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 first quarter
2023 results.
Net income attributable to common
stockholders for the first quarter of 2023 was
$28 million, or $0.33 per diluted share, as compared to
the first quarter of 2022 net income of
$10 million, or $0.12 per diluted share. Adjusted net
income attributable to common stockholders for the
first quarter of 2023 was $27 million, or
$0.32 per diluted share, as compared to the first quarter
of 2022 adjusted net income of $15 million, or
$0.17 per diluted share.
MRC Global’s
first quarter 2023 gross profit was
$179 million, or 20.2% of sales, as compared to the
first quarter 2022 gross profit of
$136 million, or 18.3% of sales. Gross profit for the
first quarter of
2023 and 2022 includes $1 million of
income and $6 million of expense, 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 (among other items) the impact of LIFO, was
$188 million, or 21.2% of sales, for the
first quarter of 2023 and was $152 million,
or 20.5% of revenue, for the first quarter
of 2022.
First Quarter 2023 Financial
Highlights:
- Sales of $885 million, a 2%
sequential increase from the fourth quarter of 2022 driven by the
Downstream, Industrial and Energy Transition (DIET) sector, and a
19% improvement compared to the same quarter a year ago
- Adjusted Gross Profit, as a
percentage of sales, of 21.2%, an increase of 70 basis points
compared to the first quarter of 2022
- Adjusted EBITDA of $69 million, or
7.8% of sales
Rob Saltiel, MRC Global’s President and CEO
stated, “I am very pleased with our strong performance in the first
quarter. The sequential revenue improvement of 2% was higher
than anticipated due to robust MRO and project activity, especially
with our refining, chemicals, and LNG customers. We also
delivered outstanding profitability with adjusted gross margins of
21.2% and adjusted EBITDA margins of 7.8%. Our backlog increased 2%
sequentially and has grown 14% compared to March of last
year.
“We are very optimistic about the remainder
of 2023 bolstered by the strong start to the year and
our growing backlog. Our first quarter results make us
increasingly confident in our ability to deliver double-digit
revenue growth, EBITDA margins exceeding 8%, and operating
cash flow of at least $120 million,” added Mr. Saltiel.
Adjusted EBITDA was $69 million in
the first quarter of 2023 compared to $48 million
for the same period in 2022.
Adjusted net income attributable to common
stockholders, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted
Gross Profit, 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 $122 million, or 13.8% of sales, for the
first quarter of 2023 compared to $107 million,
or 14.4% of sales, for the same period in 2022.
An income tax
expense of $13 million was incurred in the
first quarter of 2023, with an effective tax rate
of 28%, as compared to an income tax
expense of $7 million for the
first quarter of 2022. 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
March 31, 2023, was higher than the U.S. federal statutory
rate due to foreign losses with no tax benefit.
Revised Sector Reporting
This quarter, the company combined the
sectors formerly known as Upstream Production and Midstream
Pipeline into one sector, Production and Transmission
Infrastructure. Prompting this change are the similarity
of market drivers, the overlap of customers and the combined
management structure.
Sales
The company’s sales were $885 million for
the first quarter of 2023, which was 2% higher than
the fourth quarter of 2022 and 19% higher than
the first quarter of 2022. As compared to the
first quarter of 2022, all sectors grew double digits. By
sector, the DIET sector led with 23% growth followed by the
Production and Transmission Infrastructure (PTI) and Gas
Utilities sectors at 22% and 13%, respectively. Sequentially,
the DIET sector drove the increase.
Sales by Segment
U.S. sales in the first quarter of
2023 were $740 million, up $122 million, or
20%, from the same quarter in 2022. PTI sector sales
increased by $43 million, or 24%, primarily due to increased
activity levels in the Permian. DIET sector sales
increased $41 million, or 24% from LNG
projects, increased turnaround and maintenance spending
for refining, chemicals and mining customers. The
Gas Utilities sector revenue increased $38 million, or
14%, driven by increased activity levels related to our
customers' integrity upgrade and smart meter replacement
programs.
Sequentially, as compared to the fourth quarter
of 2022, U.S. sales increased $20 million,
or 3%, driven by the
DIET sector, which increased $28 million, or 15%, as
LNG project and turnaround maintenance activity increased. The
U.S. Gas Utilities sector was down 2% primarily due to the
timing of deliveries and projects. PTI was nearly
unchanged.
Canada sales in the first quarter of
2023 were $42 million, down $1 million, or 2%,
from the same quarter in 2022, as declines in the DIET and Gas
Utilities sectors offset an improvement in the PTI sector. Canada
sales also include a $3 million unfavorable
impact from weaker foreign currencies.
Sequentially, as compared to the
prior quarter, Canada sales declined $4 million, or
9%, due to the timing of line pipe
orders.
International sales in the first quarter of
2023 were $103 million, up $22 million, or 27%,
from the same period in 2022 including an $8 million
unfavorable impact from weaker foreign currencies. The
increase was driven by the DIET sector primarily in the
Netherlands, U.A.E., Singapore and U.K. followed by the PTI
sector in the U.K., Norway, Singapore and Australia.
Sequentially, as compared to the previous
quarter, International sales were unchanged after taking into
account a $3 million favorable impact from stronger
foreign currencies.
Sales by Sector
Gas utilities sector sales, which
are primarily U.S. based, were $307 million, in the
first quarter of 2023, or 35% of total sales, an
increase of $36 million, or 13%, from the
first quarter of 2022.
Sequentially, as compared to the fourth
quarter of 2022, the Gas Utilities sector
declined $12 million, or 4%, driven by the U.S.
segment.
Downstream, Industrial and Energy Transition
sector sales in the first quarter of
2023 were $278 million, or 31% of total sales,
an increase of $52 million, or 23%, from the
first quarter of 2022. 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 $30 million,
or 12%, driven by the U.S. segment.
PTI sector sales in the first quarter of
2023 were $300 million, or 34% of total sales, an
improvement of $55 million, or 22%, from the
first quarter of 2022. The increase in PTI sales was led
by the U.S. segment, followed by International and Canada
segments.
Sequentially, as compared to the prior quarter,
PTI sector sales declined $2 million, or 1%, as
small declines in the International and U.S. segments
were partially offset by an increase in the Canada segment.
Backlog
As of March 31, 2023, the company's backlog
was $758 million, up 2% sequentially from December 31,
2022, and 14% since March 31, 2022.
Balance Sheet and Cash Flow
Cash used in operations was
$30 million in the first quarter of 2023. As
of March 31, 2023, the cash balance was
$39 million, long-term debt (including current portion)
was $390 million, and Net Debt was $351 million.
Availability under the company’s asset-based lending facility was
$601 million and available liquidity was $640 million as
of March 31, 2023.
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 first quarter 2023 results at 10:00 a.m.
Eastern Time (9:00 a.m. Central Time) on May 9, 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 May 23, 2023, and can be accessed by
dialing 201-612-7415 and using pass code 13737072#. 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, and
production and transmission 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 216 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,” “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; 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 BroughtonVP, Investor Relations & Treasury |
MRC Global Inc. |
Monica.Broughton@mrcglobal.com |
832-308-2847 |
MRC Global Inc.Condensed Consolidated
Balance Sheets (Unaudited)(in millions, except
shares) |
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
39 |
|
|
$ |
32 |
|
Accounts receivable, net |
|
|
529 |
|
|
|
501 |
|
Inventories, net |
|
|
672 |
|
|
|
578 |
|
Other current assets |
|
|
30 |
|
|
|
31 |
|
Total current assets |
|
|
1,270 |
|
|
|
1,142 |
|
|
|
|
|
|
|
|
|
|
Long-term assets: |
|
|
|
|
|
|
|
|
Operating lease assets |
|
|
207 |
|
|
|
202 |
|
Property, plant and equipment, net |
|
|
81 |
|
|
|
82 |
|
Other assets |
|
|
21 |
|
|
|
22 |
|
|
|
|
|
|
|
|
|
|
Intangible assets: |
|
|
|
|
|
|
|
|
Goodwill, net |
|
|
264 |
|
|
|
264 |
|
Other intangible assets, net |
|
|
178 |
|
|
|
183 |
|
|
|
$ |
2,021 |
|
|
$ |
1,895 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
stockholders' equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Trade accounts payable |
|
$ |
467 |
|
|
$ |
410 |
|
Accrued expenses and other current liabilities |
|
|
99 |
|
|
|
115 |
|
Operating lease liabilities |
|
|
36 |
|
|
|
36 |
|
Current portion of long-term debt |
|
|
3 |
|
|
|
3 |
|
Total current liabilities |
|
|
605 |
|
|
|
564 |
|
|
|
|
|
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
|
|
|
|
Long-term debt, net |
|
|
387 |
|
|
|
337 |
|
Operating lease liabilities |
|
|
187 |
|
|
|
182 |
|
Deferred income taxes |
|
|
54 |
|
|
|
49 |
|
Other liabilities |
|
|
21 |
|
|
|
22 |
|
|
|
|
|
|
|
|
|
|
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, 108,428,765 and 107,864,421 issued, respectively |
|
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
|
1,757 |
|
|
|
1,758 |
|
Retained deficit |
|
|
(740 |
) |
|
|
(768 |
) |
Less: Treasury stock at cost: 24,216,330 shares |
|
|
(375 |
) |
|
|
(375 |
) |
Accumulated other comprehensive loss |
|
|
(231 |
) |
|
|
(230 |
) |
|
|
|
412 |
|
|
|
386 |
|
|
|
$ |
2,021 |
|
|
$ |
1,895 |
|
MRC Global Inc.Condensed Consolidated
Statements of Operations (Unaudited)(in millions, except
per share amounts) |
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
885 |
|
|
$ |
742 |
|
Cost of sales |
|
|
706 |
|
|
|
606 |
|
Gross profit |
|
|
179 |
|
|
|
136 |
|
Selling, general and
administrative expenses |
|
|
122 |
|
|
|
107 |
|
Operating income |
|
|
57 |
|
|
|
29 |
|
Other expense: |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(7 |
) |
|
|
(6 |
) |
Other, net |
|
|
(3 |
) |
|
|
- |
|
Income before income
taxes |
|
|
47 |
|
|
|
23 |
|
Income tax expense |
|
|
13 |
|
|
|
7 |
|
Net income |
|
|
34 |
|
|
|
16 |
|
Series A preferred stock
dividends |
|
|
6 |
|
|
|
6 |
|
Net income attributable to
common stockholders |
|
$ |
28 |
|
|
$ |
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common
share |
|
$ |
0.33 |
|
|
$ |
0.12 |
|
Diluted earnings per common
share |
|
$ |
0.33 |
|
|
$ |
0.12 |
|
Weighted-average common
shares, basic |
|
|
84.0 |
|
|
|
83.3 |
|
Weighted-average common
shares, diluted |
|
|
85.4 |
|
|
|
84.3 |
|
MRC Global Inc.Condensed Consolidated
Statements of Cash Flows (Unaudited)(in millions) |
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
Operating
activities |
|
|
|
|
|
|
|
|
Net income |
|
$ |
34 |
|
|
$ |
16 |
|
Adjustments to reconcile net
income to net cash used in operations: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
5 |
|
|
|
5 |
|
Amortization of intangibles |
|
|
5 |
|
|
|
5 |
|
Equity-based compensation expense |
|
|
3 |
|
|
|
3 |
|
Deferred income tax expense |
|
|
5 |
|
|
|
1 |
|
(Decrease) increase in LIFO reserve |
|
|
(1 |
) |
|
|
6 |
|
Other, net |
|
|
5 |
|
|
|
- |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(28 |
) |
|
|
(74 |
) |
Inventories |
|
|
(96 |
) |
|
|
(52 |
) |
Other current assets |
|
|
(1 |
) |
|
|
(9 |
) |
Accounts payable |
|
|
54 |
|
|
|
78 |
|
Accrued expenses and other current liabilities |
|
|
(15 |
) |
|
|
8 |
|
Net cash used in
operations |
|
|
(30 |
) |
|
|
(13 |
) |
|
|
|
|
|
|
|
|
|
Investing
activities |
|
|
|
|
|
|
|
|
Purchases of property, plant
and equipment |
|
|
(3 |
) |
|
|
(2 |
) |
Net cash used in investing
activities |
|
|
(3 |
) |
|
|
(2 |
) |
|
|
|
|
|
|
|
|
|
Financing
activities |
|
|
|
|
|
|
|
|
Payments on revolving credit
facilities |
|
|
(211 |
) |
|
|
(107 |
) |
Proceeds from revolving credit
facilities |
|
|
262 |
|
|
|
113 |
|
Payments on long-term
obligations |
|
|
(1 |
) |
|
|
- |
|
Dividends paid on preferred
stock |
|
|
(6 |
) |
|
|
(6 |
) |
Repurchases of shares to
satisfy tax withholdings |
|
|
(4 |
) |
|
|
(2 |
) |
Net cash provided by (used in)
financing activities |
|
|
40 |
|
|
|
(2 |
) |
|
|
|
|
|
|
|
|
|
Increase (decrease) in
cash |
|
|
7 |
|
|
|
(17 |
) |
Cash -- beginning of
period |
|
|
32 |
|
|
|
48 |
|
Cash -- end of period |
|
$ |
39 |
|
|
$ |
31 |
|
MRC Global Inc.Supplemental Sales
Information (Unaudited)(in millions) |
|
|
|
Disaggregated Sales by Segment and Sector |
|
|
|
Three Months Ended |
|
March 31, |
|
|
|
|
|
U.S. |
|
|
Canada |
|
|
International |
|
|
Total |
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas Utilities |
|
$ |
306 |
|
|
$ |
1 |
|
|
$ |
- |
|
|
$ |
307 |
|
Downstream, Industrial &
Energy Transition |
|
|
210 |
|
|
|
5 |
|
|
|
63 |
|
|
|
278 |
|
Production & Transmission
Infrastructure |
|
|
224 |
|
|
|
36 |
|
|
|
40 |
|
|
|
300 |
|
|
|
$ |
740 |
|
|
$ |
42 |
|
|
$ |
103 |
|
|
$ |
885 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas Utilities |
|
$ |
268 |
|
|
$ |
3 |
|
|
$ |
- |
|
|
$ |
271 |
|
Downstream, Industrial &
Energy Transition |
|
|
169 |
|
|
|
7 |
|
|
|
50 |
|
|
|
226 |
|
Production & Transmission
Infrastructure |
|
|
181 |
|
|
|
33 |
|
|
|
31 |
|
|
|
245 |
|
|
|
$ |
618 |
|
|
$ |
43 |
|
|
$ |
81 |
|
|
$ |
742 |
|
MRC Global Inc.Supplemental Sales
Information (Unaudited)(in millions) |
|
|
|
Sales by Product Line |
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
March 31, |
|
Type |
|
2023 |
|
|
2022 |
|
Line Pipe |
|
$ |
141 |
|
|
$ |
112 |
|
Carbon Fittings and
Flanges |
|
|
117 |
|
|
|
100 |
|
Total Carbon Pipe, Fittings and Flanges |
|
|
258 |
|
|
|
212 |
|
Valves, Automation,
Measurement and Instrumentation |
|
|
315 |
|
|
|
251 |
|
Gas Products |
|
|
207 |
|
|
|
184 |
|
Stainless Steel and Alloy Pipe
and Fittings |
|
|
32 |
|
|
|
36 |
|
General Products |
|
|
73 |
|
|
|
59 |
|
|
|
$ |
885 |
|
|
$ |
742 |
|
MRC Global Inc.Supplemental Information
(Unaudited)Reconciliation of Gross Profit to Adjusted Gross
Profit (a non-GAAP measure)(in millions) |
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
Percentage |
|
|
March 31, |
|
|
Percentage |
|
|
|
2023 |
|
|
of Revenue* |
|
|
2022 |
|
|
of Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit, as reported |
|
$ |
179 |
|
|
|
20.2 |
% |
|
$ |
136 |
|
|
|
18.3 |
% |
Depreciation and
amortization |
|
|
5 |
|
|
|
0.6 |
% |
|
|
5 |
|
|
|
0.7 |
% |
Amortization of
intangibles |
|
|
5 |
|
|
|
0.6 |
% |
|
|
5 |
|
|
|
0.7 |
% |
(Decrease) increase in LIFO
reserve |
|
|
(1 |
) |
|
|
(0.1 |
)% |
|
|
6 |
|
|
|
0.8 |
% |
Adjusted Gross Profit |
|
$ |
188 |
|
|
|
21.2 |
% |
|
$ |
152 |
|
|
|
20.5 |
% |
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.
|
MRC Global Inc.Supplemental Information
(Unaudited)Reconciliation of Net Income to
Adjusted EBITDA (a non-GAAP measure)(in millions) |
|
|
|
Three Months Ended |
|
|
March 31, |
|
March 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
Net income |
|
$ |
34 |
|
|
$ |
16 |
Income tax expense |
|
|
13 |
|
|
|
7 |
Interest expense |
|
|
7 |
|
|
|
6 |
Depreciation and
amortization |
|
|
5 |
|
|
|
5 |
Amortization of
intangibles |
|
|
5 |
|
|
|
5 |
(Decrease) increase in LIFO
reserve |
|
|
(1 |
) |
|
|
6 |
Equity-based compensation
expense (1) |
|
|
3 |
|
|
|
3 |
Foreign currency losses |
|
|
3 |
|
|
|
- |
Adjusted EBITDA |
|
$ |
69 |
|
|
$ |
48 |
Notes to above: (1) 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 |
|
|
March 31, 2023 |
|
|
Amount |
|
Per Share |
|
|
|
|
|
Net income attributable to common stockholders |
|
$ |
28 |
|
|
$ |
0.33 |
|
Decrease in LIFO reserve, net
of tax |
|
|
(1 |
) |
|
|
(0.01 |
) |
Adjusted net income
attributable to common stockholders |
|
$ |
27 |
|
|
$ |
0.32 |
|
|
|
Three Months Ended |
|
|
March 31, 2022 |
|
|
Amount |
|
Per Share |
|
|
|
|
|
Net income attributable to common stockholders |
|
$ |
10 |
|
$ |
0.12 |
Increase in LIFO reserve, net
of tax |
|
|
5 |
|
|
0.05 |
Adjusted net income
attributable to common stockholders |
|
$ |
15 |
|
$ |
0.17 |
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) |
|
|
|
|
|
March 31, |
|
|
|
2023 |
|
|
|
|
|
|
Long-term debt, net |
|
$ |
387 |
|
Plus: current portion of
long-term debt |
|
|
3 |
|
Long-term debt |
|
|
390 |
|
Less: cash |
|
|
39 |
|
Net Debt |
|
$ |
351 |
|
|
|
|
|
|
Net Debt |
|
$ |
351 |
|
Trailing twelve months
adjusted EBITDA |
|
|
282 |
|
Leverage ratio |
|
|
1.2 |
|
Notes to above:
Net Debt and related leverage metrics may be
considered non-GAAP measures. We define Net Debt as total long-term
debt, including current portion, minus cash. We define our leverage
ratio as Net Debt divided by trailing twelve months Adjusted
EBITDA. We believe Net Debt is an indicator of the extent to which
the company’s outstanding debt obligations could be satisfied by
cash on hand and a useful metric for investors to evaluate the
company’s leverage position. We believe the leverage ratio is a
commonly used metric that management and investors use to assess
the borrowing capacity of the company. We believe total long-term
debt (including the current portion) is the financial measure
calculated and presented in accordance with U.S. generally accepted
accounting principles that is most directly comparable to Net
Debt.
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