MRC Global Inc. (NYSE: MRC), the leading global
distributor of pipe, valves and fittings (PVF) and other
infrastructure products and services to diversified gas utility,
energy and industrial end-markets, today announced it is
launching an effort to amend, extend and refinance in full its $295
million in outstanding principal amount under its existing senior
secured Term Loan B, scheduled to mature in September 2024. The
company will seek to enter into an amendment to and extension
of the existing senior secured term loan B credit agreement,
which is expected to, among other things, extend its current Term
Loan B credit agreement for an additional five years and
increase the outstanding amount under the facility from $295
million to $300 million. The company expects to use the proceeds to
refinance the outstanding balance of $295 million under its
existing senior secured Term Loan B with the remainder to be used
for general corporate purposes.
In addition, the company is providing selected
preliminary first quarter 2023 financial results.
Preliminary First Quarter 2023 Financial
Results
|
● |
Revenue of approximately $885 million |
|
● |
Net income of approximately $33
million |
|
● |
Adjusted EBITDA of approximately
$69 million, or 7.8% of sales |
|
● |
Gross Profit of approximately
$179 million, or 20.2% of sales |
|
● |
Adjusted Gross Profit of
approximately $188 million, or 21.2% of sales |
|
● |
Full year 2023 cash flow from
operations continues to be expected to be at least $120
million |
The company's strong performance in the first quarter
provides increasing confidence in the outlook for the
full year.
The company expects to release its full first
quarter 2023 results on May 8, 2023, after the market close, as
previously scheduled. The company will also 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, as previously
scheduled.
Adjusted Gross Profit and Adjusted EBITDA
are non-GAAP measures. Please refer to the reconciliations
of Adjusted Gross Profit and Adjusted EBITDA to their
nearest GAAP measures in this release.
There can be no assurance that the company will
refinance its Term Loan B, or what the ultimate terms of the
refinanced facility will be. The company's ability to enter into
this refinanced Term Loan B facility and use the proceeds
depends on, among other things, market conditions, reaching final
agreement with lenders and the approval of the company's board of
directors.
About MRC Global Inc.
Headquartered in Houston, Texas, MRC Global
(NYSE: MRC) is the leading global distributor of pipe,
valves, fittings (PVF) and other infrastructure products
and services to diversified energy and industrial end-markets
including the gas utilities, downstream, industrial and energy
transition, upstream production, and midstream pipeline
sectors. With over 100 years of experience, MRC Global has provided
customers with innovative supply chain solutions, technical product
expertise and a robust digital platform from a worldwide network of
212 locations including valve and engineering centers. The
company’s unmatched quality assurance program offers over 250,000
SKUs from over 9,000 suppliers, simplifying the supply chain for
approximately 10,000 customers. Find out more at
www.mrcglobal.com.
This news release contains forward-looking
statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. Words such as
“expected,” and similar expressions are intended to identify
forward-looking statements.
Statements about the company’s expectations
regarding its cash flow from operations are not guarantees of
future performance. These statements are based on management’s
expectations that involve a number of business risks and
uncertainties, any of which could cause actual results to differ
materially from those expressed in or implied by the
forward-looking statements. These statements involve known and
unknown risks, uncertainties and other factors, most of which are
difficult to predict and many of which are beyond MRC Global’s
control, including the factors described in the company’s SEC
filings that may cause the company’s actual results and performance
to be materially different from any future results or performance
expressed or implied by these forward-looking statements.
These risks and uncertainties include (among
others) decreases in capital and other expenditure levels in
the industries that the company serves; U.S. and international
general economic conditions; geopolitical events; decreases in oil
and natural gas prices; unexpected supply shortages; loss of
third-party transportation providers; cost increases by the
company’s suppliers and transportation providers; increases in
steel prices, which the company may be unable to pass along to its
customers which could significantly lower the company’s profit; the
company’s lack of long-term contracts with most of its suppliers;
suppliers’ price reductions of products that the company sells,
which could cause the value of its inventory to decline; decreases
in steel prices, which could significantly lower the company’s
profit; a decline in demand for certain of the products the company
distributes if tariffs and duties on these products are imposed or
lifted; holding more inventory than can be sold in a commercial
time frame; significant substitution of renewables and
low-carbon fuels for oil and gas, impacting demand for the
company’s products; risks related to adverse weather events or
natural disasters; environmental, health and safety laws and
regulations and the interpretation or implementation thereof;
changes in the company’s customer and product mix; the risk that
manufacturers of the products that the company distributes will
sell a substantial amount of goods directly to end users in the
industry sectors that the company serves; failure to operate the
company’s business in an efficient or optimized manner; the
company’s ability to compete successfully with other
companies; the company’s lack of long-term contracts with many
of its customers and the company’s lack of contracts with customers
that require minimum purchase volumes; inability to attract and
retain employees or the potential loss of key personnel; adverse
health events, such as a pandemic; interruption in the proper
functioning of the company’s information systems; the occurrence of
cybersecurity incidents; risks related to the company’s customers’
creditworthiness; the success of acquisition strategies; the
potential adverse effects associated with integrating acquisitions
and whether these acquisitions will yield their intended benefits;
impairment of the company’s goodwill or other intangible assets;
adverse changes in political or economic conditions in the
countries in which the company operates; the company’s significant
indebtedness; the dependence on the company’s subsidiaries for cash
to meet parent company obligations; changes in the company’s credit
profile; potential inability to obtain necessary capital; the
sufficiency of the company’s insurance policies to cover losses,
including liabilities arising from litigation; product liability
claims against the company; pending or future asbestos-related
claims against the company; exposure to U.S. and international laws
and regulations, regulating corruption, limiting imports or exports
or imposing economic sanctions; risks relating to ongoing
evaluations of internal controls required by Section 404 of the
Sarbanes-Oxley Act; and risks related to changing laws and
regulations including trade policies and tariffs.
For a discussion of key risk factors, please see
the risk factors disclosed in the company’s SEC filings, which are
available on the SEC’s website at www.sec.gov and on the company’s
website, www.mrcglobal.com. MRC Global’s filings and other
important information are also available on the "Investors" page of
the company’s website at www.mrcglobal.com.
Undue reliance should not be placed on the
company’s forward-looking statements. Although forward-looking
statements reflect the company’s good faith beliefs, reliance
should not be placed on forward-looking statements because they
involve known and unknown risks, uncertainties and other factors,
which may cause the company’s actual results, performance or
achievements or future events to differ materially from anticipated
future results, performance or achievements or future events
expressed or implied by such forward-looking statements. The
company undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events, changed circumstances or otherwise, except to the
extent required by law.
Contact:
Monica Broughton |
VP, Investor Relations &
Treasury |
MRC Global Inc. |
Monica.Broughton@mrcglobal.com |
832-308-2847 |
MRC Global Inc. |
Supplemental Information (Unaudited) |
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(a non-GAAP measure) |
(in millions) |
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
Percentage |
|
|
|
2023 |
|
|
of Revenue* |
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
33 |
|
|
|
3.7 |
% |
Income tax expense |
|
|
13 |
|
|
|
1.5 |
% |
Interest expense |
|
|
7 |
|
|
|
0.8 |
% |
Depreciation and
amortization |
|
|
5 |
|
|
|
0.6 |
% |
Amortization of
intangibles |
|
|
5 |
|
|
|
0.6 |
% |
Decrease in LIFO reserve |
|
|
(1 |
) |
|
|
(0.1 |
)% |
Equity-based compensation
expense (1) |
|
|
3 |
|
|
|
0.3 |
% |
Foreign currency losses |
|
|
4 |
|
|
|
0.5 |
% |
Adjusted EBITDA |
|
$ |
69 |
|
|
|
7.8 |
% |
Notes to above:* Does not foot due to
rounding
The company defines adjusted EBITDA as net
income plus interest, income taxes, depreciation and amortization,
amortization of intangibles, and certain other expenses, including
non-cash expenses, (such as equity-based compensation, severance
and restructuring, changes in the fair value of derivative
instruments and asset impairments, including inventory) and plus or
minus the impact of its LIFO inventory costing
methodology. The company presents adjusted EBITDA because the
company believes adjusted EBITDA is a useful indicator of the
company’s operating performance. Among other things, adjusted
EBITDA measures the company’s operating performance without regard
to certain non-recurring, non-cash or transaction-related expenses.
adjusted EBITDA, however, does not represent and should not be
considered as an alternative to net income, cash flow from
operations or any other measure of financial performance calculated
and presented in accordance with GAAP. Because adjusted EBITDA does
not account for certain expenses, its utility as a measure of the
company’s operating performance has material limitations. Because
of these limitations, the company does not view adjusted EBITDA in
isolation or as a primary performance measure and also uses other
measures, such as net income and sales, to measure operating
performance. See the company's Annual Report filed on Form 10-K for
a more thorough discussion of the use of adjusted EBITDA.
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 |
|
|
|
2023 |
|
|
of Revenue* |
|
|
|
|
|
|
|
|
|
|
Gross profit, as reported |
|
$ |
179 |
|
|
|
20.2 |
% |
Depreciation and
amortization |
|
|
5 |
|
|
|
0.6 |
% |
Amortization of
intangibles |
|
|
5 |
|
|
|
0.6 |
% |
Decrease in LIFO
reserve |
|
|
(1 |
) |
|
|
(0.1 |
)% |
Adjusted Gross Profit |
|
$ |
188 |
|
|
|
21.2 |
% |
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 (NYSE:MRC)
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