MRC Global Inc. (NYSE: MRC), the leading global distributor of
pipe, valves, fittings and infrastructure products and
services to diversified energy, industrial and gas
utilities end-markets, today announced second quarter
2023 results.
Net income attributable to common
stockholders for the second quarter of 2023 was
$18 million, or $0.21 per diluted share, as compared to
the second quarter of 2022 net income of
$8 million, or $0.09 per diluted share. Adjusted net
income attributable to common stockholders for the
second quarter of 2023 was $22 million, or
$0.25 per diluted share, as compared to the
second quarter of 2022 adjusted net income of
$23 million, or $0.27 per diluted share.
MRC Global’s
second quarter 2023 gross profit was
$175 million, or 20.1% of sales, as compared to the
second quarter 2022 gross profit of
$151 million, or 17.8% of sales. Gross profit for the
second quarter of
2023 and 2022 includes $2 million and
$20 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 $187 million, or
21.5% of sales, for the second quarter of 2023 and
was $181 million, or 21.3% of sales, for the
second quarter of 2022.
Second Quarter 2023 Financial
Highlights:
- Sales of $871 million, a 3% improvement compared to the same
quarter a year ago
- Adjusted Gross Profit, as a percentage of sales, of 21.5%, an
increase of 30 basis points compared to the first quarter of
2023
- Adjusted EBITDA of $63 million, or 7.2% of sales and our 5th
consecutive quarter above 7%
- Cash Flow from operations of $20 million during the
quarter
Rob Saltiel, MRC Global’s President and CEO
stated, “Our second quarter results delivered revenue growth over
last year, better-than-expected cash flow generation and strong
adjusted gross profit margins. We expanded our revenue backlog in
the quarter, aided by gains in our International segment and our
DIET sector.
“We are anticipating lower annual growth in 2023
for our U.S. segment than previously forecast due primarily to a
slower ramp-up in our Gas Utilities sector sales during the current
construction season. Although the long-term growth fundamentals of
this sector remain intact, several key Gas Utilities customers are
currently focused on reducing their product inventory levels
over the next few quarters due to more certainty in the supply
chain and associated lead times. As a result, we expect full-year
revenues to increase in the upper single-digit percentage range,
compared to 2022 levels, an adjustment to our prior guidance,” Mr.
Saltiel added.
Adjusted EBITDA was $63 million in
the second quarter of 2023 compared to $65 million
for the same period in 2022.
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 $130 million, or 14.9% of sales, for the
second quarter of 2023 compared to $120 million,
or 14.2% of sales, for the same period in 2022. The
primary driver of the increase relates to higher
employee-related costs including hiring additional resources
to support the growth in our business as well as an increase
in benefit costs. Other costs include non-recurring IT
related professional fees.
An income tax
expense of $10 million was incurred in the
second quarter of 2023, with an effective tax rate
of 29%, as compared to an income tax
expense of $6 million for the
second quarter of 2022. Our rates 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. In addition, the effective tax rate for the
three months ended June 30, 2023, was higher than the U.S.
federal statutory rate due to foreign losses with no tax
benefit.
Sales
The company’s sales were $871 million for
the second quarter of 2023, which
was 2% lower than the first quarter of
2023 and 3% higher than the second quarter of
2022. As compared to the second quarter of 2022, the
Production and Transmission Infrastructure (PTI) sector led with
10% growth followed by the Gas
Utilities sector at 3%, partially offset by the
Downstream, Industrial and Energy Transition (DIET) sector, which
declined 5%. Sequentially, the DIET sector declined offsetting
increases in the Gas Utilities and PTI sectors.
Sales by Segment
U.S. sales in the second quarter of
2023 were $727 million, up $10 million, or 1%,
from the same quarter in 2022. PTI sector sales increased
by $19 million, or 9%, resulting from increased customer
facility infrastructure activity in the Permian and Rockies as well
as pipeline activity in the Haynesville and Northeast. The Gas
Utilities sector revenue increased $10 million, or 3%,
driven by increased capex spending for modernization and
replacement activity. DIET sector sales
decreased $19 million, or 10% due to the
culmination of biofuel refinery projects.
Sequentially, as compared to the first quarter
of 2023, U.S. sales decreased $13 million,
or 2%, driven by the
DIET sector, which decreased $31 million, or 15%,
due to the timing of on-going projects
and turnarounds as well as non-recurring projects. The U.S.
Gas Utilities sector increased 5% primarily due to a
seasonal increase as the heavier construction period began for
replacement and modernization activity. PTI
increased $3 million or 1% primarily due to
increased activity for midstream related infrastructure.
Canada sales in the second quarter of
2023 were $38 million, down $2 million, or 5%,
from the same quarter in 2022, as declines in the DIET and Gas
Utilities sectors offset an increase in the PTI sector.
Canada sales also include a $2 million unfavorable
impact from weaker foreign currencies.
Sequentially, as compared to the
prior quarter, Canada sales declined $4 million, or
10%, due to non-recurring project orders in
the PTI sector.
International sales in the second quarter
of 2023 were $106 million, up $15 million, or
16%, from the same period in 2022 including a $3 million
unfavorable impact from weaker foreign currencies. The
increase was driven by the PTI sector primarily in Australia and
the U.K. followed by the DIET sector in the Netherlands,
Singapore and the U.K.
Sequentially, as compared to the previous
quarter, International sales were up $3 million,
or 3%, due to increased sales in the PTI sector primarily
in Australia and the U.K.
Sales by Sector
Gas Utilities sector sales, which
are primarily U.S. based, were $323 million in
the second quarter of 2023, or 37% of total sales, an
increase of $9 million, or 3%, from the
second quarter of 2022.
Sequentially, as compared to the first
quarter of 2023, the Gas Utilities sector
increased $16 million, or 5%, driven by the U.S.
segment.
DIET sector sales in the second quarter of
2023 were $245 million, or 28% of total sales,
a decrease of $14 million, or 5%, from the
second quarter of 2022. The decrease in DIET sector sales
was primarily due to the U.S. segment partially offset by
an increase in the International segment.
Sequentially, as compared to the previous
quarter, sales in the DIET sector were down $33 million,
or 12%, primarily due to the timing of projects in the U.S.
segment.
PTI sector sales in the second quarter of
2023 were $303 million, or 35% of total sales, an
improvement of $28 million, or 10%, from the
second quarter of 2022. The increase in PTI sales was led
by the U.S. segment, followed by the International and Canada
segments.
Sequentially, as compared to the prior quarter,
PTI sector sales increased $3 million, or 1%, led
by the International segment followed by the U.S. segment
and partially offset by a decline in the Canada segment.
Backlog
As of June 30, 2023, the company's backlog
was $764 million, up 1% sequentially from March 31,
2023, and 2% since June 30, 2022.
Balance Sheet and Cash Flow
Cash provided by operations was
$20 million in the second quarter of 2023. As
of June 30, 2023, the cash balance was
$31 million, long-term debt (including current portion)
was $371 million, and Net Debt was $340 million.
Availability under the company’s asset-based lending facility was
$599 million, and available liquidity was $630 million as
of June 30, 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 second quarter 2023 results at 10:00 a.m.
Eastern Time (9:00 a.m. Central Time) on August 8, 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 August 22, 2023, and can be accessed
by dialing 201-612-7415 and using pass
code 13739473#. 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,” “anticipating,” “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, adjusted 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 & TreasuryMRC Global
Inc.Monica.Broughton@mrcglobal.com 832-308-2847
MRC Global Inc.Condensed Consolidated Balance
Sheets (Unaudited)(in millions, except shares) |
|
|
June 30, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
31 |
|
|
$ |
32 |
|
Accounts receivable, net |
|
|
519 |
|
|
|
501 |
|
Inventories, net |
|
|
674 |
|
|
|
578 |
|
Other current assets |
|
|
39 |
|
|
|
31 |
|
Total current assets |
|
|
1,263 |
|
|
|
1,142 |
|
|
|
|
|
|
|
|
|
|
Long-term assets: |
|
|
|
|
|
|
|
|
Operating lease assets |
|
|
206 |
|
|
|
202 |
|
Property, plant and equipment, net |
|
|
78 |
|
|
|
82 |
|
Other assets |
|
|
16 |
|
|
|
22 |
|
|
|
|
|
|
|
|
|
|
Intangible assets: |
|
|
|
|
|
|
|
|
Goodwill, net |
|
|
264 |
|
|
|
264 |
|
Other intangible assets, net |
|
|
173 |
|
|
|
183 |
|
|
|
$ |
2,000 |
|
|
$ |
1,895 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
stockholders' equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Trade accounts payable |
|
$ |
448 |
|
|
$ |
410 |
|
Accrued expenses and other current liabilities |
|
|
97 |
|
|
|
115 |
|
Operating lease liabilities |
|
|
37 |
|
|
|
36 |
|
Current portion of long-term debt |
|
|
3 |
|
|
|
3 |
|
Total current liabilities |
|
|
585 |
|
|
|
564 |
|
|
|
|
|
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
|
|
|
|
Long-term debt, net |
|
|
368 |
|
|
|
337 |
|
Operating lease liabilities |
|
|
186 |
|
|
|
182 |
|
Deferred income taxes |
|
|
51 |
|
|
|
49 |
|
Other liabilities |
|
|
20 |
|
|
|
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, 108,490,740 and 107,864,421 issued, respectively |
|
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
|
1,761 |
|
|
|
1,758 |
|
Retained deficit |
|
|
(722 |
) |
|
|
(768 |
) |
Less: Treasury stock at cost: 24,216,330 shares |
|
|
(375 |
) |
|
|
(375 |
) |
Accumulated other comprehensive loss |
|
|
(230 |
) |
|
|
(230 |
) |
|
|
|
435 |
|
|
|
386 |
|
|
|
$ |
2,000 |
|
|
$ |
1,895 |
|
|
|
|
|
|
|
|
|
|
MRC Global Inc.Condensed Consolidated Statements
of Operations (Unaudited)(in millions, except per share
amounts) |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
871 |
|
|
$ |
848 |
|
|
$ |
1,756 |
|
|
$ |
1,590 |
|
Cost of sales |
|
|
696 |
|
|
|
697 |
|
|
|
1,402 |
|
|
|
1,303 |
|
Gross profit |
|
|
175 |
|
|
|
151 |
|
|
|
354 |
|
|
|
287 |
|
Selling, general and
administrative expenses |
|
|
130 |
|
|
|
120 |
|
|
|
252 |
|
|
|
227 |
|
Operating income |
|
|
45 |
|
|
|
31 |
|
|
|
102 |
|
|
|
60 |
|
Other expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(10 |
) |
|
|
(5 |
) |
|
|
(17 |
) |
|
|
(11 |
) |
Other, net |
|
|
(1 |
) |
|
|
(6 |
) |
|
|
(4 |
) |
|
|
(6 |
) |
Income before income
taxes |
|
|
34 |
|
|
|
20 |
|
|
|
81 |
|
|
|
43 |
|
Income tax expense |
|
|
10 |
|
|
|
6 |
|
|
|
23 |
|
|
|
13 |
|
Net income |
|
|
24 |
|
|
|
14 |
|
|
|
58 |
|
|
|
30 |
|
Series A preferred stock
dividends |
|
|
6 |
|
|
|
6 |
|
|
|
12 |
|
|
|
12 |
|
Net income attributable to
common stockholders |
|
$ |
18 |
|
|
$ |
8 |
|
|
$ |
46 |
|
|
$ |
18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common
share |
|
$ |
0.21 |
|
|
$ |
0.10 |
|
|
$ |
0.55 |
|
|
$ |
0.22 |
|
Diluted earnings per common
share |
|
$ |
0.21 |
|
|
$ |
0.09 |
|
|
$ |
0.54 |
|
|
$ |
0.21 |
|
Weighted-average common
shares, basic |
|
|
84.3 |
|
|
|
83.6 |
|
|
|
84.1 |
|
|
|
83.4 |
|
Weighted-average common
shares, diluted |
|
|
85.3 |
|
|
|
84.9 |
|
|
|
85.4 |
|
|
|
84.6 |
|
MRC Global Inc.Condensed Consolidated Statements
of Cash Flows (Unaudited)(in millions) |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
Operating
activities |
|
|
|
|
|
|
|
|
Net income |
|
$ |
58 |
|
|
$ |
30 |
|
Adjustments to reconcile net
income to net cash used in operations: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
10 |
|
|
|
9 |
|
Amortization of intangibles |
|
|
10 |
|
|
|
11 |
|
Equity-based compensation expense |
|
|
7 |
|
|
|
6 |
|
Deferred income tax expense |
|
|
2 |
|
|
|
1 |
|
Increase in LIFO reserve |
|
|
1 |
|
|
|
26 |
|
Other, net |
|
|
13 |
|
|
|
8 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(19 |
) |
|
|
(116 |
) |
Inventories |
|
|
(101 |
) |
|
|
(136 |
) |
Other current assets |
|
|
(9 |
) |
|
|
(18 |
) |
Accounts payable |
|
|
36 |
|
|
|
116 |
|
Accrued expenses and other current liabilities |
|
|
(18 |
) |
|
|
- |
|
Net cash used in
operations |
|
|
(10 |
) |
|
|
(63 |
) |
|
|
|
|
|
|
|
|
|
Investing
activities |
|
|
|
|
|
|
|
|
Purchases of property, plant
and equipment |
|
|
(5 |
) |
|
|
(5 |
) |
Other investing
activities |
|
|
- |
|
|
|
(2 |
) |
Net cash used in investing
activities |
|
|
(5 |
) |
|
|
(7 |
) |
|
|
|
|
|
|
|
|
|
Financing
activities |
|
|
|
|
|
|
|
|
Payments on revolving credit
facilities |
|
|
(497 |
) |
|
|
(275 |
) |
Proceeds from revolving credit
facilities |
|
|
530 |
|
|
|
335 |
|
Payments on long-term
obligations |
|
|
(2 |
) |
|
|
(1 |
) |
Dividends paid on preferred
stock |
|
|
(12 |
) |
|
|
(12 |
) |
Repurchases of shares to
satisfy tax withholdings |
|
|
(4 |
) |
|
|
(2 |
) |
Net cash provided by financing
activities |
|
|
15 |
|
|
|
45 |
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in
cash |
|
|
- |
|
|
|
(25 |
) |
Effect of foreign exchange
rate on cash |
|
|
(1 |
) |
|
|
(2 |
) |
Cash -- beginning of
period |
|
|
32 |
|
|
|
48 |
|
Cash -- end of period |
|
$ |
31 |
|
|
$ |
21 |
|
|
|
|
|
|
|
|
|
|
MRC Global Inc.Supplemental Sales Information
(Unaudited)(in millions)Disaggregated Sales by Segment and
Sector |
Three Months EndedJune 30, |
|
U.S. |
|
Canada |
|
International |
|
Total |
2023 |
|
|
|
|
|
|
|
|
|
|
|
Gas Utilities |
$ |
321 |
|
$ |
1 |
|
$ |
1 |
|
$ |
323 |
Downstream, Industrial &
Energy Transition |
|
179 |
|
|
4 |
|
|
62 |
|
|
245 |
Production & Transmission
Infrastructure |
|
227 |
|
|
33 |
|
|
43 |
|
|
303 |
|
$ |
727 |
|
$ |
38 |
|
$ |
106 |
|
$ |
871 |
2022 |
|
|
|
|
|
|
|
|
|
|
|
Gas Utilities |
$ |
311 |
|
$ |
3 |
|
$ |
- |
|
$ |
314 |
Downstream, Industrial &
Energy Transition |
|
198 |
|
|
7 |
|
|
54 |
|
|
259 |
Production & Transmission
Infrastructure |
|
208 |
|
|
30 |
|
|
37 |
|
|
275 |
|
$ |
717 |
|
$ |
40 |
|
$ |
91 |
|
$ |
848 |
|
|
|
|
|
|
|
|
|
|
|
|
Six Months EndedJune 30, |
|
U.S. |
|
Canada |
|
International |
|
Total |
2023 |
|
|
|
|
|
|
|
|
|
|
|
Gas Utilities |
$ |
627 |
|
$ |
2 |
|
$ |
1 |
|
$ |
630 |
Downstream, Industrial &
Energy Transition |
|
389 |
|
|
9 |
|
|
125 |
|
|
523 |
Production & Transmission
Infrastructure |
|
451 |
|
|
69 |
|
|
83 |
|
|
603 |
|
$ |
1,467 |
|
$ |
80 |
|
$ |
209 |
|
$ |
1,756 |
2022 |
|
|
|
|
|
|
|
|
|
|
|
Gas Utilities |
$ |
579 |
|
$ |
6 |
|
$ |
- |
|
$ |
585 |
Downstream, Industrial &
Energy Transition |
|
367 |
|
|
14 |
|
|
104 |
|
|
485 |
Production & Transmission
Infrastructure |
|
389 |
|
|
63 |
|
|
68 |
|
|
520 |
|
$ |
1,335 |
|
$ |
83 |
|
$ |
172 |
|
$ |
1,590 |
|
|
|
|
|
|
|
|
|
|
|
|
MRC Global Inc.Supplemental Sales
Information (Unaudited)(in millions)Sales by
Product Line |
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
Type |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Line Pipe |
|
$ |
128 |
|
$ |
132 |
|
$ |
269 |
|
$ |
244 |
Carbon Fittings and
Flanges |
|
|
119 |
|
|
116 |
|
|
236 |
|
|
216 |
Total Carbon Pipe, Fittings
and Flanges |
|
|
247 |
|
|
248 |
|
|
505 |
|
|
460 |
Valves, Automation,
Measurement and Instrumentation |
|
|
299 |
|
|
280 |
|
|
614 |
|
|
531 |
Gas Products |
|
|
214 |
|
|
198 |
|
|
421 |
|
|
382 |
Stainless Steel and Alloy Pipe
and Fittings |
|
|
36 |
|
|
58 |
|
|
68 |
|
|
94 |
General Products |
|
|
75 |
|
|
64 |
|
|
148 |
|
|
123 |
|
|
$ |
871 |
|
$ |
848 |
|
$ |
1,756 |
|
$ |
1,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
MRC Global Inc.Supplemental Information
(Unaudited)Reconciliation of Gross Profit to Adjusted Gross
Profit (a non-GAAP measure)(in millions) |
|
Three Months Ended |
|
|
June 30, |
|
Percentage |
|
|
June 30, |
|
Percentage |
|
|
2023 |
|
of Revenue |
|
|
2022 |
|
of Revenue* |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit, as reported |
$ |
175 |
|
20.1 |
% |
|
$ |
151 |
|
17.8 |
% |
Depreciation and
amortization |
|
5 |
|
0.6 |
% |
|
|
4 |
|
0.5 |
% |
Amortization of
intangibles |
|
5 |
|
0.6 |
% |
|
|
6 |
|
0.7 |
% |
Increase in LIFO reserve |
|
2 |
|
0.2 |
% |
|
|
20 |
|
2.4 |
% |
Adjusted Gross Profit |
$ |
187 |
|
21.5 |
% |
|
$ |
181 |
|
21.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
June 30, |
|
Percentage |
|
|
June 30, |
|
Percentage |
|
|
2023 |
|
of Revenue* |
|
|
2022 |
|
of Revenue* |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit, as reported |
$ |
354 |
|
20.2 |
% |
|
$ |
287 |
|
18.1 |
% |
Depreciation and
amortization |
|
10 |
|
0.6 |
% |
|
|
9 |
|
0.6 |
% |
Amortization of
intangibles |
|
10 |
|
0.6 |
% |
|
|
11 |
|
0.7 |
% |
Increase in LIFO reserve |
|
1 |
|
0.1 |
% |
|
|
26 |
|
1.6 |
% |
Adjusted Gross Profit |
$ |
375 |
|
21.4 |
% |
|
$ |
333 |
|
20.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
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 (SG&A) to Adjusted SG&A (a non-GAAP
measure)(in millions) |
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
$ |
130 |
|
|
$ |
120 |
|
$ |
252 |
|
|
$ |
227 |
Non-recurring IT related
professional fees |
|
(1 |
) |
|
|
- |
|
|
(1 |
) |
|
|
- |
Adjusted Selling, general and
administrative expenses |
$ |
129 |
|
|
$ |
120 |
|
$ |
251 |
|
|
$ |
227 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MRC Global Inc.Supplemental Information
(Unaudited)Reconciliation of Net Income to Adjusted EBITDA
(a non-GAAP measure)(in millions) |
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
24 |
|
$ |
14 |
|
$ |
58 |
|
$ |
30 |
|
Income tax expense |
|
|
10 |
|
|
6 |
|
|
23 |
|
|
13 |
|
Interest expense |
|
|
10 |
|
|
5 |
|
|
17 |
|
|
11 |
|
Depreciation and
amortization |
|
|
5 |
|
|
4 |
|
|
10 |
|
|
9 |
|
Amortization of
intangibles |
|
|
5 |
|
|
6 |
|
|
10 |
|
|
11 |
|
Non-recurring IT related
professional fees |
|
|
1 |
|
|
- |
|
|
1 |
|
|
- |
|
Increase in LIFO reserve |
|
|
2 |
|
|
20 |
|
|
1 |
|
|
26 |
|
Equity-based compensation
expense (1) |
|
|
4 |
|
|
3 |
|
|
7 |
|
|
6 |
|
Asset disposal (2) |
|
|
1 |
|
|
- |
|
|
1 |
|
|
- |
|
Foreign currency losses |
|
|
1 |
|
|
7 |
|
|
4 |
|
|
7 |
|
Adjusted EBITDA |
|
$ |
63 |
|
$ |
65 |
|
$ |
132 |
|
$ |
113 |
|
Notes to above:
(1) |
Charges (pre-tax) recorded in SG&A. |
(2) |
Charge (pre-tax) for an asset
disposal in our International segment. |
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 |
|
Six Months Ended |
|
June 30, 2023 |
|
June 30, 2023 |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
common stockholders |
$ |
18 |
|
$ |
0.21 |
|
$ |
46 |
|
$ |
0.54 |
Non-recurring IT related
professional fees, net of tax |
|
1 |
|
|
0.01 |
|
|
1 |
|
|
0.01 |
Asset disposal, net of tax
(1) |
|
1 |
|
|
0.01 |
|
|
1 |
|
|
0.01 |
Increase in LIFO reserve, net
of tax |
|
2 |
|
|
0.02 |
|
|
1 |
|
|
0.01 |
Adjusted net income
attributable to common stockholders |
$ |
22 |
|
$ |
0.25 |
|
$ |
49 |
|
$ |
0.57 |
Notes to above:
(1) |
An
after-tax charge for an asset disposal in our International
segment. |
|
Three Months Ended |
|
Six Months Ended |
|
June 30, 2022 |
|
June 30, 2022 |
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
common stockholders |
$ |
8 |
|
$ |
0.09 |
|
$ |
18 |
|
$ |
0.21 |
Increase in LIFO reserve, net
of tax |
|
15 |
|
|
0.18 |
|
|
20 |
|
|
0.24 |
Adjusted net income
attributable to common stockholders |
$ |
23 |
|
$ |
0.27 |
|
$ |
38 |
|
$ |
0.45 |
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) |
|
June 30, |
|
2023 |
|
|
|
Long-term debt, net |
$ |
368 |
Plus: current portion of
long-term debt |
|
3 |
Long-term debt |
|
371 |
Less: cash |
|
31 |
Net Debt |
$ |
340 |
|
|
|
Net Debt |
$ |
340 |
Trailing twelve months
adjusted EBITDA |
|
280 |
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 its 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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