MRC Global Inc. (NYSE: MRC), the leading global
distributor of pipe, valves and fittings (PVF) and other
infrastructure products and services to diversified gas utility,
energy and industrial end-markets, today reported full
year and fourth quarter 2022 results.
Net income attributable to common
stockholders for the fourth quarter of 2022 was $15 million,
or $0.18 per diluted share, as compared to a net loss
of ($10) million, or ($0.12) per diluted share in the
fourth quarter of 2021. Net income attributable to common
stockholders for 2022 was $51 million, or $0.60 per
diluted share as compared to a net loss attributable to common
stockholders of ($38) million, or ($0.46) per diluted
share in 2021. Adjusted net income attributable to common
stockholders for the fourth quarter of 2022 was $27
million, or $0.32 per diluted share, as compared to an
adjusted net income of $14 million, or $0.18 per diluted
share in the fourth quarter of 2021. Adjusted net income
attributable to common stockholders for 2022 was $101 million,
or $1.19 per diluted share as compared to $22 million, or
$0.27 per diluted share in 2021.
MRC Global’s fourth quarter 2022 gross profit
was $158 million, or 18.2% of sales, as compared to
gross profit of $107 million, or 15.6% of sales, in the
fourth quarter of 2021. Gross profit for the fourth quarter of 2022
and 2021 each reflect expense of $16 million and
$30 million, respectively, 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 these items, as
well as others, was 21.2% in the fourth quarter
of 2022 and 21.6% in the fourth quarter
of 2021.
Results for the full year and fourth quarter
2022 demonstrate strong growth over the prior year:
Full Year 2022 Financial
Highlights:
- Sales of $3,363 million, an increase of 26% compared
to 2021
- Revenue for each end-market sector increased by
double-digits over 2021
- Adjusted EBITDA of $261 million, 7.8% of sales, a
230-basis point improvement over the prior year
- Adjusted Gross Profit, as a percentage of
sales, of 21.3%, an MRC Global record for the full
year
- Leverage ratio of 1.2x, the lowest leverage in MRC Global
history
Fourth Quarter 2022 Financial
Highlights:
- Sales of $869 million, an increase
of 27% compared to the same quarter of 2021
- Adjusted EBITDA of $66 million, 7.6% of sales, a
70-basis point improvement over the prior year
- Adjusted Gross Profit, as a percentage of sales, of 21.2%,
third consecutive quarter exceeding 21%
- Cash flow provided by operations of $10 million during the
fourth quarter, for a total of $43 million in the second half of
2022
Rob Saltiel, MRC Global’s President and Chief
Executive Officer, commented, “We had a strong finish to 2022, with
fourth quarter revenue consistent with our previous guidance and
ahead of the normal seasonal decline. Our full year 2022
performance was exceptional and benefitted greatly from our growth
and diversification strategy that emphasized our upstream,
chemicals and energy transition end-markets, all of which
outperformed our expectations. Two of our business sectors, Gas
Utilities and DIET, exceeded $1 billion in sales, and we increased
our company adjusted EBITDA margins to multi-year highs through
improved commercial focus and cost discipline. I am proud of the
entire MRC Global team for achieving these outstanding
results.
"We maintain our positive outlook for 2023 with
solid fundamentals anticipated for each of our business sectors and
geographic segments. We reaffirm our previous 2023 guidance
targeting double-digit revenue growth and adjusted EBITDA margins
to exceed 8%. We are increasing our guidance for expected
cash flow from operations in 2023 to now exceed $120 million, up
from $100 million previously. We are excited about the bright
future of MRC Global and the continued growth of our business,” Mr.
Saltiel added.
Adjusted EBITDA, Adjusted EBITDA margin,
Adjusted Gross Profit, Adjusted Net Income, 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 $123 million, or 14.2% of sales, for the
fourth quarter of 2022 compared to $106 million, or
15.5% of sales, for the same period of 2021. Adjusted SG&A
expense for the fourth quarter
of 2022 and 2021 was $122 million, or 14.0% of
sales and $105 million, or 15.3% of sales, respectively. Both
periods exclude $1 million of pre-tax severance and
restructuring costs.
For the three months ended December 31, 2022,
income tax expense was $12 million with an
effective rate of 36%. 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. For the three months ended December
31, 2021, income tax expense was $1 million on a
($3) million pre-tax loss due primarily to tax expense in a
foreign jurisdiction related to a provision for a valuation
allowance on certain deferred tax assets.
Adjusted EBITDA was $66 million in the
fourth quarter of 2022 compared to $47 million for the same
period in 2021. Please refer to the reconciliation of non-GAAP
measures (adjusted EBITDA) to GAAP measures (net income) in this
release.
Sales
The company’s sales were $869 million for
the fourth quarter of 2022, a 4% seasonal decline from the third
quarter of 2022 and 27% higher than the fourth
quarter of 2021. Sequential sales were in-line with expectations
and improved over historical seasonal trends. This improvement
was driven by strong activity levels in the Upstream Production and
Midstream Pipeline sectors. As compared to the fourth
quarter of 2021, double-digit sales increases across all
sectors and all segments drove the growth.
Sales by Segment
U.S. sales in the fourth quarter of 2022 were
$720 million, a $154 million, or 27%, increase from the
same quarter in 2021. Gas Utilities sector sales were up
$63 million, or 25%, as a result of safety related
modernization and emission reduction programs in conjunction
with continued infrastructure improvement
projects. Downstream, Industrial and Energy Transition (DIET)
sector sales improved by $39 million, or 27%, due to an
increase in LNG and biofuels projects and turnaround and
maintenance activity for mining and
refining customers. Upstream Production sector sales
increased $32 million, or 36%, due to increased well
completion activity by our major customers and new customer market
share gains. Midstream Pipeline sector sales increased
$20 million, or 24%, due to an increased demand for line pipe
and valves for projects.
Sequentially, as compared to the third quarter
of 2022, U.S. sales decreased $48 million, or 6%. The Gas Utilities
sector experienced a $42 million, or 12%, decline from a
seasonal reduction in customer spending, and the DIET sector
declined $27 million, or 13%, due to the conclusion of various
Energy Transition projects and turnarounds. This was partially
offset by a sales increase in our Midstream Pipeline
sector of $17 million, or 20%, due to line pipe and valve sales for
various customers. Sales to upstream customers also increased $4
million, or 3%, due primarily to increased activity levels in
the Permian Basin.
Canada sales in the fourth quarter of 2022
were $46 million, up $6 million, or 15%, from the same
quarter in 2021 driven by the Upstream Production sector from
improved customer activity levels and line pipe sales.
Sequentially, as compared to the third quarter of 2022,
Canada sales increased $9 million, or 24%, also due primarily to
increased upstream customer activity levels and line pipe
sales.
International sales in the fourth quarter of 2022 were $103
million, up $23 million, or 29%, from the same period in 2021
driven primarily by the Upstream Production sector for increased
activity in the North Sea and the DIET sector for energy
transition projects, partially offset by the unfavorable impact of
weaker foreign currencies of $12 million.
Sequentially, as compared to the third
quarter of 2022, International sales increased $4 million, or
4%, driven primarily by the Upstream Production sector. The impact
of foreign currencies was immaterial.
Sales by Sector
Gas Utilities sales in the fourth quarter
of 2022 were $319 million, or 37% of total sales,
up $61 million, or 24%, from the fourth quarter of 2021
driven by the U.S. segment.
Sequentially, as compared to the third quarter
of 2022, Gas Utilities sales declined $40 million, or 11%,
driven by the U.S. segment.
DIET sales in the fourth quarter of 2022
were $248 million, or 29% of total sales,
up $47 million, or 23%, from the fourth quarter of 2021
driven by the U.S. segment.
Sequentially, as compared to the third
quarter of 2022, DIET sales decreased $28 million, or
10%, driven by the U.S. segment.
Upstream Production sales in the fourth quarter
of 2022 were $195 million, or 22% of total sales,
up $55 million, or 39%, from the fourth quarter of 2021.
Upstream Production sales were higher as a result of double-digit
growth in each segment driven by increased customer
activity levels.
Sequentially, as compared to the third
quarter of 2022, Upstream Production sales increased
$19 million, or 11%, driven by the Canada, International and
U.S. segments, respectively.
Midstream Pipeline sales in the fourth
quarter of 2022 were $107 million, or 12% of total sales,
up $20 million, or 23%, from the fourth quarter of
2021 driven by the U.S. segment.
Sequentially, as compared to the third
quarter of 2022, Midstream Pipeline sales increased $14 million, or
15%, driven by the U.S. segment.
Balance Sheet and Cash Flow
As of December 31, 2022, the cash
balance was $32 million, long-term debt (including
current portion) was $340 million and net
debt was $308 million. Cash provided by operations
was $10 million in the fourth quarter of 2022 resulting
in ($20) million of cash used by operations for the
full year 2022. Availability under the company’s
asset-based lending facility was $606 million and liquidity
was $638 million as of December 31, 2022. Please refer to the
reconciliation of non-GAAP (net debt) to GAAP measures (long-term
debt, net) in this release.
Conference Call
The company will hold a conference call to
discuss its fourth quarter and full year 2022 results at 10:00
a.m. Eastern Time (9:00 a.m. Central Time) on February 14, 2023. 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 “Investors” page of the company’s website at least fifteen
minutes early to register, download and install any necessary audio
software. For those who cannot listen to the live call, a replay
will be available through February 28, 2023, and can be
accessed by dialing 201-612-7415 and using passcode 13734820#.
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 energy and industrial 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
212 locations including valve and engineering centers. The
company’s unmatched quality assurance program offers over 250,000
SKUs from over 9,000 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,” “look 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 capital and other expenditure levels in
the industries that the company serves; U.S. and international
general economic conditions; geopolitical events; 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 "Investors" 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)
|
|
December 31, |
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
32 |
|
|
$ |
48 |
|
Accounts receivable, net |
|
|
501 |
|
|
|
379 |
|
Inventories, net |
|
|
578 |
|
|
|
453 |
|
Other current assets |
|
|
31 |
|
|
|
19 |
|
Total current assets |
|
|
1,142 |
|
|
|
899 |
|
|
|
|
|
|
|
|
|
|
Long-term assets: |
|
|
|
|
|
|
|
|
Operating lease assets |
|
|
202 |
|
|
|
191 |
|
Property, plant and equipment, net |
|
|
82 |
|
|
|
91 |
|
Other assets |
|
|
22 |
|
|
|
22 |
|
|
|
|
|
|
|
|
|
|
Intangible assets: |
|
|
|
|
|
|
|
|
Goodwill, net |
|
|
264 |
|
|
|
264 |
|
Other intangible assets, net |
|
|
183 |
|
|
|
204 |
|
|
|
$ |
1,895 |
|
|
$ |
1,671 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
stockholders' equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Trade accounts payable |
|
$ |
410 |
|
|
$ |
321 |
|
Accrued expenses and other current liabilities |
|
|
115 |
|
|
|
80 |
|
Operating lease liabilities |
|
|
36 |
|
|
|
33 |
|
Current portion of long-term debt |
|
|
3 |
|
|
|
2 |
|
Total current liabilities |
|
|
564 |
|
|
|
436 |
|
|
|
|
|
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
|
|
|
|
Long-term debt, net |
|
|
337 |
|
|
|
295 |
|
Operating lease liabilities |
|
|
182 |
|
|
|
177 |
|
Deferred income taxes |
|
|
49 |
|
|
|
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, 107,864,421 and 107,284,171 issued, respectively |
|
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
|
1,758 |
|
|
|
1,747 |
|
Retained deficit |
|
|
(768 |
) |
|
|
(819 |
) |
Treasury stock at cost: 24,216,330 shares |
|
|
(375 |
) |
|
|
(375 |
) |
Accumulated other comprehensive loss |
|
|
(230 |
) |
|
|
(231 |
) |
|
|
|
386 |
|
|
|
323 |
|
|
|
$ |
1,895 |
|
|
$ |
1,671 |
|
MRC Global Inc.Condensed
Consolidated Statements of Operations (Unaudited)(in
millions, except per share amounts)
|
|
Three Months Ended |
|
|
Year Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
869 |
|
|
$ |
686 |
|
|
$ |
3,363 |
|
|
$ |
2,666 |
|
Cost of sales |
|
|
711 |
|
|
|
579 |
|
|
|
2,753 |
|
|
|
2,249 |
|
Gross profit |
|
|
158 |
|
|
|
107 |
|
|
|
610 |
|
|
|
417 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
|
123 |
|
|
|
106 |
|
|
|
470 |
|
|
|
410 |
|
Operating income |
|
|
35 |
|
|
|
1 |
|
|
|
140 |
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(7 |
) |
|
|
(5 |
) |
|
|
(24 |
) |
|
|
(23 |
) |
Other, net |
|
|
5 |
|
|
|
1 |
|
|
|
(6 |
) |
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes |
|
|
33 |
|
|
|
(3 |
) |
|
|
110 |
|
|
|
(14 |
) |
Income tax expense |
|
|
12 |
|
|
|
1 |
|
|
|
35 |
|
|
|
- |
|
Net income (loss) |
|
|
21 |
|
|
|
(4 |
) |
|
|
75 |
|
|
|
(14 |
) |
Series A preferred stock
dividends |
|
|
6 |
|
|
|
6 |
|
|
|
24 |
|
|
|
24 |
|
Net income (loss) attributable
to common stockholders |
|
$ |
15 |
|
|
$ |
(10 |
) |
|
$ |
51 |
|
|
$ |
(38 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per
common share |
|
$ |
0.18 |
|
|
$ |
(0.12 |
) |
|
$ |
0.61 |
|
|
$ |
(0.46 |
) |
Diluted earnings (loss) per
common share |
|
$ |
0.18 |
|
|
$ |
(0.12 |
) |
|
$ |
0.60 |
|
|
$ |
(0.46 |
) |
Weighted-average common
shares, basic |
|
|
83.6 |
|
|
|
82.5 |
|
|
|
83.5 |
|
|
|
82.5 |
|
Weighted-average common
shares, diluted |
|
|
85.3 |
|
|
|
82.5 |
|
|
|
84.9 |
|
|
|
82.5 |
|
MRC Global Inc.Condensed
Consolidated Statements of Cash Flows (Unaudited)(in
millions)
|
|
Year Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
Operating
activities |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
75 |
|
|
$ |
(14 |
) |
Adjustments to reconcile net
income (loss) to net cash (used in) provided by operations: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
18 |
|
|
|
19 |
|
Amortization of intangibles |
|
|
21 |
|
|
|
24 |
|
Equity-based compensation expense |
|
|
13 |
|
|
|
12 |
|
Deferred income tax benefit |
|
|
(7 |
) |
|
|
(15 |
) |
Amortization of debt issuance costs |
|
|
1 |
|
|
|
2 |
|
Increase in LIFO reserve |
|
|
66 |
|
|
|
77 |
|
Provision for credit losses |
|
|
- |
|
|
|
(1 |
) |
Other non-cash items |
|
|
3 |
|
|
|
- |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(128 |
) |
|
|
(61 |
) |
Inventories |
|
|
(196 |
) |
|
|
(27 |
) |
Other current assets |
|
|
(9 |
) |
|
|
(2 |
) |
Accounts payable |
|
|
90 |
|
|
|
60 |
|
Accrued expenses and other current liabilities |
|
|
33 |
|
|
|
(18 |
) |
Net cash (used in) provided by
operations |
|
|
(20 |
) |
|
|
56 |
|
|
|
|
|
|
|
|
|
|
Investing
activities |
|
|
|
|
|
|
|
|
Purchases of property, plant
and equipment |
|
|
(11 |
) |
|
|
(10 |
) |
Proceeds from the disposition
of property, plant and equipment |
|
|
- |
|
|
|
3 |
|
Net cash (used in) investing
activities |
|
|
(11 |
) |
|
|
(7 |
) |
|
|
|
|
|
|
|
|
|
Financing
activities |
|
|
|
|
|
|
|
|
Payments on revolving credit
facilities |
|
|
(779 |
) |
|
|
(389 |
) |
Proceeds from revolving credit
facilities |
|
|
824 |
|
|
|
389 |
|
Payments on long-term
obligations |
|
|
(2 |
) |
|
|
(87 |
) |
Debt issuance costs paid |
|
|
- |
|
|
|
(3 |
) |
Dividends paid on preferred
stock |
|
|
(24 |
) |
|
|
(24 |
) |
Repurchases of shares to
satisfy tax withholdings |
|
|
(2 |
) |
|
|
(4 |
) |
Net cash provided by (used in)
financing activities |
|
|
17 |
|
|
|
(118 |
) |
|
|
|
|
|
|
|
|
|
Decrease in cash |
|
|
(14 |
) |
|
|
(69 |
) |
Effect of foreign exchange
rate on cash |
|
|
(2 |
) |
|
|
(2 |
) |
Cash beginning of year |
|
|
48 |
|
|
|
119 |
|
Cash end of year |
|
$ |
32 |
|
|
$ |
48 |
|
MRC Global
Inc.Supplemental Sales Information
(Unaudited)(in millions)
Disaggregated Sales by Segment and
Sector
Three Months Ended |
December 31, |
|
|
|
U.S. |
|
|
Canada |
|
|
International |
|
|
Total |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas Utilities |
|
$ |
313 |
|
|
$ |
6 |
|
|
$ |
- |
|
|
$ |
319 |
|
Downstream, Industrial &
Energy Transition |
|
|
182 |
|
|
|
5 |
|
|
|
61 |
|
|
|
248 |
|
Upstream Production |
|
|
122 |
|
|
|
34 |
|
|
|
39 |
|
|
|
195 |
|
Midstream Pipeline |
|
|
103 |
|
|
|
1 |
|
|
|
3 |
|
|
|
107 |
|
|
|
$ |
720 |
|
|
$ |
46 |
|
|
$ |
103 |
|
|
$ |
869 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas Utilities |
|
$ |
250 |
|
|
$ |
8 |
|
|
$ |
- |
|
|
$ |
258 |
|
Downstream, Industrial &
Energy Transition |
|
|
143 |
|
|
|
5 |
|
|
|
53 |
|
|
|
201 |
|
Upstream Production |
|
|
90 |
|
|
|
26 |
|
|
|
24 |
|
|
|
140 |
|
Midstream Pipeline |
|
|
83 |
|
|
|
1 |
|
|
|
3 |
|
|
|
87 |
|
|
|
$ |
566 |
|
|
$ |
40 |
|
|
$ |
80 |
|
|
$ |
686 |
|
|
|
U.S. |
|
|
Canada |
|
|
International |
|
|
Total |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas Utilities |
|
$ |
1,247 |
|
|
$ |
15 |
|
|
$ |
1 |
|
|
$ |
1,263 |
|
Downstream, Industrial &
Energy Transition |
|
|
758 |
|
|
|
25 |
|
|
|
226 |
|
|
|
1,009 |
|
Upstream Production |
|
|
458 |
|
|
|
117 |
|
|
|
132 |
|
|
|
707 |
|
Midstream Pipeline |
|
|
360 |
|
|
|
9 |
|
|
|
15 |
|
|
|
384 |
|
|
|
$ |
2,823 |
|
|
$ |
166 |
|
|
$ |
374 |
|
|
$ |
3,363 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas Utilities |
|
$ |
995 |
|
|
$ |
13 |
|
|
$ |
- |
|
|
$ |
1,008 |
|
Downstream, Industrial &
Energy Transition |
|
|
560 |
|
|
|
20 |
|
|
|
203 |
|
|
|
783 |
|
Upstream Production |
|
|
321 |
|
|
|
88 |
|
|
|
133 |
|
|
|
542 |
|
Midstream Pipeline |
|
|
302 |
|
|
|
11 |
|
|
|
20 |
|
|
|
333 |
|
|
|
$ |
2,178 |
|
|
$ |
132 |
|
|
$ |
356 |
|
|
$ |
2,666 |
|
MRC Global
Inc.Supplemental Sales Information
(Unaudited)(in millions)
Sales by Product Line
|
|
Three Months Ended |
|
|
Year Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
Type |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Line pipe |
|
$ |
172 |
|
|
$ |
113 |
|
|
$ |
589 |
|
|
$ |
381 |
|
Carbon fittings and
flanges |
|
|
106 |
|
|
|
89 |
|
|
|
441 |
|
|
|
358 |
|
Total carbon pipe, fittings and flanges |
|
|
278 |
|
|
|
202 |
|
|
|
1,030 |
|
|
|
739 |
|
Valves, automation,
measurement and instrumentation |
|
|
290 |
|
|
|
233 |
|
|
|
1,111 |
|
|
|
947 |
|
Gas products |
|
|
191 |
|
|
|
164 |
|
|
|
778 |
|
|
|
629 |
|
Stainless steel and alloy pipe
and fittings |
|
|
33 |
|
|
|
31 |
|
|
|
180 |
|
|
|
131 |
|
General products |
|
|
77 |
|
|
|
56 |
|
|
|
264 |
|
|
|
220 |
|
|
|
$ |
869 |
|
|
$ |
686 |
|
|
$ |
3,363 |
|
|
$ |
2,666 |
|
MRC Global
Inc.Supplemental Information
(Unaudited)Reconciliation of Gross Profit to
Adjusted Gross Profit (a non-GAAP measure)(in
millions)
|
|
Three Months Ended |
|
|
|
December 31, |
|
|
Percentage |
|
|
December 31, |
|
|
Percentage |
|
|
|
2022 |
|
|
of Revenue |
|
|
2021 |
|
|
of Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit, as reported |
|
$ |
158 |
|
|
|
18.2 |
% |
|
$ |
107 |
|
|
|
15.6 |
% |
Depreciation and
amortization |
|
|
4 |
|
|
|
0.5 |
% |
|
|
5 |
|
|
|
0.7 |
% |
Amortization of
intangibles |
|
|
6 |
|
|
|
0.7 |
% |
|
|
6 |
|
|
|
0.9 |
% |
Increase in LIFO reserve |
|
|
16 |
|
|
|
1.8 |
% |
|
|
30 |
|
|
|
4.4 |
% |
Adjusted Gross Profit |
|
$ |
184 |
|
|
|
21.2 |
% |
|
$ |
148 |
|
|
|
21.6 |
% |
|
|
Year Ended |
|
|
|
December 31, |
|
|
Percentage |
|
|
December 31, |
|
|
Percentage |
|
|
|
2022 |
|
|
of Revenue* |
|
|
2021 |
|
|
of Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit, as reported |
|
$ |
610 |
|
|
|
18.1 |
% |
|
$ |
417 |
|
|
|
15.6 |
% |
Depreciation and
amortization |
|
|
18 |
|
|
|
0.5 |
% |
|
|
19 |
|
|
|
0.7 |
% |
Amortization of
intangibles |
|
|
21 |
|
|
|
0.6 |
% |
|
|
24 |
|
|
|
0.9 |
% |
Increase in LIFO reserve |
|
|
66 |
|
|
|
2.0 |
% |
|
|
77 |
|
|
|
2.9 |
% |
Adjusted Gross Profit |
|
$ |
715 |
|
|
|
21.3 |
% |
|
$ |
537 |
|
|
|
20.1 |
% |
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 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 |
|
|
Year Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
$ |
123 |
|
|
$ |
106 |
|
|
$ |
470 |
|
|
$ |
410 |
|
Severance and restructuring
(1) |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
Facility closures (2) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1 |
) |
Employee separation (3) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2 |
) |
Adjusted Selling, general and
administrative expenses |
|
$ |
122 |
|
|
$ |
105 |
|
|
$ |
469 |
|
|
$ |
406 |
|
Notes to above:
(1 |
) |
Employee severance and restructuring charges (pre-tax),
primarily in the U.S. |
(2 |
) |
In 2021, charges (pre-tax) of $1 million associated with the exit
of the Korea business were recorded in the International
segment. |
(3 |
) |
Charges (pre-tax) related to employee separation, of which $1
million is non-cash equity-based compensation. |
The company defines adjusted selling, general
and administrative (SG&A) expenses as SG&A, less
severance and restructuring expenses, 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. 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 (Loss) to
Adjusted EBITDA (a non-GAAP measure)(in millions)
|
|
Three Months Ended |
|
|
Year Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
21 |
|
|
$ |
(4 |
) |
|
$ |
75 |
|
|
$ |
(14 |
) |
Income tax expense |
|
|
12 |
|
|
|
1 |
|
|
|
35 |
|
|
|
- |
|
Interest expense |
|
|
7 |
|
|
|
5 |
|
|
|
24 |
|
|
|
23 |
|
Depreciation and
amortization |
|
|
4 |
|
|
|
5 |
|
|
|
18 |
|
|
|
19 |
|
Amortization of
intangibles |
|
|
6 |
|
|
|
6 |
|
|
|
21 |
|
|
|
24 |
|
Facility closures (1) |
|
|
- |
|
|
|
1 |
|
|
|
- |
|
|
|
1 |
|
Severance and restructuring
(2) |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
Employee separation (3) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1 |
|
Increase in LIFO reserve |
|
|
16 |
|
|
|
30 |
|
|
|
66 |
|
|
|
77 |
|
Equity-based compensation
expense (4) |
|
|
4 |
|
|
|
2 |
|
|
|
13 |
|
|
|
12 |
|
Foreign currency (gains)
losses |
|
|
(5 |
) |
|
|
- |
|
|
|
8 |
|
|
|
2 |
|
Adjusted EBITDA |
|
$ |
66 |
|
|
$ |
47 |
|
|
$ |
261 |
|
|
$ |
146 |
|
Notes to above:
(1 |
) |
In the fourth quarter of 2021, charges (pre-tax) of $1 million
associated with the exit of the Kazakhstan business were recorded
in the International segment. In 2021, charges (pre-tax) of $1
million associated with the exit of the Korea and Kazakhstan
businesses partially offset by a gain on the sale of a facility all
recorded in the International segment. |
(2 |
) |
Employee severance and restructuring charges (pre-tax),
primarily in the U.S. |
(3 |
) |
Charges (pre-tax) recorded in SG&A. $2 million relates to
employee separation, of which, $1 million is recorded in
equity-based compensation expense. |
(4 |
) |
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
and asset impairments, including inventory) and plus or minus the
impact of its LIFO inventory costing methodology. The company
presents adjusted EBITDA because the company believes adjusted
EBITDA is a useful indicator of the company’s operating
performance. Among other things, adjusted EBITDA measures the
company’s operating performance without regard to certain
non-recurring, non-cash or transaction-related expenses. adjusted
EBITDA, however, does not represent and should not be considered as
an alternative to net income, cash flow from operations or any
other measure of financial performance calculated and presented in
accordance with GAAP. Because adjusted EBITDA does not account for
certain expenses, its utility as a measure of the company’s
operating performance has material limitations. Because of these
limitations, the company does not view adjusted EBITDA in isolation
or as a primary performance measure and also uses other measures,
such as net income and sales, to measure operating performance. See
the company's Annual Report filed on Form 10-K for a more thorough
discussion of the use of adjusted EBITDA. Reconciling the
company's adjusted EBITDA 2023 target is not reasonably
possible as the impact from inflation or deflation on indices used
to calculate LIFO is not possible to reasonably predict.
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)
|
|
December 31, 2022 |
|
|
|
Three Months Ended |
|
|
Year Ended |
|
|
|
Amount |
|
|
Per Share |
|
|
Amount |
|
|
Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
common stockholders |
|
$ |
15 |
|
|
$ |
0.18 |
|
|
$ |
51 |
|
|
$ |
0.60 |
|
Increase in LIFO reserve, net
of tax |
|
|
12 |
|
|
|
0.14 |
|
|
|
50 |
|
|
|
0.59 |
|
Adjusted net income
attributable to common stockholders |
|
$ |
27 |
|
|
$ |
0.32 |
|
|
$ |
101 |
|
|
$ |
1.19 |
|
|
|
December 31, 2021 |
|
|
|
Three Months Ended |
|
|
Year Ended |
|
|
|
Amount |
|
|
Per Share* |
|
|
Amount |
|
|
Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to
common stockholders |
|
$ |
(10 |
) |
|
$ |
(0.12 |
) |
|
$ |
(38 |
) |
|
$ |
(0.46 |
) |
Facility closures, net of tax
(1) |
|
|
1 |
|
|
|
0.01 |
|
|
|
1 |
|
|
|
0.01 |
|
Severance and restructuring,
net of tax (2) |
|
|
1 |
|
|
|
0.01 |
|
|
|
1 |
|
|
|
0.01 |
|
Increase in LIFO reserve, net
of tax |
|
|
22 |
|
|
|
0.27 |
|
|
|
58 |
|
|
|
0.71 |
|
Adjusted net income
attributable to common stockholders |
|
$ |
14 |
|
|
$ |
0.18 |
|
|
$ |
22 |
|
|
$ |
0.27 |
|
Notes to above:*Does not foot due to
rounding
(1 |
) |
In the fourth quarter of 2021, charges (after-tax) of $1 million
associated with the exit of the Kazakhstan business were recorded
in the International segment. In 2021, charges (after-tax) of $1
million associated with the exit of the Korea and Kazakhstan
businesses partially offset by a gain on the sale of a facility all
recorded in the International segment. |
(2 |
) |
Employee severance and restructuring charges (after-tax),
primarily in the U.S. |
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)
|
|
December 31, |
|
|
|
2022 |
|
|
|
|
|
|
Long-term debt, net |
|
$ |
337 |
|
Plus: current portion of
long-term debt |
|
|
3 |
|
Long-term debt |
|
|
340 |
|
Less: cash |
|
|
32 |
|
Net Debt |
|
$ |
308 |
|
|
|
|
|
|
Net Debt |
|
$ |
308 |
|
Trailing twelve months
adjusted EBITDA |
|
|
261 |
|
Leverage ratio |
|
|
1.2 |
|
Notes to above:
Net Debt and related leverage metrics may be
considered non-GAAP measures. The company defines Net Debt as
total long-term debt, including current portion, minus cash. The
company defines leverage ratio as Net Debt divided by
trailing twelve months adjusted EBITDA. The company believes 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. The company believes the leverage ratio is a commonly
used metric that management and investors use to assess the
borrowing capacity of the company. The company believes 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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