MRC Global Inc. (NYSE: MRC), the leading global distributor of
pipe, valves, fittings and infrastructure products and
services to diversified energy, industrial and gas
utility end-markets, today announced it has raised its 2022
guidance and provided selected preliminary second quarter
2022 results.
Rob Saltiel, MRC Global’s President and CEO,
stated, “I am very pleased with our excellent financial
performance in the first half of 2022. The year started off strong
and has continued to improve, significantly exceeding our
expectations. Robust activity in all of our sectors underpins our
strong outlook for the full year, supported by continued growth in
our order intake and backlog. We are increasing our 2022 targets to
$3.3 billion in sales and $230 million of adjusted EBITDA, or 7% of
targeted sales.”
Raising 2022 Guidance
Strong results in the first half of the year and
a positive outlook for each of the company’s end-markets for the
remainder of the year support an upward revision to the company’s
2022 forecast.
- Revenue is now targeted to be $3.3
billion, up from the previous guidance of $3.1 billion, which would
be a 24% increase in 2022 revenue over 2021.
- Adjusted EBITDA is targeted to be
$230 million, up from the previous guidance of $200 million,
which would be a 58% increase in 2022 adjusted EBITDA over
2021.
- Adjusted EBITDA as a percentage of
sales is targeted at approximately 7%, up from the previous
guidance of 6.5%, which would be a 150 basis-point improvement
over 2021.
The company expects third quarter revenue will
be higher than the second quarter with a seasonal decline in the
fourth quarter.
Adjusted EBITDA and adjusted EBITDA as a
percentage of sales are non-GAAP measures. Please refer to the note
regarding adjusted EBITDA below.
Preliminary Second Quarter 2022
Results
Based on preliminary results, MRC Global now
expects its second quarter 2022 sales to be up approximately 14%
over the first quarter, as compared to the high single-digit
improvement previously communicated. All four of the company’s
end-markets reflect strong sequential revenue growth, led by
greater than expected increases in the Gas Utilities and
Downstream, Industrial and Energy Transition (DIET) sectors. The
adjusted EBITDA margin percentage for the second quarter of 2022 is
expected to be approximately 7.5% of sales, which would be the best
quarterly adjusted EBITDA margin percentage since 2018.
Additional second quarter 2022 earnings and
annual outlook information will be provided in the company’s
scheduled earnings release and earnings call previously
announced.
Non-GAAP Measure (Adjusted EBITDA)
Disclosure
Adjusted EBITDA and adjusted EBITDA as a
percentage of sales are non-GAAP measures. 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), plus or minus the impact of its
last-in, first-out (LIFO) inventory costing methodology.
Reconciling the company’s preliminary second
quarter 2022 adjusted EBITDA (and the resulting adjusted EBITDA
percentage of sales) to the company’s preliminary second quarter
net income is not reasonably possible as the company has not yet
fully closed its second quarter books and there may be variations
in sales, selling, general and administrative expense, LIFO expense
and income taxes, among other line items. The company will provide
a full reconciliation when it finalizes its books, releases its
second quarter 2022 results and files its quarterly report on Form
10-Q for the quarter.
Reconciling the company's adjusted EBITDA 2022
target (and its outlook regarding adjusted EBITDA percentage of
sales) to annual 2022 outlook regarding the company’s net income is
not reasonably possible as the impact from inflation or deflation
on indices used to calculate LIFO is not possible to reasonably
predict.
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.
About MRC Global Inc.
Headquartered in Houston, Texas, MRC Global
(NYSE: MRC) is the leading global distributor of pipe,
valves, fittings (PVF) and other infrastructure products
and services to diversified end-markets including the gas
utilities, downstream, industrial and energy transition, upstream
production, and midstream pipeline sectors. 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
210 locations including valve and engineering centers. The
company’s unmatched quality assurance program offers 250,000 SKUs
from 10,000 suppliers, simplifying the supply chain for over 10,000
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 BroughtonInvestor RelationsMRC Global
Inc.Monica.Broughton@mrcglobal.com832-308-2847
MRC Global (NYSE:MRC)
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