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 third quarter
2022 results.
Net income attributable to common
stockholders for the third quarter of 2022 was
$18 million, or $0.21 per diluted share, as compared to
the third quarter of 2021 net loss of
($17) million, or ($0.21) per diluted share. Adjusted net
income attributable to common stockholders for the
third quarter of 2022 was $36 million, or
$0.42 per diluted share, as compared to the third quarter
of 2021 adjusted net income of $8 million, or
$0.09 per diluted share.
MRC Global’s
third quarter 2022 gross profit was
$165 million, or 18.3% of sales, as compared to the
third quarter 2021 gross profit of $95 million,
or 13.9% of sales. Gross profit for the third quarter of
2022 and 2021 includes $24 million and
$32 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 $198 million, or
21.9% of sales, for the third quarter of 2022 and
was $137 million, or 20.0% of revenue, for the
third quarter of 2021.
Third Quarter 2022 Financial
Highlights:
- Sales of
$904 million, a 7% sequential increase from the
second quarter of 2022 led by the gas utilities and downstream,
industrial and energy transition (DIET) sectors, and a 32%
improvement compared to the same quarter a year ago
- Adjusted Gross
Profit, as a percentage of sales, of 21.9%, an increase of 60
basis points compared to the second quarter of 2022 and an MRC
Global record
- Adjusted EBITDA
of $82 million, or 9.1% of sales, a
company record for adjusted EBITDA margins
- Backlog of $773
million, up 4% compared to the second quarter of 2022 and up 49%
compared to year end 2021
Rob Saltiel, MRC Global’s President and CEO
stated, “I am very pleased with our outstanding performance this
quarter with total revenue of $904 million, a 7% sequential
growth, led by our two largest end-market sectors, gas utilities
and DIET. Continued strong activity, coupled with cost
management, resulted in new company records for both adjusted gross
margin of 21.9% and adjusted EBITDA margin of
9.1%. Our business generated operating cash flow of $33
million in the third quarter, and we expect to achieve positive
operating cash flow for the full year, which would be a major
achievement given the high revenue growth we have experienced
in 2022.”
“Our third quarter’s results are indicative
of the solid performance of the MRC Global team and are
underpinned by our resilient gas utilities business, our
expanding roster of energy transition projects and
our continued cost discipline. Looking forward to 2023, we
expect double-digit revenue growth, higher annual EBITDA
margins and strong cash flow generation,” continued Mr.
Saltiel.
Adjusted EBITDA was $82 million in the
third quarter of 2022 compared to $39 million
for the same period in 2021.
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.
Selling, general and administrative (SG&A)
expenses were $120 million, or 13.3% of sales, for the
third quarter of 2022 compared to $102 million,
or 14.9% of sales, for the same period
in 2021.
An income tax
expense of $10 million was incurred in the
third quarter of 2022, with an effective tax rate
of 29%, as compared to an income tax
benefit of $2 million for the
third quarter of 2021. Our rates generally differ from
the U.S. federal statutory rate of 21% as a result of state income
taxes, non-deductible expenses, and differing foreign income tax
rates. The effective tax rate for the three months ended
September 30, 2022, was higher primarily due to unbenefited foreign
losses.
Sales
The company’s sales were $904 million for
the third quarter of 2022, which was 7% higher than
the second quarter of 2022 and 32% higher than
the third quarter of 2021. As compared to the
third quarter of 2021, all sectors and segments grew. By
sector, the DIET sector led with 40% growth followed by the
upstream production and gas utilities and sectors at 33% and 32%,
respectively. Sequentially, the gas utilities and DIET sectors
led the increase.
Sales by Segment
U.S. sales in the third quarter of
2022 were $768 million, up $198 million, or
35%, from the same quarter in 2021. The gas utilities sector
revenue increased $86 million, or 32%, driven by
increased activity levels related to our customers' integrity
upgrade programs, smart meter programs and seasonal
demand. DIET sector sales
increased $66 million, or 46%,
from increased renewable biofuel projects and
additional turnaround projects and maintenance spending
for refining, mining and
chemical customers. Upstream production sector sales
increased by $36 million, or 44%, primarily due to increased
customer spending for well completions. Midstream pipeline
sector sales improved $10 million, or 13%, driven by new
gathering and processing infrastructure as a result of increased
production levels.
Sequentially, as compared to the
second quarter of 2022, U.S. sales increased $51 million,
or 7%, led by the gas
utilities sector, which increased $44 million,
or 14%, as customers continue to make progress on their
infrastructure projects. The DIET sector was up $11 million,
or 6% from biofuel projects, mining customer
spending, and turnaround maintenance for refining and
chemicals. U.S. upstream sales were up $1 million, or 1%, as
several customer projects shifted to the fourth
quarter.
Canada sales in the third quarter of
2022 were $37 million, up $7 million, or 23%,
from the same quarter in 2021, driven by the upstream
production sector as customers increased capital budgets.
Sequentially, as compared to the
prior quarter, Canada sales declined $3 million, or
8%, due to upstream production sector
seasonality.
International sales in the third quarter of
2022 were $99 million, up $14 million, or 16%,
from the same period in 2021 overcoming a $13 million
unfavorable impact from weaker foreign currencies. The
increase was driven by the DIET sector primarily in the
Netherlands, U.K. and New Zealand.
Sequentially, as compared to the previous
quarter, International sales increased $8 million, or 9%,
driven by the DIET sector, despite a $5 million
unfavorable impact from weaker foreign currencies. The DIET
sector increased in the U.K., the Netherlands and
New Zealand.
Sales by Sector
Gas utilities sector sales, which
are primarily U.S. based, were $359 million, in the
third quarter of 2022, or 40% of total sales, an
increase of $88 million, or 32%, from the
third quarter of 2021.
Sequentially, as compared to the second
quarter of 2022, the gas utilities sector grew
$45 million, or 14%, driven by the U.S. segment.
Downstream, industrial and energy transition
sector sales in the third quarter of 2022 were
$276 million, or 31% of total sales, an increase of
$79 million, or 40%, from the third quarter of 2021. The
increase in DIET sector sales was driven by the
U.S. segment followed by the International segment.
Sequentially, as compared to the previous
quarter, sales in the DIET sector were up $17 million, or 7%,
led by the U.S. followed closely by the International
segment.
Upstream production sector sales in the
third quarter of 2022 were $176 million, or
19% of total sales, an
improvement of $44 million, or 33%, from the
third quarter of 2021. The increase in upstream production
sales was led by the U.S. segment, followed by Canada and
International segments.
Sequentially, as compared to the prior quarter,
upstream production sector sales declined $2 million, or
1%, driven by the Canada segment.
Midstream pipeline sector sales, which
are primarily U.S. based, were $93 million, in the
third quarter of 2022, or 10% of total sales, an
increase of $8 million, or 9%, from the
third quarter of 2021.
Sequentially, as compared to the prior quarter,
midstream pipeline sector sales decreased $4 million, or 4%,
due to the timing of construction projects.
Backlog
As of September 30, 2022, the company's backlog
was $773 million, up 4% sequentially from June 30,
2022, and 49% since December 31, 2022. The U.S. backlog was
$576 million, up 65% since December 31, 2022 with all sectors
up double-digits including a 78% increase in the gas
utilities sector and a 75% increase in the upstream sector.
Balance Sheet and Cash Flow
Cash provided by operations was
$33 million in the third quarter of 2022. As
of September 30, 2022, the cash balance was
$29 million, long-term debt (including current portion)
was $341 million, and net debt was $312 million.
Availability under the company’s asset-based lending facility
was $612 million and available liquidity
was $641 million as of September 30, 2022.
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 third quarter 2022 results at 10:00 a.m.
Eastern Time (9:00 a.m. Central Time) on November 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 November 23, 2022,
and can be accessed by dialing 201-612-7415 and using pass
code 13730618#. 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 206 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, EBITDA margin. 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 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 |
MRC Global Inc.Condensed
Consolidated Balance Sheets (Unaudited)(in millions,
except shares)
|
|
September 30, |
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
29 |
|
|
$ |
48 |
|
Accounts receivable, net |
|
|
526 |
|
|
|
379 |
|
Inventories, net |
|
|
584 |
|
|
|
453 |
|
Other current assets |
|
|
30 |
|
|
|
19 |
|
Total current assets |
|
|
1,169 |
|
|
|
899 |
|
|
|
|
|
|
|
|
|
|
Long-term assets: |
|
|
|
|
|
|
|
|
Operating lease assets |
|
|
194 |
|
|
|
191 |
|
Property, plant and equipment, net |
|
|
83 |
|
|
|
91 |
|
Other assets |
|
|
23 |
|
|
|
22 |
|
|
|
|
|
|
|
|
|
|
Intangible assets: |
|
|
|
|
|
|
|
|
Goodwill, net |
|
|
264 |
|
|
|
264 |
|
Other intangible assets, net |
|
|
189 |
|
|
|
204 |
|
|
|
$ |
1,922 |
|
|
$ |
1,671 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
stockholders' equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Trade accounts payable |
|
$ |
479 |
|
|
$ |
321 |
|
Accrued expenses and other current liabilities |
|
|
96 |
|
|
|
80 |
|
Operating lease liabilities |
|
|
34 |
|
|
|
33 |
|
Current portion of long-term debt |
|
|
3 |
|
|
|
2 |
|
Total current liabilities |
|
|
612 |
|
|
|
436 |
|
|
|
|
|
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
|
|
|
|
Long-term debt, net |
|
|
338 |
|
|
|
295 |
|
Operating lease liabilities |
|
|
177 |
|
|
|
177 |
|
Deferred income taxes |
|
|
55 |
|
|
|
53 |
|
Other liabilities |
|
|
22 |
|
|
|
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, 107,819,492 and 107,284,171 issued, respectively |
|
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
|
1,754 |
|
|
|
1,747 |
|
Retained deficit |
|
|
(783 |
) |
|
|
(819 |
) |
Less: Treasury stock at cost: 24,216,330 shares |
|
|
(375 |
) |
|
|
(375 |
) |
Accumulated other comprehensive loss |
|
|
(234 |
) |
|
|
(231 |
) |
|
|
|
363 |
|
|
|
323 |
|
|
|
$ |
1,922 |
|
|
$ |
1,671 |
|
MRC Global Inc.Condensed
Consolidated Statements of Operations (Unaudited)(in
millions, except per share amounts)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
904 |
|
|
$ |
685 |
|
|
$ |
2,494 |
|
|
$ |
1,980 |
|
Cost of sales |
|
|
739 |
|
|
|
590 |
|
|
|
2,042 |
|
|
|
1,670 |
|
Gross profit |
|
|
165 |
|
|
|
95 |
|
|
|
452 |
|
|
|
310 |
|
Selling, general and
administrative expenses |
|
|
120 |
|
|
|
102 |
|
|
|
347 |
|
|
|
304 |
|
Operating income (loss) |
|
|
45 |
|
|
|
(7 |
) |
|
|
105 |
|
|
|
6 |
|
Other (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(6 |
) |
|
|
(6 |
) |
|
|
(17 |
) |
|
|
(18 |
) |
Other, net |
|
|
(5 |
) |
|
|
- |
|
|
|
(11 |
) |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes |
|
|
34 |
|
|
|
(13 |
) |
|
|
77 |
|
|
|
(11 |
) |
Income tax expense
(benefit) |
|
|
10 |
|
|
|
(2 |
) |
|
|
23 |
|
|
|
(1 |
) |
Net income (loss) |
|
|
24 |
|
|
|
(11 |
) |
|
|
54 |
|
|
|
(10 |
) |
Series A preferred stock
dividends |
|
|
6 |
|
|
|
6 |
|
|
|
18 |
|
|
|
18 |
|
Net income (loss) attributable
to common stockholders |
|
$ |
18 |
|
|
$ |
(17 |
) |
|
$ |
36 |
|
|
$ |
(28 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per
common share |
|
$ |
0.22 |
|
|
$ |
(0.21 |
) |
|
$ |
0.43 |
|
|
$ |
(0.34 |
) |
Diluted earnings (loss) per
common share |
|
$ |
0.21 |
|
|
$ |
(0.21 |
) |
|
$ |
0.42 |
|
|
$ |
(0.34 |
) |
Weighted-average common
shares, basic |
|
|
83.6 |
|
|
|
82.7 |
|
|
|
83.5 |
|
|
|
82.5 |
|
Weighted-average common
shares, diluted |
|
|
85.0 |
|
|
|
82.7 |
|
|
|
84.8 |
|
|
|
82.5 |
|
MRC Global Inc.Condensed
Consolidated Statements of Cash Flows (Unaudited)(in
millions)
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
Operating
activities |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
54 |
|
|
$ |
(10 |
) |
Adjustments to reconcile net
income (loss) to net cash (used in) provided by operations: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
14 |
|
|
|
14 |
|
Amortization of intangibles |
|
|
15 |
|
|
|
18 |
|
Equity-based compensation expense |
|
|
9 |
|
|
|
10 |
|
Deferred income tax benefit |
|
|
(1 |
) |
|
|
(7 |
) |
Amortization of debt issuance costs |
|
|
1 |
|
|
|
1 |
|
Increase in LIFO reserve |
|
|
50 |
|
|
|
47 |
|
Other |
|
|
12 |
|
|
|
3 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(159 |
) |
|
|
(81 |
) |
Inventories |
|
|
(197 |
) |
|
|
(15 |
) |
Other current assets |
|
|
(11 |
) |
|
|
(11 |
) |
Accounts payable |
|
|
165 |
|
|
|
68 |
|
Accrued expenses and other current liabilities |
|
|
18 |
|
|
|
(21 |
) |
Net cash (used in) provided by
operations |
|
|
(30 |
) |
|
|
16 |
|
|
|
|
|
|
|
|
|
|
Investing
activities |
|
|
|
|
|
|
|
|
Purchases of property, plant
and equipment |
|
|
(8 |
) |
|
|
(6 |
) |
Other investing
activities |
|
|
(2 |
) |
|
|
2 |
|
Net cash used in investing
activities |
|
|
(10 |
) |
|
|
(4 |
) |
|
|
|
|
|
|
|
|
|
Financing
activities |
|
|
|
|
|
|
|
|
Payments on revolving credit
facilities |
|
|
(523 |
) |
|
|
(262 |
) |
Proceeds from revolving credit
facilities |
|
|
569 |
|
|
|
290 |
|
Payments on long-term
obligations |
|
|
(2 |
) |
|
|
(87 |
) |
Debt issuance costs paid |
|
|
- |
|
|
|
(3 |
) |
Dividends paid on preferred
stock |
|
|
(18 |
) |
|
|
(18 |
) |
Repurchases of shares to
satisfy tax withholdings |
|
|
(2 |
) |
|
|
(2 |
) |
Net cash provided by (used in)
financing activities |
|
|
24 |
|
|
|
(82 |
) |
|
|
|
|
|
|
|
|
|
Decrease in cash |
|
|
(16 |
) |
|
|
(70 |
) |
Effect of foreign exchange
rate on cash |
|
|
(3 |
) |
|
|
(2 |
) |
Cash -- beginning of
period |
|
|
48 |
|
|
|
119 |
|
Cash -- end of period |
|
$ |
29 |
|
|
$ |
47 |
|
MRC Global
Inc.Supplemental Sales Information
(Unaudited)(in millions)
Disaggregated Sales by Segment and
Sector
Three Months Ended |
September 30, |
|
|
U.S. |
|
|
Canada |
|
|
International |
|
|
Total |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas utilities |
|
$ |
355 |
|
|
$ |
3 |
|
|
$ |
1 |
|
|
$ |
359 |
|
Downstream, industrial &
energy transition |
|
|
209 |
|
|
|
6 |
|
|
|
61 |
|
|
|
276 |
|
Upstream production |
|
|
118 |
|
|
|
25 |
|
|
|
33 |
|
|
|
176 |
|
Midstream pipeline |
|
|
86 |
|
|
|
3 |
|
|
|
4 |
|
|
|
93 |
|
|
|
$ |
768 |
|
|
$ |
37 |
|
|
$ |
99 |
|
|
$ |
904 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas utilities |
|
$ |
269 |
|
|
$ |
2 |
|
|
$ |
- |
|
|
$ |
271 |
|
Downstream, industrial &
energy transition |
|
|
143 |
|
|
|
6 |
|
|
|
48 |
|
|
|
197 |
|
Upstream production |
|
|
82 |
|
|
|
18 |
|
|
|
32 |
|
|
|
132 |
|
Midstream pipeline |
|
|
76 |
|
|
|
4 |
|
|
|
5 |
|
|
|
85 |
|
|
|
$ |
570 |
|
|
$ |
30 |
|
|
$ |
85 |
|
|
$ |
685 |
|
Nine Months Ended |
September 30, |
|
|
U.S. |
|
|
Canada |
|
|
International |
|
|
Total |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas utilities |
|
$ |
934 |
|
|
$ |
9 |
|
|
$ |
1 |
|
|
$ |
944 |
|
Downstream, industrial &
energy transition |
|
|
576 |
|
|
|
20 |
|
|
|
165 |
|
|
|
761 |
|
Upstream production |
|
|
336 |
|
|
|
83 |
|
|
|
93 |
|
|
|
512 |
|
Midstream pipeline |
|
|
257 |
|
|
|
8 |
|
|
|
12 |
|
|
|
277 |
|
|
|
$ |
2,103 |
|
|
$ |
120 |
|
|
$ |
271 |
|
|
$ |
2,494 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas utilities |
|
$ |
745 |
|
|
$ |
5 |
|
|
$ |
- |
|
|
$ |
750 |
|
Downstream, industrial &
energy transition |
|
|
417 |
|
|
|
15 |
|
|
|
150 |
|
|
|
582 |
|
Upstream production |
|
|
231 |
|
|
|
62 |
|
|
|
109 |
|
|
|
402 |
|
Midstream pipeline |
|
|
219 |
|
|
|
10 |
|
|
|
17 |
|
|
|
246 |
|
|
|
$ |
1,612 |
|
|
$ |
92 |
|
|
$ |
276 |
|
|
$ |
1,980 |
|
MRC Global
Inc.Supplemental Sales Information
(Unaudited)(in millions)
Sales by Product Line
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
Type |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Line pipe |
|
$ |
173 |
|
|
$ |
103 |
|
|
$ |
417 |
|
|
$ |
268 |
|
Carbon fittings and
flanges |
|
|
119 |
|
|
|
96 |
|
|
|
335 |
|
|
|
269 |
|
Total carbon pipe, fittings
and flanges |
|
|
292 |
|
|
|
199 |
|
|
|
752 |
|
|
|
537 |
|
Valves, automation,
measurement and instrumentation |
|
|
290 |
|
|
|
230 |
|
|
|
821 |
|
|
|
714 |
|
Gas products |
|
|
205 |
|
|
|
169 |
|
|
|
587 |
|
|
|
465 |
|
Stainless steel and alloy pipe
and fittings |
|
|
53 |
|
|
|
35 |
|
|
|
147 |
|
|
|
100 |
|
General products |
|
|
64 |
|
|
|
52 |
|
|
|
187 |
|
|
|
164 |
|
|
|
$ |
904 |
|
|
$ |
685 |
|
|
$ |
2,494 |
|
|
$ |
1,980 |
|
MRC Global
Inc.Supplemental Information
(Unaudited)Reconciliation of Gross Profit to
Adjusted Gross Profit (a non-GAAP measure)(in
millions)
|
|
Three Months Ended |
|
|
|
|
September 30,2022 |
|
|
|
Percentageof Revenue* |
|
|
|
September 30,2021 |
|
|
|
Percentageof Revenue* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit, as reported |
|
$ |
165 |
|
|
|
18.3 |
% |
|
$ |
95 |
|
|
|
13.9 |
% |
Depreciation and
amortization |
|
|
5 |
|
|
|
0.6 |
% |
|
|
4 |
|
|
|
0.6 |
% |
Amortization of
intangibles |
|
|
4 |
|
|
|
0.4 |
% |
|
|
6 |
|
|
|
0.9 |
% |
Increase in LIFO reserve |
|
|
24 |
|
|
|
2.7 |
% |
|
|
32 |
|
|
|
4.7 |
% |
Adjusted Gross Profit |
|
$ |
198 |
|
|
|
21.9 |
% |
|
$ |
137 |
|
|
|
20.0 |
% |
|
|
Nine Months Ended |
|
|
|
September 30,2022 |
|
|
Percentageof Revenue |
|
|
September 30,2021 |
|
|
Percentageof Revenue* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit, as reported |
|
$ |
452 |
|
|
|
18.1 |
% |
|
$ |
310 |
|
|
|
15.7 |
% |
Depreciation and
amortization |
|
|
14 |
|
|
|
0.6 |
% |
|
|
14 |
|
|
|
0.7 |
% |
Amortization of
intangibles |
|
|
15 |
|
|
|
0.6 |
% |
|
|
18 |
|
|
|
0.9 |
% |
Increase in LIFO reserve |
|
|
50 |
|
|
|
2.0 |
% |
|
|
47 |
|
|
|
2.4 |
% |
Adjusted Gross Profit |
|
$ |
531 |
|
|
|
21.3 |
% |
|
$ |
389 |
|
|
|
19.6 |
% |
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.
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 |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
$ |
120 |
|
|
$ |
102 |
|
|
$ |
347 |
|
|
$ |
304 |
|
Facility closures (1) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1 |
) |
Employee separation (2) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2 |
) |
Adjusted Selling, general and
administrative expenses |
|
$ |
120 |
|
|
$ |
102 |
|
|
$ |
347 |
|
|
$ |
301 |
|
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.
MRC Global
Inc.Supplemental Information
(Unaudited)Reconciliation of Net Income to
Adjusted EBITDA (a non-GAAP measure)(in millions)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
24 |
|
|
$ |
(11 |
) |
|
$ |
54 |
|
|
$ |
(10 |
) |
Income tax expense
(benefit) |
|
|
10 |
|
|
|
(2 |
) |
|
|
23 |
|
|
|
(1 |
) |
Interest expense |
|
|
6 |
|
|
|
6 |
|
|
|
17 |
|
|
|
18 |
|
Depreciation and
amortization |
|
|
5 |
|
|
|
4 |
|
|
|
14 |
|
|
|
14 |
|
Amortization of
intangibles |
|
|
4 |
|
|
|
6 |
|
|
|
15 |
|
|
|
18 |
|
Employee separation (1) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1 |
|
Increase in LIFO reserve |
|
|
24 |
|
|
|
32 |
|
|
|
50 |
|
|
|
47 |
|
Equity-based compensation
expense (2) |
|
|
3 |
|
|
|
3 |
|
|
|
9 |
|
|
|
10 |
|
Foreign currency losses |
|
|
6 |
|
|
|
1 |
|
|
|
13 |
|
|
|
2 |
|
Adjusted EBITDA |
|
$ |
82 |
|
|
$ |
39 |
|
|
$ |
195 |
|
|
$ |
99 |
|
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. |
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.
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)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, 2022 |
|
|
September 30, 2022 |
|
|
|
Amount |
|
|
Per Share |
|
|
Amount |
|
|
Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
common stockholders |
|
$ |
18 |
|
|
$ |
0.21 |
|
|
$ |
36 |
|
|
$ |
0.42 |
|
Increase in LIFO reserve, net
of tax |
|
|
18 |
|
|
|
0.21 |
|
|
|
38 |
|
|
|
0.45 |
|
Adjusted net income
attributable to common stockholders |
|
$ |
36 |
|
|
$ |
0.42 |
|
|
$ |
74 |
|
|
$ |
0.87 |
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, 2021 |
|
|
September 30, 2021 |
|
|
|
Amount |
|
|
Per Share |
|
|
Amount |
|
|
Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to
common stockholders |
|
$ |
(17 |
) |
|
$ |
(0.21 |
) |
|
$ |
(28 |
) |
|
$ |
(0.34 |
) |
Increase in LIFO reserve, net
of tax |
|
|
25 |
|
|
|
0.30 |
|
|
|
36 |
|
|
|
0.43 |
|
Adjusted net income
attributable to common stockholders |
|
$ |
8 |
|
|
$ |
0.09 |
|
|
$ |
8 |
|
|
$ |
0.09 |
|
Notes to above:
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 U.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.
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)
|
|
September 30, |
|
|
|
2022 |
|
|
|
|
|
|
Long-term debt, net |
|
$ |
338 |
|
Plus: current portion of
long-term debt |
|
|
3 |
|
Long-term debt |
|
|
341 |
|
Less: cash |
|
|
29 |
|
Net Debt |
|
$ |
312 |
|
|
|
|
|
|
Net Debt |
|
$ |
312 |
|
Trailing twelve months
adjusted EBITDA |
|
|
242 |
|
Leverage ratio |
|
|
1.3 |
|
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.
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