MRC Global Inc. (NYSE: MRC), the leading global distributor of
pipe, valves, fittings and infrastructure products and
services to diversified energy, industrial and gas
utilities' end-markets, today announced second quarter
2022 results.
Net income attributable to common
stockholders for the second quarter of 2022 was
$8 million, or $0.09 per diluted share, as compared to
the second quarter of 2021 net loss of
($2) million, or ($0.02) per diluted share. Adjusted net
income attributable to common stockholders for the
second quarter of 2022 was $23 million, or
$0.27 per diluted share, as compared to the
second quarter of 2021 adjusted net income of
$6 million, or $0.08 per diluted share.
MRC Global’s
second quarter 2022 gross profit was
$151 million, or 17.8% of sales, as compared to the
second quarter 2021 gross profit of
$112 million, or 16.3% of sales. Gross profit for the
second quarter of
2022 and 2021 includes $20 million and
$11 million, respectively, of expense in cost of sales
relating to the use of the last-in, first-out (LIFO) method of
inventory cost accounting. Adjusted gross profit, which excludes
(among other items) the impact of LIFO, was $181 million, or
21.3% of sales, for the second quarter of 2022 and
was $134 million, or 19.5% of revenue, for the
second quarter of 2021.
Second Quarter 2022 Financial
Highlights:
- Sales of $848 million, a 14% sequential increase
and a 24% improvement over the same quarter a year ago
- Adjusted EBITDA of $65 million, 7.7% of sales,
the highest quarterly adjusted EBITDA margin since 2014
- Adjusted Gross Profit, as a percentage of sales, of 21.3%,
an increase of 80 basis points compared to the first quarter of
2022
- Backlog increased 12% compared to the first quarter of 2022 and
up 43% compared to year end 2021
Rob Saltiel, MRC Global’s President and CEO
stated, “Strong double-digit growth in each of our end-market
sectors drove second quarter revenue
of $848 million, a 14% sequential improvement, while
adjusted EBITDA margin was 7.7%, our best quarterly result since
2014. The gas utilities and downstream, industrial and energy
transition (DIET) sectors led the sequential improvement and
combined represent 68% of our revenue for the quarter. Our targets
for the full year remain at $3.3 billion of revenue and $230
million of adjusted EBITDA, supported by strong business
fundamentals and our growing backlog, which increased 12%
sequentially.”
Adjusted EBITDA was $65 million in the
second quarter of 2022 compared to $36 million
for the same period in 2021.
Selling, general and administrative (SG&A)
expenses were $120 million, or 14.2% of sales, for the
second quarter of 2022 compared to $102 million,
or 14.9% of sales, for the same period in 2021. Adjusted
SG&A of $101 million for the second quarter of 2021 excludes $1
million of facility closure costs.
Adjusted net income attributable to common
stockholders, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted
Gross Profit, Adjusted SG&A, Net Debt and Leverage Ratio are
all non-GAAP measures. Please refer to the reconciliation of each
of these measures to the nearest GAAP measure in this
release.
An income tax
expense of $6 million was incurred in the
second quarter of 2022, with an effective tax rate
of 30%, as compared to income tax
expense of $1 million for the
second quarter of 2021. Our 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. The effective
tax rate for the three months ended June 30, 2022, was higher
primarily due to unbenefited foreign losses.
Sales
The company’s sales were $848 million for
the second quarter of 2022, which was 14% higher
than the first quarter of 2022 and 24% higher
than the second quarter of 2021. As compared to the
second quarter of 2021, all sectors grew double-digit
percentages, led by the gas utilities and DIET sectors
followed by the upstream production and midstream pipeline
sectors. Sequentially, all sectors
increased double-digit percentages led by the gas
utilities and DIET sectors, as well.
Sales by Segment
U.S. sales in the second quarter of
2022 were $717 million, up $159 million, or
28%, from the same quarter in 2021. The gas utilities sector
revenue increased $44 million, or 16%, driven by
increased activity levels related to our customers' integrity
upgrade programs, smart meter programs and seasonal
demand. DIET sector sales
increased $62 million, or 46%,
from increased renewable biofuel projects and
additional turnaround project and maintenance spending for
both refining and chemicals customers. Upstream
production sector sales increased by $36 million, or 44%,
primarily due to increased customer spending for well completions
as oil and gas market conditions have improved. Midstream
pipeline sector sales improved $17 million, or 23%,
driven by new gathering and processing infrastructure as a result
of increased production levels.
Sequentially, as compared to the
first quarter, U.S. sales increased $99 million,
or 16%, as all sectors were up double-digits,
led by the gas utilities sector, which increased
$43 million, or 16%, as construction season is
underway, and customers take delivery for planned projects. The
DIET sector was up $29 million, or 17%, as biofuels
project activity, turnaround, and maintenance activity
increased. The upstream production and midstream pipeline sectors
were up 16% and 14%, respectively, as higher customer capital
spending drove increased well completions and
production levels.
Canada sales in the second quarter of
2022 were $40 million, up $10 million, or 33%,
from the same quarter in 2021, driven by the upstream
production sector from increased customer capital budgets due
to supportive commodity prices.
Sequentially, as compared to the
prior quarter, Canada sales declined $3 million, or
7%, due to seasonality from spring break-up
in the upstream production sector.
International sales in the second quarter
of 2022 were $91 million, down $7 million, or
7%, from the same period in 2021 primarily due to a
$10 million unfavorable impact from weaker foreign
currencies, as the underlying business experienced growth in the
upstream sector primarily in Norway and Australia from improved
market conditions.
Sequentially, as compared to the previous
quarter, International sales increased $10 million, or 12%, as
all sectors improved, led by the upstream production and DIET
sectors, despite a $4 million unfavorable impact from weaker
foreign currencies. Upstream production increased as customer
activity expanded in Norway and Australia as a result of supportive
commodity prices and an increase in oil demand post-pandemic. The
DIET sector increased in New Zealand and the Netherlands
including energy transition projects.
2
Sales by Sector
Gas utilities sector sales, which is primarily
U.S. based, were $314 million, in the second quarter
of 2022, or 37% of total sales, an
increase of $45 million, or 17%, from the
second quarter of 2021.
Sequentially, as compared to the
first quarter, the gas utilities sector grew
$43 million, or 16%, driven by the U.S.
Downstream, industrial and energy transition
sector sales in the second quarter of 2022 were
$259 million, or 31% of total sales, an increase of
$68 million, or 36%, from the second quarter of 2021. The
increase in DIET sector sales was driven by the
U.S. segment.
Sequentially, as compared to the previous
quarter, sales in the DIET sector were up $33 million, or 15%,
driven by the U.S.
Upstream production sector sales in the
second quarter of 2022 were $178 million, or
21% of total sales, an
improvement of $35 million, or 24%, from the
second quarter of 2021. The increase in upstream production
sales was led by the U.S. segment, followed by Canada and
partially offset by the International segment.
Sequentially, as compared to the prior quarter,
upstream production sector sales increased $20 million, or
13%, driven by the U.S. segment.
Midstream pipeline sector sales in the
second quarter of 2022 were $97 million, or
11% of total sales, an increase of $14 million, or
17%, from the second quarter of 2021, driven by the U.S.
segment.
Sequentially, midstream pipeline sector sales
increased $10 million, or 11%, driven by the U.S.
segment primarily related to gathering and processing
activity.
Backlog
As of June 30, 2022, the company's backlog is up
12% sequentially. The U.S. backlog is up 50% since
year-end with all sectors up double-digits including a 66%
increase in the gas utilities sector and a 48% increase in the DIET
sector.
Balance Sheet and Cash Flow
Cash used in operations was
($50) million in the second quarter of 2022. As
of June 30, 2022, the cash balance was
$21 million, long-term debt (including current portion)
was $356 million, and net debt was $335 million.
Availability under the company’s asset-based lending facility
was $529 million and available liquidity
was $550 million as of June 30, 2022.
Please refer to the reconciliation of non-GAAP
measures (Net Debt) to GAAP measures (Long-term Debt) in this
release.
3
Conference Call
The company will hold a conference call to
discuss its second quarter 2022 results at 10:00 a.m.
Eastern Time (9:00 a.m. Central Time) on August 9, 2022. To
participate in the call, please dial 201-689-8261 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 23, 2022, and can
be accessed by dialing 201-612-7415 and using pass
code 13730617#. 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, 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 205 locations
including valve and engineering centers. The company’s unmatched
quality assurance program offers over 250,000 SKUs from over 10,000
suppliers, simplifying the supply chain for
approximately 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.
4
These risks and uncertainties include (among
others) decreases in capital and other expenditure levels in the
industries that the company serves; U.S. and international general
economic conditions; decreases in oil and natural gas prices;
unexpected supply shortages; loss of third-party transportation
providers; cost increases by the company’s suppliers and
transportation providers; increases in steel prices, which the
company may be unable to pass along to its customers which could
significantly lower the company’s profit; 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 its inventory to decline; decreases in steel prices,
which could significantly lower the company’s profit; a decline in
demand for certain of the products the company distributes if
tariffs and duties on these products are imposed or lifted; holding
more inventory than can be sold in a commercial time frame;
significant substitution of renewables and low-carbon fuels for oil
and gas, impacting demand for the company’s products; risks related
to adverse weather events or natural disasters; environmental,
health and safety laws and regulations and the interpretation or
implementation thereof; changes in the company’s customer and
product mix; the risk that manufacturers of the products that the
company distributes will sell a substantial amount of goods
directly to end users in the industry sectors that the company
serves; failure to operate the company’s business in an efficient
or optimized manner; the company’s ability to compete successfully
with other companies; 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; inability to
attract and retain employees or the potential loss of key
personnel; adverse health events, such as a pandemic; interruption
in the proper functioning of the company’s information systems; the
occurrence of cybersecurity incidents; risks related to the
company’s customers’ creditworthiness; the success of acquisition
strategies; the potential adverse effects associated with
integrating acquisitions and whether these acquisitions will yield
their intended benefits; 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; the
company’s significant indebtedness; the dependence on the company’s
subsidiaries for cash to meet parent company obligations; changes
in the company’s credit profile; potential inability to obtain
necessary capital; 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; exposure to
U.S. and international laws and regulations, regulating corruption,
limiting imports or exports or imposing economic sanctions; risks
relating to ongoing evaluations of internal controls required by
Section 404 of the Sarbanes-Oxley Act; and risks related to
changing laws and regulations including trade policies and
tariffs.
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 Relations |
MRC Global Inc. |
Monica.Broughton@mrcglobal.com |
832-308-2847 |
5
MRC Global Inc.Condensed
Consolidated Balance Sheets (Unaudited)(in millions,
except shares)
|
|
June 30, |
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
21 |
|
|
$ |
48 |
|
Accounts receivable, net |
|
|
489 |
|
|
|
379 |
|
Inventories, net |
|
|
555 |
|
|
|
453 |
|
Other current assets |
|
|
36 |
|
|
|
19 |
|
Total current assets |
|
|
1,101 |
|
|
|
899 |
|
|
|
|
|
|
|
|
|
|
Long-term assets: |
|
|
|
|
|
|
|
|
Operating lease assets |
|
|
197 |
|
|
|
191 |
|
Property, plant and equipment, net |
|
|
85 |
|
|
|
91 |
|
Other assets |
|
|
23 |
|
|
|
22 |
|
|
|
|
|
|
|
|
|
|
Intangible assets: |
|
|
|
|
|
|
|
|
Goodwill, net |
|
|
264 |
|
|
|
264 |
|
Other intangible assets, net |
|
|
194 |
|
|
|
204 |
|
|
|
$ |
1,864 |
|
|
$ |
1,671 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
stockholders' equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Trade accounts payable |
|
$ |
433 |
|
|
$ |
321 |
|
Accrued expenses and other current liabilities |
|
|
79 |
|
|
|
80 |
|
Operating lease liabilities |
|
|
34 |
|
|
|
33 |
|
Current portion of long-term debt |
|
|
3 |
|
|
|
2 |
|
Total current liabilities |
|
|
549 |
|
|
|
436 |
|
|
|
|
|
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
|
|
|
|
Long-term debt, net |
|
|
353 |
|
|
|
295 |
|
Operating lease liabilities |
|
|
181 |
|
|
|
177 |
|
Deferred income taxes |
|
|
56 |
|
|
|
53 |
|
Other liabilities |
|
|
23 |
|
|
|
32 |
|
|
|
|
|
|
|
|
|
|
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, 107,816,687 and 107,284,171 issued, respectively |
|
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
|
1,751 |
|
|
|
1,747 |
|
Retained deficit |
|
|
(801 |
) |
|
|
(819 |
) |
Less: Treasury stock at cost: 24,216,330 shares |
|
|
(375 |
) |
|
|
(375 |
) |
Accumulated other comprehensive loss |
|
|
(229 |
) |
|
|
(231 |
) |
|
|
|
347 |
|
|
|
323 |
|
|
|
$ |
1,864 |
|
|
$ |
1,671 |
|
6
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, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
848 |
|
|
$ |
686 |
|
|
$ |
1,590 |
|
|
$ |
1,295 |
|
Cost of sales |
|
|
697 |
|
|
|
574 |
|
|
|
1,303 |
|
|
|
1,080 |
|
Gross profit |
|
|
151 |
|
|
|
112 |
|
|
|
287 |
|
|
|
215 |
|
Selling, general and
administrative expenses |
|
|
120 |
|
|
|
102 |
|
|
|
227 |
|
|
|
202 |
|
Operating income |
|
|
31 |
|
|
|
10 |
|
|
|
60 |
|
|
|
13 |
|
Other (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(5 |
) |
|
|
(6 |
) |
|
|
(11 |
) |
|
|
(12 |
) |
Other, net |
|
|
(6 |
) |
|
|
1 |
|
|
|
(6 |
) |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
20 |
|
|
|
5 |
|
|
|
43 |
|
|
|
2 |
|
Income tax expense |
|
|
6 |
|
|
|
1 |
|
|
|
13 |
|
|
|
1 |
|
Net income |
|
|
14 |
|
|
|
4 |
|
|
|
30 |
|
|
|
1 |
|
Series A preferred stock
dividends |
|
|
6 |
|
|
|
6 |
|
|
|
12 |
|
|
|
12 |
|
Net income (loss) attributable
to common stockholders |
|
$ |
8 |
|
|
$ |
(2 |
) |
|
$ |
18 |
|
|
$ |
(11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per
common share |
|
$ |
0.10 |
|
|
$ |
(0.02 |
) |
|
$ |
0.22 |
|
|
$ |
(0.13 |
) |
Diluted earnings (loss) per
common share |
|
$ |
0.09 |
|
|
$ |
(0.02 |
) |
|
$ |
0.21 |
|
|
$ |
(0.13 |
) |
Weighted-average common
shares, basic |
|
|
83.6 |
|
|
|
82.6 |
|
|
|
83.4 |
|
|
|
82.5 |
|
Weighted-average common
shares, diluted |
|
|
84.9 |
|
|
|
82.6 |
|
|
|
84.6 |
|
|
|
82.5 |
|
7
MRC Global Inc.Condensed
Consolidated Statements of Cash Flows (Unaudited)(in
millions)
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
Operating
activities |
|
|
|
|
|
|
|
|
Net income |
|
$ |
30 |
|
|
$ |
1 |
|
Adjustments to reconcile net
income to net cash (used in) provided by operations: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
9 |
|
|
|
10 |
|
Amortization of intangibles |
|
|
11 |
|
|
|
12 |
|
Equity-based compensation expense |
|
|
6 |
|
|
|
7 |
|
Deferred income tax expense (benefit) |
|
|
1 |
|
|
|
(1 |
) |
Increase in LIFO reserve |
|
|
26 |
|
|
|
15 |
|
Provision for credit losses |
|
|
- |
|
|
|
3 |
|
Other |
|
|
8 |
|
|
|
- |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(116 |
) |
|
|
(62 |
) |
Inventories |
|
|
(136 |
) |
|
|
8 |
|
Other current assets |
|
|
(18 |
) |
|
|
(16 |
) |
Accounts payable |
|
|
116 |
|
|
|
86 |
|
Accrued expenses and other current liabilities |
|
|
- |
|
|
|
(16 |
) |
Net cash (used in) provided by
operations |
|
|
(63 |
) |
|
|
47 |
|
|
|
|
|
|
|
|
|
|
Investing
activities |
|
|
|
|
|
|
|
|
Purchases of property, plant
and equipment |
|
|
(5 |
) |
|
|
(4 |
) |
Other investing
activities |
|
|
(2 |
) |
|
|
2 |
|
Net cash used in investing
activities |
|
|
(7 |
) |
|
|
(2 |
) |
|
|
|
|
|
|
|
|
|
Financing
activities |
|
|
|
|
|
|
|
|
Payments on revolving credit
facilities |
|
|
(275 |
) |
|
|
(125 |
) |
Proceeds from revolving credit
facilities |
|
|
335 |
|
|
|
125 |
|
Payments on long-term
obligations |
|
|
(1 |
) |
|
|
(87 |
) |
Dividends paid on preferred
stock |
|
|
(12 |
) |
|
|
(12 |
) |
Repurchases of shares to
satisfy tax withholdings |
|
|
(2 |
) |
|
|
(2 |
) |
Net cash provided by (used in)
financing activities |
|
|
45 |
|
|
|
(101 |
) |
|
|
|
|
|
|
|
|
|
Decrease in cash |
|
|
(25 |
) |
|
|
(56 |
) |
Effect of foreign exchange
rate on cash |
|
|
(2 |
) |
|
|
- |
|
Cash -- beginning of
period |
|
|
48 |
|
|
|
119 |
|
Cash -- end of period |
|
$ |
21 |
|
|
$ |
63 |
|
8
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 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas utilities |
|
$ |
311 |
|
|
$ |
3 |
|
|
$ |
- |
|
|
$ |
314 |
|
Downstream, industrial &
energy transition |
|
|
198 |
|
|
|
7 |
|
|
|
54 |
|
|
|
259 |
|
Upstream production |
|
|
117 |
|
|
|
29 |
|
|
|
32 |
|
|
|
178 |
|
Midstream pipeline |
|
|
91 |
|
|
|
1 |
|
|
|
5 |
|
|
|
97 |
|
|
|
$ |
717 |
|
|
$ |
40 |
|
|
$ |
91 |
|
|
$ |
848 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas utilities |
|
$ |
267 |
|
|
$ |
2 |
|
|
$ |
- |
|
|
$ |
269 |
|
Downstream, industrial &
energy transition |
|
|
136 |
|
|
|
5 |
|
|
|
50 |
|
|
|
191 |
|
Upstream production |
|
|
81 |
|
|
|
21 |
|
|
|
41 |
|
|
|
143 |
|
Midstream pipeline |
|
|
74 |
|
|
|
2 |
|
|
|
7 |
|
|
|
83 |
|
|
|
$ |
558 |
|
|
$ |
30 |
|
|
$ |
98 |
|
|
$ |
686 |
|
Six Months Ended |
June 30, |
|
|
U.S. |
|
|
Canada |
|
|
International |
|
|
Total |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas utilities |
|
$ |
579 |
|
|
$ |
6 |
|
|
$ |
- |
|
|
$ |
585 |
|
Downstream, industrial &
energy transition |
|
|
367 |
|
|
|
14 |
|
|
|
104 |
|
|
|
485 |
|
Upstream production |
|
|
218 |
|
|
|
58 |
|
|
|
60 |
|
|
|
336 |
|
Midstream pipeline |
|
|
171 |
|
|
|
5 |
|
|
|
8 |
|
|
|
184 |
|
|
|
$ |
1,335 |
|
|
$ |
83 |
|
|
$ |
172 |
|
|
$ |
1,590 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas utilities |
|
$ |
476 |
|
|
$ |
3 |
|
|
$ |
- |
|
|
$ |
479 |
|
Downstream, industrial &
energy transition |
|
|
274 |
|
|
|
9 |
|
|
|
102 |
|
|
|
385 |
|
Upstream production |
|
|
149 |
|
|
|
44 |
|
|
|
77 |
|
|
|
270 |
|
Midstream pipeline |
|
|
143 |
|
|
|
6 |
|
|
|
12 |
|
|
|
161 |
|
|
|
$ |
1,042 |
|
|
$ |
62 |
|
|
$ |
191 |
|
|
$ |
1,295 |
|
9
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 |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Line pipe |
|
$ |
132 |
|
|
$ |
100 |
|
|
$ |
244 |
|
|
$ |
165 |
|
Carbon fittings and
flanges |
|
|
116 |
|
|
|
88 |
|
|
|
216 |
|
|
|
173 |
|
Total carbon pipe, fittings
and flanges |
|
|
248 |
|
|
|
188 |
|
|
|
460 |
|
|
|
338 |
|
Valves, automation,
measurement and instrumentation |
|
|
280 |
|
|
|
243 |
|
|
|
531 |
|
|
|
484 |
|
Gas products |
|
|
198 |
|
|
|
162 |
|
|
|
382 |
|
|
|
296 |
|
Stainless steel and alloy pipe
and fittings |
|
|
58 |
|
|
|
36 |
|
|
|
94 |
|
|
|
65 |
|
General products |
|
|
64 |
|
|
|
57 |
|
|
|
123 |
|
|
|
112 |
|
|
|
$ |
848 |
|
|
$ |
686 |
|
|
$ |
1,590 |
|
|
$ |
1,295 |
|
10
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 |
|
|
|
2022 |
|
|
of Revenue* |
|
|
2021 |
|
|
of Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit, as reported |
|
$ |
151 |
|
|
|
17.8 |
% |
|
$ |
112 |
|
|
|
16.3 |
% |
Depreciation and
amortization |
|
|
4 |
|
|
|
0.5 |
% |
|
|
5 |
|
|
|
0.7 |
% |
Amortization of
intangibles |
|
|
6 |
|
|
|
0.7 |
% |
|
|
6 |
|
|
|
0.9 |
% |
Increase in LIFO reserve |
|
|
20 |
|
|
|
2.4 |
% |
|
|
11 |
|
|
|
1.6 |
% |
Adjusted Gross Profit |
|
$ |
181 |
|
|
|
21.3 |
% |
|
$ |
134 |
|
|
|
19.5 |
% |
|
|
Six Months Ended |
|
|
|
|
June 30, |
|
|
Percentage |
|
|
|
June 30, |
|
|
Percentage |
|
|
|
|
2022 |
|
|
of Revenue* |
|
|
|
2021 |
|
|
of Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit, as reported |
|
$ |
287 |
|
|
|
18.1 |
% |
|
|
$ |
215 |
|
|
|
16.6 |
% |
|
Depreciation and
amortization |
|
|
9 |
|
|
|
0.6 |
% |
|
|
|
10 |
|
|
|
0.8 |
% |
|
Amortization of
intangibles |
|
|
11 |
|
|
|
0.7 |
% |
|
|
|
12 |
|
|
|
0.9 |
% |
|
Increase in LIFO reserve |
|
|
26 |
|
|
|
1.6 |
% |
|
|
|
15 |
|
|
|
1.2 |
% |
|
Adjusted Gross Profit |
|
$ |
333 |
|
|
|
20.9 |
% |
|
|
$ |
252 |
|
|
|
19.5 |
% |
|
Notes to above:* Does not foot due to
rounding
The company defines Adjusted Gross Profit as
sales, less cost of sales, plus depreciation and amortization, plus
amortization of intangibles, plus inventory-related charges
incremental to normal operations 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.
11
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, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
$ |
120 |
|
|
$ |
102 |
|
|
$ |
227 |
|
|
$ |
202 |
|
Facility closures (1) |
|
|
- |
|
|
|
(1 |
) |
|
|
- |
|
|
|
(1 |
) |
Employee separation (2) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2 |
) |
Adjusted Selling, general and
administrative expenses |
|
$ |
120 |
|
|
$ |
101 |
|
|
$ |
227 |
|
|
$ |
199 |
|
Notes to above:
(1 |
) |
Charges (pre-tax) associated with the exit of the Korea business
recorded in the International segment. |
(2 |
) |
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. 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.
12
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, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
14 |
|
|
$ |
4 |
|
|
$ |
30 |
|
|
$ |
1 |
|
Income tax expense |
|
|
6 |
|
|
|
1 |
|
|
|
13 |
|
|
|
1 |
|
Interest expense |
|
|
5 |
|
|
|
6 |
|
|
|
11 |
|
|
|
12 |
|
Depreciation and
amortization |
|
|
4 |
|
|
|
5 |
|
|
|
9 |
|
|
|
10 |
|
Amortization of
intangibles |
|
|
6 |
|
|
|
6 |
|
|
|
11 |
|
|
|
12 |
|
Employee separation (1) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1 |
|
Increase in LIFO reserve |
|
|
20 |
|
|
|
11 |
|
|
|
26 |
|
|
|
15 |
|
Equity-based compensation
expense (2) |
|
|
3 |
|
|
|
2 |
|
|
|
6 |
|
|
|
7 |
|
Foreign currency losses |
|
|
7 |
|
|
|
1 |
|
|
|
7 |
|
|
|
1 |
|
Adjusted EBITDA |
|
$ |
65 |
|
|
$ |
36 |
|
|
$ |
113 |
|
|
$ |
60 |
|
Notes to above:
(1 |
) |
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. |
(2 |
) |
Charges (pre-tax) recorded in
SG&A. In 2021, $1 million relates to employee separation. |
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, long-lived asset impairments (including goodwill and
intangible assets), inventory-related charges incremental to normal
operations, 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.
13
MRC Global
Inc.Supplemental Information
(Unaudited)Reconciliation of Net Income (Loss)
Attributable to Common Stockholders to Adjusted
Net Income Attributable to Common Stockholders (a non-GAAP
measure)(in millions, except per share amounts)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, 2022 |
|
|
June 30, 2022 |
|
|
|
Amount |
|
|
Per Share |
|
|
Amount |
|
|
Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
common stockholders |
|
$ |
8 |
|
|
$ |
0.09 |
|
|
$ |
18 |
|
|
$ |
0.21 |
|
Increase in LIFO reserve, net
of tax |
|
|
15 |
|
|
|
0.18 |
|
|
|
20 |
|
|
|
0.24 |
|
Adjusted net income
attributable to common stockholders |
|
$ |
23 |
|
|
$ |
0.27 |
|
|
$ |
38 |
|
|
$ |
0.45 |
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, 2021 |
|
|
June 30, 2021 |
|
|
|
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 |
|
|
$ |
- |
|
|
$ |
- |
|
Notes to above:* 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 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. After-tax impacts
were determined using the Company's blended statutory
rate. 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.
14
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, |
|
|
|
2022 |
|
|
|
|
|
|
Long-term debt, net |
|
$ |
353 |
|
Plus: current portion of
long-term debt |
|
|
3 |
|
Long-term debt |
|
|
356 |
|
Less: cash |
|
|
21 |
|
Net Debt |
|
$ |
335 |
|
|
|
|
|
|
Net Debt |
|
$ |
335 |
|
Trailing twelve months
adjusted EBITDA |
|
|
199 |
|
Leverage ratio |
|
|
1.7 |
|
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.
15
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