MRC Global Announces Third Quarter 2024 Results
MRC Global reported Q3 2024 results with net income of $23 million ($0.27 per diluted share), down from $29 million ($0.33 per diluted share) in Q3 2023. Sales decreased 10% year-over-year to $797 million. The company generated strong operating cash flow of $96 million in Q3, bringing 2024 total to $197 million. Gross profit was $160 million (20.1% of sales), compared to $183 million (20.6%) in Q3 2023. The company raised full-year operating cash flow guidance to $220 million or more. Notable achievements include a record low Net Working Capital at 14.3% of sales and a Net Debt leverage ratio of 0.1 times.
MRC Global ha riportato i risultati del terzo trimestre 2024, con un utile netto di 23 milioni di dollari (0,27 dollari per azione diluita), in calo rispetto ai 29 milioni di dollari (0,33 dollari per azione diluita) nel terzo trimestre 2023. Le vendite sono diminuite del 10% rispetto all'anno precedente, raggiungendo 797 milioni di dollari. L'azienda ha generato un forte flusso di cassa operativo di 96 milioni di dollari nel Q3, portando il totale del 2024 a 197 milioni di dollari. L'utile lordo è stato di 160 milioni di dollari (20,1% delle vendite), rispetto ai 183 milioni di dollari (20,6%) nel terzo trimestre 2023. L'azienda ha aumentato le previsioni del flusso di cassa operativo per l'intero anno a 220 milioni di dollari o più. Tra i risultati significativi, si segnalano un livello record di Capitale Circolante Netto al 14,3% delle vendite e un rapporto di indebitamento netto di 0,1 volte.
MRC Global informó los resultados del tercer trimestre de 2024, con una ganancia neta de 23 millones de dólares (0,27 dólares por acción diluida), en comparación con 29 millones de dólares (0,33 dólares por acción diluida) en el tercer trimestre de 2023. Las ventas disminuyeron un 10% interanual a 797 millones de dólares. La compañía generó un fuerte flujo de caja operativo de 96 millones de dólares en el tercer trimestre, elevando el total de 2024 a 197 millones de dólares. La utilidad bruta fue de 160 millones de dólares (20,1% de las ventas), en comparación con 183 millones de dólares (20,6%) en el tercer trimestre de 2023. La compañía elevó la guía de flujo de caja operativo para todo el año a 220 millones de dólares o más. Entre los logros notables se encuentran un nivel récord de Capital de Trabajo Neto del 14,3% de las ventas y una relación de apalancamiento de Deuda Neta de 0,1 veces.
MRC Global은 2024년 3분기 결과를 보고했으며, 순이익은 2천3백만 달러(주당 0.27달러)로, 2023년 3분기의 2천9백만 달러(주당 0.33달러)에서 감소했습니다. 연간 판매는 10% 감소하여 7억9천7백만 달러에 달했습니다. 회사는 3분기에 9천6백만 달러의 강력한 운영 현금 흐름을 생성하여 2024년 총치를 1억9천7백만 달러로 기록했습니다. 총 이익은 1억6천만 달러(판매의 20.1%)로, 2023년 3분기의 1억8천3백만 달러(20.6%)와 비교되었습니다. 회사는 연간 운영 현금 흐름 지침을 2억2천만 달러 이상으로 상향 조정했습니다. 주목할 만한 성과로는 판매의 14.3%에 해당하는 기록적인 저금리 순운전자본과 0.1배의 순부채 비율이 있습니다.
MRC Global a annoncé les résultats du troisième trimestre 2024, avec un bénéfice net de 23 millions de dollars (0,27 dollars par action diluée), en baisse par rapport à 29 millions de dollars (0,33 dollars par action diluée) au troisième trimestre 2023. Les ventes ont diminué de 10 % d'une année sur l'autre, atteignant 797 millions de dollars. L'entreprise a généré un solide flux de trésorerie opérationnel de 96 millions de dollars au troisième trimestre, portant le total pour 2024 à 197 millions de dollars. Le bénéfice brut était de 160 millions de dollars (20,1 % des ventes), contre 183 millions de dollars (20,6 %) au troisième trimestre 2023. La société a relevé ses prévisions de flux de trésorerie opérationnel pour l'ensemble de l'année à 220 millions de dollars ou plus. Parmi les réalisations notables figurent un niveau record de Fonds de Roulement Net à 14,3 % des ventes et un ratio de levier de Dette Nette de 0,1 fois.
MRC Global berichtete über die Ergebnisse des dritten Quartals 2024 mit einem Nettogewinn von 23 Millionen US-Dollar (0,27 US-Dollar pro verwässerter Aktie), ein Rückgang von 29 Millionen US-Dollar (0,33 US-Dollar pro verwässerter Aktie) im dritten Quartal 2023. Der Umsatz sank im Vergleich zum Vorjahr um 10% auf 797 Millionen US-Dollar. Das Unternehmen erzielte im dritten Quartal einen starken operativen Cashflow von 96 Millionen US-Dollar, was den Gesamtwert für 2024 auf 197 Millionen US-Dollar bringt. Der Bruttogewinn betrug 160 Millionen US-Dollar (20,1% des Umsatzes), im Vergleich zu 183 Millionen US-Dollar (20,6%) im dritten Quartal 2023. Das Unternehmen hob die Prognose für den operativen Cashflow für das gesamte Jahr auf 220 Millionen US-Dollar oder mehr an. Zu den bemerkenswerten Leistungen gehören ein rekordniedriger Netto-Umlaufvermögen von 14,3% des Umsatzes sowie ein Nettoverschuldungsgrad von 0,1 Mal.
- Strong operating cash flow of $96 million in Q3 2024
- Record low Net Working Capital at 14.3% of sales
- Low Net Debt leverage ratio of 0.1 times
- Raised full-year operating cash flow guidance to $220 million+
- Sales declined 10% year-over-year to $797 million
- Net income decreased to $23 million from $29 million in Q3 2023
- Gross profit margin declined to 20.1% from 20.6% year-over-year
- Adjusted EBITDA decreased to $48 million (6.0% of sales) from $70 million (7.9%) in Q3 2023
- Backlog declined 9% from previous quarter
Insights
MRC Global's Q3 2024 results show concerning trends with
- Adjusted EBITDA margin dropped to
6.0% from7.9% YoY - Gross margins contracted to
20.1% from20.6% - Revenue declined in all major sectors
The bright spot is strong cash flow generation of
HOUSTON, Nov. 05, 2024 (GLOBE NEWSWIRE) -- MRC Global Inc. (NYSE: MRC) today announced third quarter 2024 results.
Net income attributable to common stockholders for the third quarter of 2024 was
MRC Global’s third quarter 2024 gross profit was
Third Quarter 2024 Financial Highlights:
- Cash flow provided by operations of
$96 million for the third quarter and$197 million in the first nine months of 2024 - Sales of
$797 million , a4% decrease compared to the second quarter of 2024 - Adjusted Gross Profit, as a percentage of sales, of
20.8% - Adjusted EBITDA of
$48 million , or6.0% of sales - Net Working Capital, as a percentage of sales, of
14.3% - a new company record low - Net Debt leverage ratio of 0.1 times
Rob Saltiel, MRC Global’s President and CEO, stated, “As we guided on our last earnings call, revenue and Adjusted EBITDA declined in the third quarter due to slowing activity in the U.S. oilfield and project delays in our DIET sector. Despite these headwinds, we generated operating cash flow of
"As recently announced, we repurchased all of our convertible preferred shares through a successful new Term Loan B, and we are in the process of extending the maturity of our asset-based lending facility to 2029. We expect that these transactions will be accretive to earnings and cash flow in 2025 and beyond, and they simplify our capital structure while maintaining a solid balance sheet," Mr. Saltiel added.
Selling, general and administrative (SG&A) expenses were
Adjusted EBITDA was
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Gross Profit, Adjusted Net Income, 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.
An income tax expense of
Sales
The company’s sales were
Sales by Segment
U.S. sales in the third quarter of 2024 were
Sequentially, as compared to the second quarter of 2024, U.S. sales decreased
Canada sales in the third quarter of 2024 were
Sequentially, Canada sales were down
International sales in the third quarter of 2024 were
Sequentially, as compared to the previous quarter, International sales were up
Sales by Sector
Gas Utilities sector sales, which are primarily U.S. based, were
Sequentially, as compared to the second quarter of 2024, the Gas Utilities sector sales increased
DIET sector sales in the third quarter of 2024 were
Sequentially, as compared to the previous quarter, DIET sector sales were down
PTI sector sales in the third quarter of 2024 were
Sequentially, as compared to the prior quarter, PTI sector sales decreased
Backlog
As of September 30, 2024, the company's backlog was
Balance Sheet and Cash Flow
As of September 30, 2024, the cash balance was
Subsequent Event
The company issued a new 7-year
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 2024 results at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on November 6, 2024. To participate in the call, please dial 201-689-8261 and ask for the MRC Global conference call 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. For those who cannot listen to the live call, a replay will be available through November 20, 2024, and can be accessed by dialing 201-612-7415 and using pass code 13746017#. 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 infrastructure 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,” “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 Broughton
VP, Investor Relations & Treasury
MRC Global Inc.
Monica.Broughton@mrcglobal.com
832-308-2847
MRC Global Inc. Condensed Consolidated Balance Sheets (Unaudited) (in millions, except shares) | ||||||||
September 30, | December 31, | |||||||
2024 | 2023 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 62 | $ | 131 | ||||
Accounts receivable, net | 478 | 430 | ||||||
Inventories, net | 462 | 560 | ||||||
Other current assets | 41 | 34 | ||||||
Total current assets | 1,043 | 1,155 | ||||||
Long-term assets: | ||||||||
Operating lease assets | 185 | 205 | ||||||
Property, plant and equipment, net | 85 | 78 | ||||||
Other assets | 31 | 21 | ||||||
Intangible assets: | ||||||||
Goodwill, net | 264 | 264 | ||||||
Other intangible assets, net | 148 | 163 | ||||||
$ | 1,756 | $ | 1,886 | |||||
Liabilities and stockholders' equity | ||||||||
Current liabilities: | ||||||||
Trade accounts payable | $ | 382 | $ | 355 | ||||
Accrued expenses and other current liabilities | 108 | 102 | ||||||
Operating lease liabilities | 34 | 34 | ||||||
Current portion of debt obligations | - | 292 | ||||||
Total current liabilities | 524 | 783 | ||||||
Long-term liabilities: | ||||||||
Long-term debt | 85 | 9 | ||||||
Operating lease liabilities | 167 | 186 | ||||||
Deferred income taxes | 41 | 45 | ||||||
Other liabilities | 27 | 20 | ||||||
Commitments and contingencies | ||||||||
355 | 355 | |||||||
Stockholders' equity: | ||||||||
Common stock, | 1 | 1 | ||||||
Additional paid-in capital | 1,774 | 1,768 | ||||||
Retained deficit | (618 | ) | (678 | ) | ||||
Less: Treasury stock at cost: 24,216,330 shares | (375 | ) | (375 | ) | ||||
Accumulated other comprehensive loss | (225 | ) | (228 | ) | ||||
557 | 488 | |||||||
$ | 1,756 | $ | 1,886 |
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, | |||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Sales | $ | 797 | $ | 888 | $ | 2,435 | $ | 2,644 | ||||||||
Cost of sales | 637 | 705 | 1,939 | 2,107 | ||||||||||||
Gross profit | 160 | 183 | 496 | 537 | ||||||||||||
Selling, general and administrative expenses | 123 | 126 | 374 | 378 | ||||||||||||
Operating income | 37 | 57 | 122 | 159 | ||||||||||||
Other (expense) income: | ||||||||||||||||
Interest expense | (4 | ) | (9 | ) | (19 | ) | (26 | ) | ||||||||
Other, net | (1 | ) | 1 | (2 | ) | (3 | ) | |||||||||
Income before income taxes | 32 | 49 | 101 | 130 | ||||||||||||
Income tax expense | 3 | 14 | 23 | 37 | ||||||||||||
Net income | 29 | 35 | 78 | 93 | ||||||||||||
Series A preferred stock dividends | 6 | 6 | 18 | 18 | ||||||||||||
Net income attributable to common stockholders | $ | 23 | $ | 29 | $ | 60 | $ | 75 | ||||||||
Basic earnings per common share | $ | 0.27 | $ | 0.34 | $ | 0.71 | $ | 0.89 | ||||||||
Diluted earnings per common share | $ | 0.27 | $ | 0.33 | $ | 0.70 | $ | 0.88 | ||||||||
Weighted-average common shares, basic | 85.2 | 84.3 | 85.0 | 84.2 | ||||||||||||
Weighted-average common shares, diluted | 86.2 | 105.9 | 86.2 | 105.8 |
MRC Global Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (in millions) | ||||||||
Nine Months Ended | ||||||||
September 30, | September 30, | |||||||
2024 | 2023 | |||||||
Operating activities | ||||||||
Net income | $ | 78 | $ | 93 | ||||
Adjustments to reconcile net income to net cash provided by operations: | ||||||||
Depreciation and amortization | 16 | 15 | ||||||
Amortization of intangibles | 15 | 15 | ||||||
Equity-based compensation expense | 11 | 10 | ||||||
Deferred income tax (benefit) | (6 | ) | (3 | ) | ||||
Other non-cash items | 5 | 9 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (47 | ) | (20 | ) | ||||
Inventories | 98 | (45 | ) | |||||
Other current assets | (3 | ) | (4 | ) | ||||
Accounts payable | 29 | 27 | ||||||
Accrued expenses and other current liabilities | 1 | (5 | ) | |||||
Net cash provided by operations | 197 | 92 | ||||||
Investing activities | ||||||||
Purchases of property, plant and equipment | (23 | ) | (10 | ) | ||||
Other investing activities | 1 | (2 | ) | |||||
Net cash used in investing activities | (22 | ) | (12 | ) | ||||
Financing activities | ||||||||
Payments on revolving credit facilities | (276 | ) | (776 | ) | ||||
Proceeds from revolving credit facilities | 352 | 743 | ||||||
Payments on debt obligations | (295 | ) | (2 | ) | ||||
Debt issuance costs paid | - | (1 | ) | |||||
Dividends paid on preferred stock | (18 | ) | (18 | ) | ||||
Repurchases of shares to satisfy tax withholdings | (5 | ) | (4 | ) | ||||
Net cash used in financing activities | (242 | ) | (58 | ) | ||||
(Decrease) increase in cash | (67 | ) | 22 | |||||
Effect of foreign exchange rate on cash | (2 | ) | (2 | ) | ||||
Cash -- beginning of period | 131 | 32 | ||||||
Cash -- end of period | $ | 62 | $ | 52 |
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 | |||||||||||||
2024 | ||||||||||||||||
Gas Utilities | $ | 293 | $ | 2 | $ | - | $ | 295 | ||||||||
DIET | 170 | 9 | 69 | 248 | ||||||||||||
PTI | 181 | 15 | 58 | 254 | ||||||||||||
$ | 644 | $ | 26 | $ | 127 | $ | 797 | |||||||||
2023 | ||||||||||||||||
Gas Utilities | $ | 311 | $ | 2 | $ | 1 | $ | 314 | ||||||||
DIET | 210 | 7 | 62 | 279 | ||||||||||||
PTI | 224 | 29 | 42 | 295 | ||||||||||||
$ | 745 | $ | 38 | $ | 105 | $ | 888 |
Nine Months Ended | ||||||||||||||||
September 30, | ||||||||||||||||
U.S. | Canada | International | Total | |||||||||||||
2024 | ||||||||||||||||
Gas Utilities | $ | 845 | $ | 3 | $ | - | $ | 848 | ||||||||
DIET | 560 | 30 | 202 | 792 | ||||||||||||
PTI | 583 | 55 | 157 | 795 | ||||||||||||
$ | 1,988 | $ | 88 | $ | 359 | $ | 2,435 | |||||||||
2023 | ||||||||||||||||
Gas Utilities | $ | 938 | $ | 4 | $ | 2 | $ | 944 | ||||||||
DIET | 599 | 16 | 187 | 802 | ||||||||||||
PTI | 675 | 98 | 125 | 898 | ||||||||||||
$ | 2,212 | $ | 118 | $ | 314 | $ | 2,644 |
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 | 2024 | 2023 | 2024 | 2023 | ||||||||||||
Line Pipe | $ | 105 | $ | 164 | $ | 351 | $ | 433 | ||||||||
Carbon Fittings and Flanges | 99 | 117 | 305 | 353 | ||||||||||||
Total Carbon Pipe, Fittings and Flanges | 204 | 281 | 656 | 786 | ||||||||||||
Valves, Automation, Measurement and Instrumentation | 285 | 306 | 878 | 920 | ||||||||||||
Gas Products | 194 | 191 | 574 | 612 | ||||||||||||
Stainless Steel and Alloy Pipe and Fittings | 54 | 40 | 130 | 108 | ||||||||||||
General Products | 60 | 70 | 197 | 218 | ||||||||||||
$ | 797 | $ | 888 | $ | 2,435 | $ | 2,644 |
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 | |||||||||||||
2024 | of Revenue* | 2023 | of Revenue | |||||||||||||
Gross profit, as reported | $ | 160 | 20.1 | % | $ | 183 | 20.6 | % | ||||||||
Depreciation and amortization | 6 | 0.8 | % | 5 | 0.6 | % | ||||||||||
Amortization of intangibles | 5 | 0.6 | % | 5 | 0.6 | % | ||||||||||
Decrease in LIFO reserve | (5 | ) | (0.6 | )% | (4 | ) | (0.5 | )% | ||||||||
Adjusted Gross Profit | $ | 166 | 20.8 | % | $ | 189 | 21.3 | % |
Nine Months Ended | ||||||||||||||||
September 30, | Percentage | September 30, | Percentage | |||||||||||||
2024 | of Revenue* | 2023 | of Revenue* | |||||||||||||
Gross profit, as reported | $ | 496 | 20.4 | % | $ | 537 | 20.3 | % | ||||||||
Depreciation and amortization | 16 | 0.7 | % | 15 | 0.6 | % | ||||||||||
Amortization of intangibles | 15 | 0.6 | % | 15 | 0.6 | % | ||||||||||
Decrease in LIFO reserve | (3 | ) | (0.1 | )% | (3 | ) | (0.1 | )% | ||||||||
Adjusted Gross Profit | $ | 524 | 21.5 | % | $ | 564 | 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 which costing 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, | |||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Selling, general and administrative expenses | $ | 123 | $ | 126 | $ | 374 | $ | 378 | ||||||||
Facility closures (1) | - | - | (1 | ) | - | |||||||||||
Customer settlement (2) | - | (3 | ) | - | (3 | ) | ||||||||||
Non-recurring IT related professional fees | - | - | - | (1 | ) | |||||||||||
Activism response legal and consulting costs | - | - | (4 | ) | - | |||||||||||
Adjusted Selling, general and administrative expenses | $ | 123 | $ | 123 | $ | 369 | $ | 374 |
Notes to above: | |
(1) | Charge (pre-tax) associated with a facility closure in our International segment. |
(2) | Charge (pre-tax) for a customer settlement in our U.S. segment. |
The company defines adjusted selling, general and administrative (SG&A) expenses as SG&A, restructuring expenses and other unusual items. The company presents adjusted SG&A because the company believes it is a useful indicator of the company’s operating performance. Among other things, adjusted SG&A measures the company’s operating performance without regard to certain non-recurring, non-cash or transaction-related expenses. The company uses adjusted SG&A as a key performance indicator in managing its business. The company believes that SG&A is the financial measure calculated and presented in accordance with U.S. Generally Accepted Accounting Principles that is most directly comparable to adjusted SG&A.
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, | |||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Net income | $ | 29 | $ | 35 | $ | 78 | $ | 93 | ||||||||
Income tax expense | 3 | 14 | 23 | 37 | ||||||||||||
Interest expense | 4 | 9 | 19 | 26 | ||||||||||||
Depreciation and amortization | 6 | 5 | 16 | 15 | ||||||||||||
Amortization of intangibles | 5 | 5 | 15 | 15 | ||||||||||||
Facility closures (1) | - | - | 1 | - | ||||||||||||
Non-recurring IT related professional fees | - | - | - | 1 | ||||||||||||
Decrease in LIFO reserve | (5 | ) | (4 | ) | (3 | ) | (3 | ) | ||||||||
Equity-based compensation expense (2) | 4 | 3 | 11 | 10 | ||||||||||||
Activism response legal and consulting costs | - | - | 4 | - | ||||||||||||
Write off of debt issuance costs | - | - | 1 | - | ||||||||||||
Customer settlement (3) | - | 3 | - | 3 | ||||||||||||
Asset disposal (4) | - | - | 1 | 1 | ||||||||||||
Foreign currency losses | 2 | - | 4 | 4 | ||||||||||||
Adjusted EBITDA | $ | 48 | $ | 70 | $ | 170 | $ | 202 |
Notes to above: | ||
(1) | Charges (pre-tax) associated with a facility closure in our International segment. | |
(2) | Charges (pre-tax) recorded in SG&A. | |
(3) | Charge (pre-tax) for a customer settlement in our U.S. segment. | |
(4) | 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, restructuring, changes in the fair value of derivative instruments, asset impairments, including inventory, 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 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 Attributable to Common Stockholders to Adjusted Net Income Attributable to Common Stockholders (a non-GAAP measure) (in millions, except per share amounts) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2024 | September 30, 2024 | |||||||||||||||
Amount | Per Share | Amount | Per Share* | |||||||||||||
Net income attributable to common stockholders | $ | 23 | $ | 0.27 | $ | 60 | $ | 0.70 | ||||||||
Facility closures, net of tax (1) | - | - | 1 | 0.01 | ||||||||||||
Asset disposal, net of tax (2) | - | - | 1 | 0.01 | ||||||||||||
Activism response legal and consulting costs, net of tax | - | - | 3 | 0.03 | ||||||||||||
Decrease in LIFO reserve, net of tax | (4 | ) | (0.05 | ) | (2 | ) | (0.02 | ) | ||||||||
Adjusted net income attributable to common stockholders | $ | 19 | $ | 0.22 | $ | 63 | $ | 0.73 |
Notes to above: | ||
* Does not foot due to rounding | ||
(1) | An after-tax charge associated with a facility closure in our International segment. | |
(2) | An after-tax charge for an asset disposal in our International segment. |
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: | |
* Does not foot due to rounding | |
(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 |
The company defines adjusted net income attributable to common stockholders (a non-GAAP measure) as net income attributable to common stockholders plus or minus the after-tax impact of items deemed non-standard and plus or minus the after-tax impact of its LIFO inventory costing methodology. After-tax impacts were determined using the company'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 which costing 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) | ||||||||
Pro forma | ||||||||
September 30, 2024 | September 30, 2024 | |||||||
Long-term debt | $ | 429 | $ | 85 | ||||
Plus: current portion of debt obligations | 4 | - | ||||||
Total debt | 433 | 85 | ||||||
Less: cash | 62 | 62 | ||||||
Net Debt | $ | 371 | $ | 23 | ||||
Net Debt | $ | 371 | $ | 23 | ||||
Trailing twelve months adjusted EBITDA | 218 | 218 | ||||||
Leverage ratio | 1.7 | 0.1 | ||||||
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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