SG&A as a key performance indicator in managing its
business. The company believes that SG&A is the financial
measure calculated and presented in accordance with U.S. generally
accepted accounting principles that is most directly comparable to
Adjusted SG&A.
MRC Global
Inc.Supplemental Information
(Unaudited)Reconciliation of Net Income to
Adjusted EBITDA (a non-GAAP measure)(in millions)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
4 |
|
|
$ |
(281 |
) |
|
$ |
1 |
|
|
$ |
(272 |
) |
Income tax expense
(benefit) |
|
|
1 |
|
|
|
(17 |
) |
|
|
1 |
|
|
|
(12 |
) |
Interest expense |
|
|
6 |
|
|
|
7 |
|
|
|
12 |
|
|
|
15 |
|
Depreciation and
amortization |
|
|
5 |
|
|
|
5 |
|
|
|
10 |
|
|
|
10 |
|
Amortization of
intangibles |
|
|
6 |
|
|
|
6 |
|
|
|
12 |
|
|
|
13 |
|
Goodwill and intangible asset
impairment (1) |
|
|
- |
|
|
|
242 |
|
|
|
- |
|
|
|
242 |
|
Inventory-related charges
(2) |
|
|
- |
|
|
|
34 |
|
|
|
- |
|
|
|
34 |
|
Facility closures (3) |
|
|
- |
|
|
|
18 |
|
|
|
- |
|
|
|
18 |
|
Severance and restructuring
(4) |
|
|
- |
|
|
|
7 |
|
|
|
- |
|
|
|
7 |
|
Employee separation (5) |
|
|
- |
|
|
|
- |
|
|
|
1 |
|
|
|
- |
|
Increase (decrease) in LIFO
reserve |
|
|
11 |
|
|
|
(6 |
) |
|
|
15 |
|
|
|
(9 |
) |
Equity-based compensation
expense (5) |
|
|
2 |
|
|
|
3 |
|
|
|
7 |
|
|
|
5 |
|
Gain on early extinguishment
of debt (6) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1 |
) |
Foreign currency losses
(gains) |
|
|
1 |
|
|
|
(1 |
) |
|
|
1 |
|
|
|
1 |
|
Adjusted EBITDA |
|
$ |
36 |
|
|
$ |
17 |
|
|
$ |
60 |
|
|
$ |
51 |
|
Notes to above:
(1 |
) |
Non-cash charges (pre-tax) for
the impairment of $217 million for goodwill and $25 million for the
U.S. intangible, indefinite-lived tradename asset. The goodwill
impairment consisted of $177 million for the U.S. segment and $40
million for the International segment, resulting in a $0 balance
for the International segment. |
(2 |
) |
Non-cash charges (pre-tax) for
inventory recorded in cost of goods sold. Charges of $19 million in
the U.S. and $1 million in Canada relate to excess and obsolete
inventory as a result of the current market outlook for certain
products. International segment charges of $14 million relate to
increased reserves for excess and obsolete inventory as well as the
exit of the Thailand business. |
(3 |
) |
2021: Charges (pre-tax) $1
million associated with the exit of the Korea business recorded in
the International segment. 2020: Charges (pre-tax) of $15
million for lease impairments and abandonments related to facility
closures, substantially non-cash, recorded in SG&A. $12 million
is recorded in the International segment, $2 million in the U.S.
segment and $1 million in the Canada segment. Also included are $3
million of non-cash (pre-tax) charges for the write-down of assets
for facilities in Canada ($2 million) and International,
recorded in Other expense. |
(4 |
) |
Charges (pre-tax) related to
employee severance and restructuring charges associated with the
company’s cost reduction initiatives recorded in SG&A, of which
$6 million is in the U.S. segment and $1 million is in the
International segment. |
(5 |
) |
Charges (pre-tax) recorded in
SG&A. $2 million relates to employee separation, of which, $1
million is recorded in equity-based compensation expense, in the
first quarter of 2021. |
(6 |
) |
Gain (pre-tax) related to the
purchase of the Term Loan recorded in Other, net. |
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 intangible assets
and 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 Net Income (Loss)
Attributable to Common Stockholders to Adjusted
Net Income (Loss) Attributable to Common Stockholders (a non-GAAP
measure)(in millions, except per share amounts)
|
|
June 30, 2021 |
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
Amount |
|
|
Per Share* |
|
|
Amount |
|
|
Per Share* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to
common stockholders |
|
$ |
(2 |
) |
|
$ |
(0.02 |
) |
|
$ |
(11 |
) |
|
$ |
(0.13 |
) |
Increase in LIFO reserve, net
of tax |
|
|
8 |
|
|
|
0.10 |
|
|
|
11 |
|
|
|
0.14 |
|
Adjusted net income
attributable to common stockholders |
|
$ |
6 |
|
|
$ |
0.08 |
|
|
$ |
0 |
|
|
$ |
0.00 |
|
|
|
June 30, 2020 |
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
Amount |
|
|
Per Share |
|
|
Amount |
|
|
Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to
common stockholders |
|
$ |
(287 |
) |
|
$ |
(3.50 |
) |
|
$ |
(284 |
) |
|
$ |
(3.47 |
) |
Goodwill and intangible asset
impairment, net of tax (1) |
|
|
234 |
|
|
|
2.85 |
|
|
|
234 |
|
|
|
2.86 |
|
Inventory-related charges, net
of tax (2) |
|
|
29 |
|
|
|
0.35 |
|
|
|
29 |
|
|
|
0.35 |
|
Facility closures, net of tax
(3) |
|
|
16 |
|
|
|
0.20 |
|
|
|
16 |
|
|
|
0.20 |
|
Severance and restructuring,
net of tax (4) |
|
|
5 |
|
|
|
0.06 |
|
|
|
5 |
|
|
|
0.06 |
|
Decrease in LIFO reserve, net
of tax |
|
|
(5 |
) |
|
|
(0.06 |
) |
|
|
(7 |
) |
|
|
(0.09 |
) |
Adjusted net loss attributable
to common stockholders |
|
$ |
(8 |
) |
|
$ |
(0.10 |
) |
|
$ |
(7 |
) |
|
$ |
(0.09 |
) |
Notes to above:
* Does not foot due to rounding
(1 |
) |
Non-cash charges (after-tax)
for the impairment of $215 million for goodwill and $19 million for
the U.S. intangible, indefinite-lived tradename asset. The
after-tax goodwill impairment consisted of $175 million for the
U.S. segment and $40 million for the International segment,
resulting in a $0 balance for the International segment. |
(2 |
) |
Charges (after-tax) for
inventory recorded in cost of goods sold. Charges (after-tax) of
$15 million in the U.S. relate to excess and obsolete inventory as
a result of the current market outlook for certain products.
International segment charges (after-tax) of $14 million
relate to increased reserves for excess and obsolete inventory as
well as the exit of the Thailand business. |
(3 |
) |
Charges (after-tax) of $14
million for lease impairments and abandonments related to facility
closures, substantially non-cash, recorded in SG&A. $11 million
is recorded in the International segment, $2 million in the U.S.
segment and $1 million in the Canada segment, each after-tax. Also
includes $2 million of non-cash (after-tax) charges for the
write-down of assets for facilities in Canada ($2 million) and
International, recorded in Other expense. |
(4 |
) |
Charges (after-tax) related to
employee severance and restructuring charges associated with the
company’s cost reduction initiatives recorded in SG&A, of which
$4 million is in the U.S. segment and $1 million is in the
International segment. |
The company defines Adjusted Net Income Attributable to Common
Stockholders (a non-GAAP measure) as Net Income Attributable to
Common Stockholders less after-tax goodwill and intangible
impairment, inventory-related charges, facility closures, severance
and restructuring, 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 irregular variations from certain restructuring events not
indicative of the on-going business. Those items include goodwill
and intangible asset impairments, inventory-related charges,
facility closures, severance and restructuring as well as 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.
MRC Global
Inc.Supplemental Information
(Unaudited)Reconciliation of Long-term Debt to Net
Debt (a non-GAAP measure) and the Leverage Ratio
Calculation(in millions)
|
|
June 30, |
|
|
|
2021 |
|
|
|
|
|
|
Long-term debt, net |
|
$ |
296 |
|
Plus: current portion of
long-term debt |
|
|
1 |
|
Long-term debt |
|
|
297 |
|
Less: cash |
|
|
63 |
|
Net Debt |
|
$ |
234 |
|
|
|
|
|
|
Net Debt |
|
$ |
234 |
|
Trailing twelve months
adjusted EBITDA |
|
|
106 |
|
Leverage ratio |
|
|
2.2 |
|
Notes to above:
Net Debt and related leverage metrics may be considered non-GAAP
measures. We define Net Debt as total long-term debt, including
current portion, minus cash. We define our leverage ratio as Net
Debt divided by trailing twelve months Adjusted EBITDA. We believe
Net Debt is an indicator of the extent to which the company’s
outstanding debt obligations could be satisfied by cash on hand and
a useful metric for investors to evaluate the company’s leverage
position. We believe the leverage ratio is a commonly used metric
that management and investors use to assess the borrowing capacity
of the company. We believe total long-term debt (including the
current portion) is the financial measure calculated and presented
in accordance with U.S. generally accepted accounting principles
that is most directly comparable to Net Debt.
MRC Global (NYSE:MRC)
Historical Stock Chart
From Jun 2024 to Jul 2024
MRC Global (NYSE:MRC)
Historical Stock Chart
From Jul 2023 to Jul 2024