MRC Global Inc. (NYSE: MRC), the leading global distributor of
pipe, valves, fittings and infrastructure products and
services to diversified energy, industrial and gas
utilities end-markets, today announced third quarter
2023 results.
Net income attributable to common
stockholders for the third quarter of 2023 was
$29 million, or $0.33 per diluted share, as compared to
the third quarter of 2022 net income attributable to
common stockholders of $18 million, or $0.21 per diluted
share. Adjusted net income attributable to common stockholders
for the third quarter of 2023 was $28 million, or
$0.32 per diluted share, as compared to the third quarter
of 2022 adjusted net income attributable to common
stockholders of $36 million, or $0.42 per diluted
share.
MRC Global’s
third quarter 2023 gross profit was
$183 million, or 20.6% of sales, as compared to the
third quarter 2022 gross profit of
$165 million, or 18.3% of sales. Gross profit for the
third quarter of
2023 and 2022 includes $4 million of
income and $24 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 $189 million, or
21.3% of sales, for the third quarter of 2023 and
was $198 million, or 21.9% of sales, for the
third quarter of 2022.
Third Quarter 2023 Financial
Highlights:
- Sales of $888 million, a 2% improvement compared to the second
quarter of 2023
- Adjusted Gross Profit, as a percentage of sales, of 21.3%
- Adjusted EBITDA of $70 million, or 7.9% of sales and the
company's 6th consecutive quarter above 7%
- Cash Flow from operations of $102 million during the third
quarter, allowing the company to achieve our full year target of
$90 million a quarter early
- Net Debt leverage ratio of 0.9 times, the lowest in the
company's public company history
Rob Saltiel, MRC Global’s President and CEO
stated, “Revenue in the third quarter increased moderately compared
to the second quarter, as rising DIET sector revenue offset
declines in our Gas Utilities and PTI sectors. We are pleased to
have achieved adjusted gross profit margins in excess of
21%, operating cash flow of over $100 million and adjusted
EBITDA margins of 7.9%. The value of our end-market diversification
is evident as year-to-date revenue gains in the PTI and DIET
sectors have countered the temporary weakness we are experiencing
in Gas Utilities."
Adjusted EBITDA was $70 million in
the third quarter of 2023 compared to $82 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 $126 million, or 14.2% of sales, for the
third quarter of 2023 compared to $120 million,
or 13.3% of sales, for the same period in 2022. Adjusted
SG&A for the third quarter of 2023 was $123 million, or
13.9% of sales, excluding a $3 million customer settlement
expense.
An income tax
expense of $14 million was incurred in the
third quarter of 2023, with an effective tax rate
of 29%, as compared to an income tax
expense of $10 million for the
third 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 September 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 $888 million for
the third quarter of 2023, which
was 2% higher than the second quarter of
2023 and 2% lower than the third quarter
of 2022. As compared to the third quarter of 2022, the
Production and Transmission Infrastructure (PTI) sector led with
10% growth followed by the Downstream, Industrial and
Energy Transition (DIET) sector at 1%, offset by the Gas
Utilities sector, which declined 13%. Sequentially, the DIET
sector increased offsetting decreases in the Gas
Utilities and PTI sectors.
Sales by Segment
U.S. sales in the third quarter of
2023 were $745 million, down $23 million, or
3%, from the same quarter in 2022. PTI sector sales
increased by $20 million, or 10%, resulting from increased
customer infrastructure activity in the Permian and Rockies.
DIET sector sales increased $1 million. The Gas
Utilities sector revenue decreased $44 million, or 12%,
driven by decreased capex spending for modernization and
replacement activity as customers focus on reducing their own
product inventory levels as well as delayed customer projects
due to higher interest rates and inflation in construction
costs.
Sequentially, as compared to the second quarter
of 2023, U.S. sales increased $18 million,
or 2%, driven by the
DIET sector, which increased $31 million,
or 17%, due to increased turnarounds and project
activity. The U.S. Gas Utilities sector decreased $10 million,
or 3%, primarily due to decreases in capex spending for
modernization and replacement activity as customers focus on
reducing their own product inventory levels as well as the
timing of projects. PTI decreased $3 million, or 1%,
primarily due to seasonal decrease and the timing of customer
projects.
Canada sales in the third quarter of
2023 were $38 million, up $1 million, or 3%,
from the same quarter in 2022, as increases in the DIET and
PTI sectors offset a decrease in the Gas
Utilities sector. Canada sales also include a $1
million unfavorable impact from weaker foreign currencies.
Sequentially, Canada sales were flat with
no change from the prior quarter.
International sales in the third quarter of
2023 were $105 million, up $6 million, or 6%,
from the same period in 2022 including a $3 million
favorable impact from stronger foreign currencies. The
increase was driven by the PTI sector primarily in the Middle East
and the U.K., followed by the DIET sector in the
Netherlands.
Sequentially, as compared to the previous
quarter, International sales were down $1 million,
or 1%, due to a decrease in sales in the PTI sector,
where reduced activity in Australia was partially offset by
increased activity in the U.K. and the Middle East.
Sales by Sector
Gas Utilities sector sales, which
are primarily U.S. based, were $314 million in
the third quarter of 2023, or 35% of total sales, a
decrease of $45 million, or 13%, from the
third quarter of 2022.
Sequentially, as compared to the second
quarter of 2023, the Gas Utilities sector
decreased $9 million, or 3%, driven by the U.S.
segment.
DIET sector sales in the third quarter of
2023 were $279 million, or 32% of total sales,
an increase of $3 million, or 1%, from the
third quarter of 2022. The increase in DIET
sector sales was spread relatively evenly across the
segments.
Sequentially, as compared to the previous
quarter, sales in the DIET sector were up $34 million,
or 14%, primarily due to increased turnarounds
and projects in the U.S. segment.
PTI sector sales in the third quarter of
2023 were $295 million, or 33% of total sales, an
improvement of $26 million, or 10%, from the
third 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 decreased $8 million, or 3%,
driven by the Canada segment followed by the U.S.
and International segments.
Backlog
As of September 30, 2023, the company's backlog
was $718 million, a 6% decline compared to the previous
quarter.
Balance Sheet and Cash Flow
Cash provided by operations was
$102 million in the third quarter of 2023. As
of September 30, 2023, the cash balance was
$52 million, long-term debt (including current portion)
was $303 million, and Net Debt was $251 million.
Availability under the company’s asset-based lending facility
was $696 million, and available liquidity was
$748 million as of September 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 third quarter 2023 results at 10:00 a.m.
Eastern Time (9:00 a.m. Central Time) on November 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 November 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 218 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; risks
related to changing laws and regulations including trade policies
and tariffs; and the potential share price volatility and costs
incurred in response to any shareholder activism campaigns.
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.com832-308-2847
MRC Global Inc.Condensed
Consolidated Balance Sheets (Unaudited)(in millions,
except shares)
|
September 30, |
|
December 31, |
|
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash |
$ |
52 |
|
$ |
32 |
|
Accounts receivable, net |
|
518 |
|
|
501 |
|
Inventories, net |
|
620 |
|
|
578 |
|
Other current assets |
|
35 |
|
|
31 |
|
Total current assets |
|
1,225 |
|
|
1,142 |
|
|
|
|
|
|
|
|
Long-term assets: |
|
|
|
|
|
|
Operating lease assets |
|
206 |
|
|
202 |
|
Property, plant and equipment, net |
|
77 |
|
|
82 |
|
Other assets |
|
18 |
|
|
22 |
|
|
|
|
|
|
|
|
Intangible assets: |
|
|
|
|
|
|
Goodwill, net |
|
264 |
|
|
264 |
|
Other intangible assets, net |
|
168 |
|
|
183 |
|
|
$ |
1,958 |
|
$ |
1,895 |
|
|
|
|
|
|
|
|
Liabilities and
stockholders' equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Trade accounts payable |
$ |
438 |
|
$ |
410 |
|
Accrued expenses and other current liabilities |
|
111 |
|
|
115 |
|
Operating lease liabilities |
|
38 |
|
|
36 |
|
Current portion of long-term debt |
|
3 |
|
|
3 |
|
Total current liabilities |
|
590 |
|
|
564 |
|
|
|
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
|
|
Long-term debt, net |
|
300 |
|
|
337 |
|
Operating lease liabilities |
|
184 |
|
|
182 |
|
Deferred income taxes |
|
46 |
|
|
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, 108,512,938 and 107,864,421 issued, respectively |
|
1 |
|
|
1 |
|
Additional paid-in capital |
|
1,764 |
|
|
1,758 |
|
Retained deficit |
|
(693 |
) |
|
(768 |
) |
Less: Treasury stock at cost: 24,216,330 shares |
|
(375 |
) |
|
(375 |
) |
Accumulated other comprehensive loss |
|
(234 |
) |
|
(230 |
) |
|
|
463 |
|
|
386 |
|
|
$ |
1,958 |
|
$ |
1,895 |
|
MRC Global Inc.Condensed
Consolidated Statements of Operations (Unaudited)(in
millions, except per share amounts)
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
$ |
888 |
|
$ |
904 |
|
$ |
2,644 |
|
$ |
2,494 |
|
Cost of sales |
|
705 |
|
|
739 |
|
|
2,107 |
|
|
2,042 |
|
Gross profit |
|
183 |
|
|
165 |
|
|
537 |
|
|
452 |
|
Selling, general and
administrative expenses |
|
126 |
|
|
120 |
|
|
378 |
|
|
347 |
|
Operating income |
|
57 |
|
|
45 |
|
|
159 |
|
|
105 |
|
Other (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
(9 |
) |
|
(6 |
) |
|
(26 |
) |
|
(17 |
) |
Other, net |
|
1 |
|
|
(5 |
) |
|
(3 |
) |
|
(11 |
) |
Income before income
taxes |
|
49 |
|
|
34 |
|
|
130 |
|
|
77 |
|
Income tax expense |
|
14 |
|
|
10 |
|
|
37 |
|
|
23 |
|
Net income |
|
35 |
|
|
24 |
|
|
93 |
|
|
54 |
|
Series A preferred stock
dividends |
|
6 |
|
|
6 |
|
|
18 |
|
|
18 |
|
Net income attributable to
common stockholders |
$ |
29 |
|
$ |
18 |
|
$ |
75 |
|
$ |
36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common
share |
$ |
0.34 |
|
$ |
0.22 |
|
$ |
0.89 |
|
$ |
0.43 |
|
Diluted earnings per common
share |
$ |
0.33 |
|
$ |
0.21 |
|
$ |
0.88 |
|
$ |
0.42 |
|
Weighted-average common
shares, basic |
|
84.3 |
|
|
83.6 |
|
|
84.2 |
|
|
83.5 |
|
Weighted-average common
shares, diluted |
|
105.9 |
|
|
85.0 |
|
|
105.8 |
|
|
84.8 |
|
Notes to above:
(1) The preferred stock shares (20.3 million
shares) were dilutive for the three and nine months ended September
30, 2023. For the three months ended September 30, 2023, the
diluted earnings per common share calculation is calculated as net
income of $35 million divided by 105.9 million shares. For the nine
months ended September 30, 2023, the diluted earnings per common
share calculation is calculated as net income of $93 million
divided by 105.8 million shares.
MRC Global Inc.Condensed
Consolidated Statements of Cash Flows (Unaudited)(in
millions)
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
Operating
activities |
|
|
|
|
|
|
Net income |
$ |
93 |
|
$ |
54 |
|
Adjustments to reconcile net
income to net cash provided by (used in) operations: |
|
|
|
|
|
|
Depreciation and amortization |
|
15 |
|
|
14 |
|
Amortization of intangibles |
|
15 |
|
|
15 |
|
Equity-based compensation expense |
|
10 |
|
|
9 |
|
Deferred income tax benefit |
|
(3 |
) |
|
(1 |
) |
(Decrease) increase in LIFO reserve |
|
(3 |
) |
|
50 |
|
Other, net |
|
12 |
|
|
13 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
(20 |
) |
|
(159 |
) |
Inventories |
|
(45 |
) |
|
(197 |
) |
Other current assets |
|
(4 |
) |
|
(11 |
) |
Accounts payable |
|
27 |
|
|
165 |
|
Accrued expenses and other current liabilities |
|
(5 |
) |
|
18 |
|
Net cash provided by (used in)
operations |
|
92 |
|
|
(30 |
) |
|
|
|
|
|
|
|
Investing
activities |
|
|
|
|
|
|
Purchases of property, plant
and equipment |
|
(10 |
) |
|
(8 |
) |
Other investing
activities |
|
(2 |
) |
|
(2 |
) |
Net cash used in investing
activities |
|
(12 |
) |
|
(10 |
) |
|
|
|
|
|
|
|
Financing
activities |
|
|
|
|
|
|
Payments on revolving credit
facilities |
|
(776 |
) |
|
(523 |
) |
Proceeds from revolving credit
facilities |
|
743 |
|
|
569 |
|
Payments on long-term
obligations |
|
(2 |
) |
|
(2 |
) |
Debt issuance costs paid |
|
(1 |
) |
|
- |
|
Dividends paid on preferred
stock |
|
(18 |
) |
|
(18 |
) |
Repurchases of shares to
satisfy tax withholdings |
|
(4 |
) |
|
(2 |
) |
Net cash (used in) provided by
financing activities |
|
(58 |
) |
|
24 |
|
|
|
|
|
|
|
|
Increase (decrease) in
cash |
|
22 |
|
|
(16 |
) |
Effect of foreign exchange
rate on cash |
|
(2 |
) |
|
(3 |
) |
Cash -- beginning of
period |
|
32 |
|
|
48 |
|
Cash -- end of period |
$ |
52 |
|
$ |
29 |
|
MRC Global
Inc.Supplemental Sales Information
(Unaudited)(in millions)
Disaggregated Sales by Segment and
Sector
Three Months Ended |
September 30, |
|
U.S. |
|
Canada |
|
International |
|
Total |
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
Gas Utilities |
$ |
311 |
|
$ |
2 |
|
$ |
1 |
|
$ |
314 |
|
Downstream, Industrial &
Energy Transition |
|
210 |
|
|
7 |
|
|
62 |
|
|
279 |
|
Production & Transmission
Infrastructure |
|
224 |
|
|
29 |
|
|
42 |
|
|
295 |
|
|
$ |
745 |
|
$ |
38 |
|
$ |
105 |
|
$ |
888 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
Gas Utilities |
$ |
355 |
|
$ |
3 |
|
$ |
1 |
|
$ |
359 |
|
Downstream, Industrial &
Energy Transition |
|
209 |
|
|
6 |
|
|
61 |
|
|
276 |
|
Production & Transmission
Infrastructure |
|
204 |
|
|
28 |
|
|
37 |
|
|
269 |
|
|
$ |
768 |
|
$ |
37 |
|
$ |
99 |
|
$ |
904 |
|
Nine Months Ended |
September 30, |
|
U.S. |
|
Canada |
|
International |
|
Total |
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
Gas Utilities |
$ |
938 |
|
$ |
4 |
|
$ |
2 |
|
$ |
944 |
|
Downstream, Industrial &
Energy Transition |
|
599 |
|
|
16 |
|
|
187 |
|
|
802 |
|
Production & Transmission
Infrastructure |
|
675 |
|
|
98 |
|
|
125 |
|
|
898 |
|
|
$ |
2,212 |
|
$ |
118 |
|
$ |
314 |
|
$ |
2,644 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
Gas Utilities |
$ |
934 |
|
$ |
9 |
|
$ |
1 |
|
$ |
944 |
|
Downstream, Industrial &
Energy Transition |
|
576 |
|
|
20 |
|
|
165 |
|
|
761 |
|
Production & Transmission
Infrastructure |
|
593 |
|
|
91 |
|
|
105 |
|
|
789 |
|
|
$ |
2,103 |
|
$ |
120 |
|
$ |
271 |
|
$ |
2,494 |
|
MRC Global
Inc.Supplemental Sales Information
(Unaudited)(in millions)
Sales by Product Line
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
September 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
Type |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Line Pipe |
|
$ |
164 |
|
$ |
173 |
|
$ |
433 |
|
$ |
417 |
|
Carbon Fittings and
Flanges |
|
|
117 |
|
|
119 |
|
|
353 |
|
|
335 |
|
Total Carbon Pipe, Fittings
and Flanges |
|
|
281 |
|
|
292 |
|
|
786 |
|
|
752 |
|
Valves, Automation,
Measurement and Instrumentation |
|
|
306 |
|
|
290 |
|
|
920 |
|
|
821 |
|
Gas Products |
|
|
191 |
|
|
205 |
|
|
612 |
|
|
587 |
|
Stainless Steel and Alloy Pipe
and Fittings |
|
|
40 |
|
|
53 |
|
|
108 |
|
|
147 |
|
General Products |
|
|
70 |
|
|
64 |
|
|
218 |
|
|
187 |
|
|
|
$ |
888 |
|
$ |
904 |
|
$ |
2,644 |
|
$ |
2,494 |
|
MRC Global
Inc.Supplemental Information
(Unaudited)Reconciliation of Gross Profit to
Adjusted Gross Profit (a non-GAAP measure)(in
millions)
|
Three Months Ended |
|
|
September 30, |
|
Percentage |
|
|
September 30, |
|
Percentage |
|
|
2023 |
|
of Revenue |
|
|
2022 |
|
of Revenue* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit, as reported |
$ |
183 |
|
|
20.6 |
% |
|
$ |
165 |
|
|
18.3 |
% |
Depreciation and
amortization |
|
5 |
|
|
0.6 |
% |
|
|
5 |
|
|
0.6 |
% |
Amortization of
intangibles |
|
5 |
|
|
0.6 |
% |
|
|
4 |
|
|
0.4 |
% |
(Decrease) increase in LIFO
reserve |
|
(4 |
) |
|
(0.5 |
)% |
|
|
24 |
|
|
2.7 |
% |
Adjusted Gross Profit |
$ |
189 |
|
|
21.3 |
% |
|
$ |
198 |
|
|
21.9 |
% |
|
Nine Months Ended |
|
|
September 30, |
|
Percentage |
|
|
September 30, |
|
Percentage |
|
|
2023 |
|
of Revenue* |
|
|
2022 |
|
of Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit, as reported |
$ |
537 |
|
|
20.3 |
% |
|
$ |
452 |
|
|
18.1 |
% |
Depreciation and
amortization |
|
15 |
|
|
0.6 |
% |
|
|
14 |
|
|
0.6 |
% |
Amortization of
intangibles |
|
15 |
|
|
0.6 |
% |
|
|
15 |
|
|
0.6 |
% |
(Decrease) increase in LIFO
reserve |
|
(3 |
) |
|
(0.1 |
)% |
|
|
50 |
|
|
2.0 |
% |
Adjusted Gross Profit |
$ |
564 |
|
|
21.3 |
% |
|
$ |
531 |
|
|
21.3 |
% |
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 |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
$ |
126 |
|
$ |
120 |
|
$ |
378 |
|
$ |
347 |
|
Customer settlement (1) |
|
(3 |
) |
|
- |
|
|
(3 |
) |
|
- |
|
Non-recurring IT related
professional fees |
|
- |
|
|
- |
|
|
(1 |
) |
|
- |
|
Adjusted Selling, general and
administrative expenses |
$ |
123 |
|
$ |
120 |
|
$ |
374 |
|
$ |
347 |
|
Notes to above:
(1 |
) |
Charge (pre-tax) for a customer settlement in our U.S.
segment. |
MRC Global
Inc.Supplemental Information
(Unaudited)Reconciliation of Net Income to
Adjusted EBITDA (a non-GAAP measure)(in millions)
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
35 |
|
$ |
24 |
|
$ |
93 |
|
$ |
54 |
|
Income tax expense |
|
14 |
|
|
10 |
|
|
37 |
|
|
23 |
|
Interest expense |
|
9 |
|
|
6 |
|
|
26 |
|
|
17 |
|
Depreciation and
amortization |
|
5 |
|
|
5 |
|
|
15 |
|
|
14 |
|
Amortization of
intangibles |
|
5 |
|
|
4 |
|
|
15 |
|
|
15 |
|
Non-recurring IT related
professional fees |
|
- |
|
|
- |
|
|
1 |
|
|
- |
|
(Decrease) increase in LIFO
reserve |
|
(4 |
) |
|
24 |
|
|
(3 |
) |
|
50 |
|
Equity-based compensation
expense (1) |
|
3 |
|
|
3 |
|
|
10 |
|
|
9 |
|
Customer settlement (2) |
|
3 |
|
|
- |
|
|
3 |
|
|
- |
|
Asset disposal (3) |
|
- |
|
|
- |
|
|
1 |
|
|
- |
|
Foreign currency losses |
|
- |
|
|
6 |
|
|
4 |
|
|
13 |
|
Adjusted EBITDA |
$ |
70 |
|
$ |
82 |
|
$ |
202 |
|
$ |
195 |
|
Notes to above:
(1 |
) |
Charges (pre-tax) recorded in SG&A. |
(2 |
) |
Charge (pre-tax) for a customer
settlement in our U.S. segment. |
(3 |
) |
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 |
|
Nine Months Ended |
|
|
September 30, 2023 |
|
September 30, 2023 |
|
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
common stockholders (3) |
$ |
29 |
|
$ |
0.33 |
|
$ |
75 |
|
$ |
0.88 |
|
Non-recurring IT related
professional fees, net of tax |
|
- |
|
|
- |
|
|
1 |
|
|
0.01 |
|
Asset disposal, net of tax
(1) |
|
- |
|
|
- |
|
|
1 |
|
|
0.01 |
|
Customer settlement, net of
tax (2) |
|
2 |
|
|
0.02 |
|
|
2 |
|
|
0.02 |
|
Decrease in LIFO reserve, net
of tax |
|
(3 |
) |
|
(0.03 |
) |
|
(2 |
) |
|
(0.02 |
) |
Adjusted net income
attributable to common stockholders (3) |
$ |
28 |
|
$ |
0.32 |
|
$ |
77 |
|
$ |
0.90 |
|
Notes to above:
(1 |
) |
An
after-tax charge for an asset disposal in our International
segment. |
(2 |
) |
An after-tax charge for a
customer settlement in our U.S. segment. |
(3 |
) |
Earnings per share represents
diluted earnings per share. For the three months
ended September 30, 2023, the diluted earnings per common
share calculation is calculated as net income of $35 million
divided by 105.9 million shares. For the nine months ended
September 30, 2023, the diluted earnings per common share
calculation is calculated as net income of $93 million divided
by 105.8 million shares. |
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, 2022 |
|
September 30, 2022 |
|
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
common stockholders |
$ |
18 |
|
$ |
0.21 |
|
$ |
36 |
|
$ |
0.42 |
|
Increase in LIFO reserve, net
of tax |
|
18 |
|
|
0.21 |
|
|
38 |
|
|
0.45 |
|
Adjusted net income
attributable to common stockholders |
$ |
36 |
|
$ |
0.42 |
|
$ |
74 |
|
$ |
0.87 |
|
Notes to above:
The company defines Adjusted Net Income
Attributable to Common Stockholders (a non-GAAP measure) as Net
Income Attributable to Common Stockholders less after-tax goodwill
and intangible impairment, inventory-related charges, facility
closures, severance and restructuring, plus or minus the after-tax
impact of its LIFO inventory costing methodology. After-tax impacts
were determined using the Company's U.S. blended statutory
rate. The company presents Adjusted Net Income Attributable to
Common Stockholders and related per share amounts because the
company believes it provides useful comparisons of the company’s
operating results to other companies, including those companies
with whom we compete in the distribution of pipe, valves and
fittings to the energy industry, without regard to the irregular
variations from certain restructuring events not indicative of the
on-going business. Those items include goodwill and intangible
asset impairments, inventory-related charges, facility closures,
severance and restructuring as well as the LIFO inventory costing
methodology. The impact of the LIFO inventory costing methodology
can cause results to vary substantially from company to company
depending upon whether they elect to utilize LIFO and depending
upon which method they may elect. The company believes that
Net Income Attributable to Common Stockholders is the financial
measure calculated and presented in accordance with U.S. generally
accepted accounting principles that is most directly compared to
Adjusted Net Income Attributable to Common Stockholders.
MRC Global
Inc.Supplemental Information
(Unaudited)Reconciliation of Long-term Debt to Net
Debt (a non-GAAP measure) and the Leverage Ratio
Calculation(in millions)
|
September 30, |
|
|
2023 |
|
|
|
|
|
Long-term debt, net |
$ |
300 |
|
Plus: current portion of
long-term debt |
|
3 |
|
Long-term debt |
|
303 |
|
Less: cash |
|
52 |
|
Net Debt |
$ |
251 |
|
|
|
|
|
Net Debt |
$ |
251 |
|
Trailing twelve months
adjusted EBITDA |
|
268 |
|
Leverage ratio |
|
0.9 |
|
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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