MRC Global Announces Sale of Canada Business
MRC Global (NYSE: MRC) announced the sale of its Canada operations to Emco The strategic divestiture aims to focus on core geographies and product offerings with stronger growth and profit potential. The sale is expected to be accretive to the company's adjusted gross margins and adjusted EBITDA margins.
The transaction will result in a pre-tax, non-cash loss on discontinued operations of approximately US $25 million in Q4 2024. The deal is expected to close in H1 2025, subject to Canadian regulatory approval. MRC Global plans to use the proceeds for debt reduction. CIBC served as financial advisor, with Norton Rose Fulbright and McCarthy Tétrault LLP providing legal counsel.
MRC Global (NYSE: MRC) ha annunciato la vendita delle sue operazioni in Canada a Emco. Questa dismissione strategica mira a concentrarsi su geografie e offerte di prodotto chiave con maggiore potenziale di crescita e profitto. Ci si aspetta che la vendita sia accrescitiva per i margini lordi aggiustati e i margini EBITDA aggiustati dell'azienda.
La transazione comporterà una perdita non monetaria, prima delle tasse, sulle operazioni cessate di circa 25 milioni di dollari USA nel quarto trimestre del 2024. Si prevede che l'accordo si chiuderà nella prima metà del 2025, soggetto all'approvazione normativa canadese. MRC Global prevede di utilizzare i proventi per la riduzione del debito. CIBC ha agito come consulente finanziario, con Norton Rose Fulbright e McCarthy Tétrault LLP che hanno fornito consulenza legale.
MRC Global (NYSE: MRC) anunció la venta de sus operaciones en Canadá a Emco. Esta desinversión estratégica tiene como objetivo concentrarse en geografías centrales y ofertas de productos con un mayor potencial de crecimiento y rentabilidad. Se espera que la venta incremente los márgenes brutos ajustados y los márgenes EBITDA ajustados de la empresa.
La transacción resultará en una pérdida no monetaria, antes de impuestos, en operaciones discontinuadas de aproximadamente 25 millones de dólares estadounidenses en el cuarto trimestre de 2024. Se espera que el acuerdo se cierre en el primer semestre de 2025, sujeto a la aprobación regulatoria canadiense. MRC Global planea utilizar los ingresos para la reducción de deuda. CIBC actuó como asesor financiero, con Norton Rose Fulbright y McCarthy Tétrault LLP proporcionando asesoría legal.
MRC Global (NYSE: MRC)는 캐나다 운영을 Emco에 매각한다고 발표했습니다. 이번 전략적 매각은 더 높은 성장 및 이익 잠재력이 있는 핵심 지역 및 제품 제공에 집중하기 위한 것입니다. 매각은 회사의 조정된 총 이익률 및 조정된 EBITDA 이익률에 긍정적인 영향을 미칠 것으로 예상됩니다.
이번 거래는 2024년 4분기에 약 2,500만 달러의 세전 비현금 손실을 초래할 것입니다. 거래는 캐나다 규제 승인을 조건으로 2025년 상반기에 완료될 것으로 예상됩니다. MRC Global은 수익금으로 부채 감소에 사용할 계획입니다. CIBC는 재무 자문을 맡았으며, Norton Rose Fulbright와 McCarthy Tétrault LLP가 법률 자문을 제공했습니다.
MRC Global (NYSE: MRC) a annoncé la vente de ses opérations au Canada à Emco. Ce désinvestissement stratégique vise à se concentrer sur les zones géographiques clés et les offres de produits présentant un plus grand potentiel de croissance et de profit. La vente devrait être bénéfique pour les marges brutes ajustées et les marges EBITDA ajustées de l'entreprise.
La transaction se traduira par une perte non monétaire avant impôts sur les opérations arrêtées d'environ 25 millions de dollars US au quatrième trimestre 2024. La conclusion de l'accord est attendue au premier semestre 2025, sous réserve de l'approbation réglementaire canadienne. MRC Global prévoit d'utiliser les produits pour la réduction de la dette. CIBC a servi de conseiller financier, avec Norton Rose Fulbright et McCarthy Tétrault LLP fournissant un conseil juridique.
MRC Global (NYSE: MRC) hat den Verkauf seiner Kanada-Operationen an Emco angekündigt. Diese strategische Veräußering zielt darauf ab, sich auf zentrale geografische Märkte und Produktangebote mit höherem Wachstums- und Gewinnpotential zu konzentrieren. Der Verkauf wird voraussichtlich die adjustierten Bruttomargen und die adjustierten EBITDA-Margen des Unternehmens erhöhen.
Die Transaktion wird zu einem Vorsteuerverlust aus der Einstellung von Geschäftstätigkeiten in Höhe von etwa 25 Millionen US-Dollar im 4. Quartal 2024 führen. Der Abschluss des Deals wird im 1. Halbjahr 2025 erwartet, vorbehaltlich der Genehmigung durch die kanadische Regulierungsbehörde. MRC Global plant, die Einnahmen zur Schuldenreduzierung zu verwenden. CIBC fungierte als Finanzberater, während Norton Rose Fulbright und McCarthy Tétrault LLP Rechtsberatung leisteten.
- Strategic refocus on core markets with higher growth potential
- Expected improvement in adjusted gross margins and EBITDA margins
- Proceeds will be used to reduce debt leverage
- US $25 million pre-tax non-cash loss expected in Q4 2024
- Loss of Canadian market presence and associated revenue stream
- Transaction subject to regulatory approval, creating closing uncertainty
Insights
This strategic divestiture represents a significant pivot for MRC Global, streamlining operations to focus on core markets. The sale, while resulting in a
The Canadian operations likely represented a smaller, less profitable segment compared to MRC's core markets. By divesting this unit, management can redirect capital and resources to higher-growth, higher-margin opportunities. The involvement of CIBC as financial advisor and reputable legal firms suggests a well-structured deal that should provide clean execution and minimal operational disruption during the transition period.
This divestiture aligns with broader industry trends where industrial distributors are optimizing their geographical footprints to enhance operational efficiency. The sale to Emco , a well-established Canadian distributor, suggests a strategic fit that should facilitate a smooth transition for existing customers and employees. The timing of this announcement, amid challenging market conditions, indicates MRC's proactive approach to portfolio optimization.
The expected margin improvements post-divestiture suggest the Canadian operations were potentially dilutive to overall company margins. This strategic repositioning should allow MRC to better compete in its remaining core markets and potentially drive higher shareholder value through improved profitability metrics.
HOUSTON, Dec. 16, 2024 (GLOBE NEWSWIRE) -- MRC Global Inc. (NYSE: MRC), announced today that its subsidiary, MRC Global (Canada) ULC, has entered into a definitive agreement to sell its Canada operations to Emco Corporation.
Rob Saltiel, MRC Global President & CEO stated, “This divestiture will reposition our strategic focus and future capital investment decisions on our core geographies and product offerings that provide the strongest growth and profit potential. The sale of our Canada business is expected to be accretive to our total company adjusted gross margins and adjusted EBITDA margins.
“I would like to express my appreciation to our Canada team members who have consistently provided exceptional value to our customers. We believe we have found the right home for the Canada business and that Emco Corporation is well equipped to maintain success for our employees and customers into the future," Mr. Saltiel added.
As a result of the expected sale, a pre-tax, non-cash loss on discontinued operations of approximately US
Canadian Imperial Bank of Commerce (CIBC) acted as financial advisor to MRC Global. Norton Rose Fulbright acted as legal counsel to MRC Global; and McCarthy Tétrault LLP acted as legal advisor to Emco.
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 over 200 locations including valve and engineering centers. The company’s unmatched quality assurance program offers over 300,000 SKUs from over 8,500 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,” and similar expressions are intended to identify forward-looking statements.
Statements about the company’s business, including the company’s expectations that the transactions described in this release as being accretive to both cash generation and earnings per share in 2025 and beyond, 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 Broughton
VP, Investor Relations & Treasury
MRC Global Inc.
Monica.Broughton@mrcglobal.com
832-308-2847
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