Barclays Energy Distribution Day August 15, 2013 1 MRC Global Inc. // Barclays Energy Distribution Day August 15, 2013 Exhibit 99.1 |
Barclays Energy Distribution Day August 15, 2013 2 2 This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act, as amended, including, for example, statements about the Company’s business strategy, its industry, its future profitability, growth in the Company’s various markets, and the Company’s expectations, beliefs, plans, strategies, objectives, prospects and assumptions. These forward-looking statements are not guarantees of future performance. These statements involve known and unknown risks, uncertainties and other factors 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. For a discussion of key risk factors, please see the risk factors disclosed in the Company’s annual report on Form 10-K for the year ended December 31, 2012 and the registration statement (including a prospectus and prospectus supplement) for the offering to which this communication relates, which are available on the SEC’s website at www.sec.gov and on the Company’s website, 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 our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements 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. Statement Regarding Use of Non-GAAP Measures: The Non-GAAP financial measures contained in this presentation (EBITDA, Adjusted EBITDA, Adjusted Gross Profit and variations thereof) are not measures of financial performance calculated in accordance with GAAP and should not be considered as alternatives to net income (loss) or any other performance measure derived in accordance with GAAP or as alternatives to cash flows from operating activities as a measure of our liquidity. They should be viewed in addition to, and not as a substitute for, analysis of our results reported in accordance with GAAP, or as alternative measures of liquidity. Management believes that certain non-GAAP financial measures provide a view to measures similar to those used in evaluating our compliance with certain financial covenants under our credit facilities and provide financial statement users meaningful comparisons between current and prior year period results. They are also used as a metric to determine certain components of performance-based compensation. The adjustments and Adjusted EBITDA are based on currently available information and certain adjustments that we believe are reasonable and are presented as an aid in understanding our operating results. They are not necessarily indicative of future results of operations that may be obtained by the Company. Forward Looking Statements and Non-GAAP Disclaimer |
Barclays Energy Distribution Day August 15, 2013 3 By the Numbers Industry Sectors Product Categories Business Model 2013E Sales Guidance Midpoint $5.2 B Upstream Line Pipe / OCTG Locations 400+ Countries 44+ Midstream Valves Customers 18,000+ Suppliers 18,000+ Downstream/ Industrial Fittings / Flanges SKU’s 175,000+ Company Snapshot MRO 72% Projects 28% U.S. 75% Canada 14% Europe / Asia Pacific 11% MRC is the largest global distributor of pipe, valves and fittings (PVF) to the energy industry 1. Percentage of sales for the six months ended June 30, 2013 2. MRO revenue generated from broad based contracts covering both ongoing capital and operating needs of customers. 1 2 |
Barclays Energy Distribution Day August 15, 2013 4 By Geography By Product Line Transmission 17% By Industry Sector MRC Revenue Diversification Production Infrastructure, Materials & Supplies 35% Note: Percentage of sales for the six months ended June 30, 2013. Drilling & Completion Tubulars 9% Chemical 5% Refining 7% Other/ Industrial 16% Gas Utility 11% Canada 14% Europe/ Asia Pacific 11% Western US 25% Gulf Coast 26% Eastern US 24% OCTG 9% Line Pipe 19% Valves 29% Fittings & Flanges 22% Other 21% |
Barclays Energy Distribution Day August 15, 2013 5 Benefits of MRC • Supplier Registration / Preferred Supplier List • Global footprint • Integrated IT procurement systems Integrated Supply Chain Services • Inventory Consignment / Just-in-Time Delivery • Customized IT Solutions • Warehouse Management • Technical Assistance / Product Recommendation • Cost Savings and Efficiencies • Logistics Management Why Customers Choose Distribution & MRC Generating savings and efficiencies for our customers while enabling them to focus on their core competencies PVF is low cost relative to overall cost of maintenance or project spend so service is integral |
Barclays Energy Distribution Day August 15, 2013 6 MRC plays a critical role in the complex, technical, global energy supply chain Long-Term Customer & Supplier Relationships CUSTOMERS SUPPLIERS |
Barclays Energy Distribution Day August 15, 2013 7 Where Our Customers Need Us To Be Leading industrial distributor of PVF globally to the energy and industrials sectors Houston, TX Edmonton, AB Bradford, UK Singapore Perth, AU North America International Branches U.S. = 145+ Canada = 45+ 50+ Distribution Centers U.S.= 8 Canada = 1 U.K. = 1 Singapore = 1 Australia = 2 Netherlands = 1 Valve Automation Centers U.S. =12 Canada = 1 12 Pipe Yards U.S. = 95+ Canada = 25+ 10 |
Barclays Energy Distribution Day August 15, 2013 8 Strategic Objectives • 2012: Global Shell valve contract • 2013: Global Celanese PVF contract • More expected • Lowered OCTG as a percentage of inventory / sales • Focus on valve and valve automation • Strengthen offerings in stainless and alloy PFF • Add product lines to complete global PVF offerings • 2012: Production Specialty Services • 2013: Flow Control Products, Permian Basin – Valve & valve automation • NAWAH – Iraqi alliance • Service customers where they spend – currently an international focus • Target Accounts: develop the “next 75” customers • Top 25 customers represent 49% of revenue 1 All Other - 18,000+ customers Targeted Growth Accounts Top 1 - 25 Customer Mix - Revenue ~2/3 of sales are under contract 95% renewal rate since 2000 1. Percentage of sales for the six months ended June 30, 2013 . 27% 24% 49% Organic Growth Growth from Mergers & Acquisitions Execute Global Preferred Supplier Contracts Rebalance Product Mix to Higher Margin Items |
Barclays Energy Distribution Day August 15, 2013 9 End Market Opportunities Aging Infrastructure & New Legislation Driving Pipeline Replacement 4 Global E&P Spending 1. Percentage of sales for the six months ended June 30, 2013 2. Source: Barclays 2013 E&P Spending Outlook Mid Year Update. 3. Source: Industrial Info Resources: June 2013 4. Source: Pipeline Safety and Hazardous Materials Administration, Wall Street Journal, for Top 10 states by pipeline mileage Global Petroleum Refining & Chemical Processing Spend MRC Revenue Mix by End Market $- $200 $400 $600 $800 $1,000 2011A 2012A 2013E 2014E 2015E United States Canada Outside North America $- $50 $100 $150 $200 $250 $300 $350 $400 2010A 2011A 2012A 2013E 2014E 2015E United States Canada Outside North America Upstream 44% Downstream 28% Midstream 28% Built after 1970 37% Built before 1970 63% 2 3 1 |
Barclays Energy Distribution Day August 15, 2013 10 Today 10 – 15 Years Ago Next 1 to 5 Years Changing PVF Energy Distribution Landscape Consolidating energy industry benefits global players Decentralized Procurement • PVF purchasing handled locally • Separate contracts by product class Centralized Procurement • Purchasing more consolidated • Contracts by end segment • Contracts cover PVF • Customers align with suppliers with size/scale Global Procurement • Global upstream / midstream / downstream PVF contracts |
Barclays Energy Distribution Day August 15, 2013 11 Note: Reflects reported revenues for the year of acquisition M&A - Track Record of Strategic Acquisitions Acquisition Priorities • Branch platforms/infrastructure for North American shale plays • Global valve and valve automation • Global stainless/alloys • International branch platform for “super majors” E&P spend |
Barclays Energy Distribution Day August 15, 2013 12 Financial Overview |
Barclays Energy Distribution Day August 15, 2013 13 Financial Metrics Sales Adjusted Gross Profit and % Margin Adjusted EBITDA and % Margin 8.5% ($ in millions, except per share data) Y-o-Y Growth 28% 24% (4%) Y-o-Y Growth 61% 29% (14%) Longer term revenue growth and improving profitability Y-o-Y Growth 27% 15% (7%) Diluted EPS Y-o-Y Growth NM 259% 43% Six months ended June 30 17.2% 17.6% 19.0% 20% 19% 18.8% 19.9% $1,040 $3,846 $4,832 $5,571 $5,100 $2,813 $2,573 2010 2011 2012 2013 Guidance 2012 2013 Six months ended June 30 $5,300 $663 $850 $1,058 $988 $530 $512 2010 2011 2012 2013 Guidance 2012 2013 Six months ended June 30 $224 $360 $463 $385 $239 $203 2010 2011 2012 2013 Guidance 2012 2013 $415 $(0.61) $0.34 $1.22 $1.65 $0.75 $0.88 2010 2011 2012 2013 Guidance 2012 2013 $ 1.85 Six months ended June 30 5.8% 7.5% 8.3% 7.8% 7.5% 8.5% 7.9% 5.8% 7.5% 8.3% 7.8% 7.5% 8.5% 7.9% |
Barclays Energy Distribution Day August 15, 2013 14 Balance Sheet Metrics Total Debt Capital Structure Cash Flow from Operations Net Leverage ($ in millions) Strong balance sheet and cash flow June 30, 2013 Cash and Cash Equivalents $ 38 Total Debt (including current portion): Term Loan B due 2019, net of discount 640 Global ABL Facility due 2017 439 Other 6 Total Debt $ 1,084 Total Equity 1,261 Total Capitalization $ 2,345 Six months ended June 30 $1,360 $1,527 $1,257 $1,084 2010 2011 2012 June -13 $113 $(103) $240 $250 $(47) $182 2010 2011 2012 2013 Guidance 2012 2013 $280 8.7 x 5.2 x 2.6x 2.45x 2010 2011 2012 June -13 |
Barclays Energy Distribution Day August 15, 2013 15 Drivers • Growth in global energy consumption drives capital investment • Infrastructure to support transmission and distribution of energy • Increase in downstream energy conversion businesses to produce end products Revenue Growth 10-12% Adjusted Gross Profit Margin 20% Adjusted EBITDA Margin 10% Leverage 2.0 – 3.0x Targets (through cycle) Investment Thesis Summary • Organic • Acquisitions 2-3% 8-9% |
Barclays Energy Distribution Day August 15, 2013 16 Appendix |
Barclays Energy Distribution Day August 15, 2013 17 Six months ended June 30 December 31 ($ in millions) 2013 2012 2012 2011 2010 Net income (loss) $ 90.0 $ 68.9 $ 118.0 $ 29.0 $ (51.8) Income tax expense (benefit) 44.2 37.5 63.7 26.8 (23.4) Interest expense 30.5 64.4 112.5 136.8 139.6 (Decrease) increase in LIFO reserve (15.6) 18.5 (24.1) 73.7 74.6 Write off of debt issuance costs - 1.7 1.7 9.5 - Loss (gain) on early extinguishment of debt - 11.4 114.0 - - Depreciation and amortization 11.2 8.6 18.6 17.0 16.6 Amortization of intangibles 26.0 24.8 49.5 50.7 53.9 Change in fair value of derivative instruments (2.4) (0.9) (2.2) (7.0) 4.9 Equity based compensation expense 4.6 3.6 8.5 8.4 3.7 Foreign currency losses (gains) 13.4 1.5 (0.8) (0.6) 0.3 Inventory write-down - - - - 0.4 M&A transaction & integration expenses - - - 0.5 1.4 Pension settlement - - 4.4 - - Legal and consulting expenses - - (1.2) 9.9 4.2 Joint venture termination - - - 1.7 - Provision for uncollectible accounts - - - 0.4 (2.0) Severance and related costs - - - 1.1 3.2 Franchise taxes - - - 0.4 0.7 Closed locations - - - - (0.7) Other expenses 0.8 (1.2) 0.6 2.2 (1.4) Adjusted EBITDA $ 202.7 $ 238.8 $ 463.2 $ 360.5 $ 224.2 Adjusted EBITDA Reconciliation |
Barclays Energy Distribution Day August 15, 2013 18 Six months ended June 30 December 31 ($ in millions) 2013 2012 2012 2011 2010 Gross Profit $ 490.5 $ 478.2 $ 1,013.7 $ 708.2 $ 518.1 Depreciation and amortization 11.2 8.6 18.6 17.0 16.6 Amortization of intangibles 26.0 24.8 49.5 50.7 53.9 (Decrease) increase in LIFO reserve (15.6) 18.5 (24.1) 73.7 74.6 Adjusted Gross Profit $ 512.1 $ 530.1 $ 1,057.7 $ 849.6 $ 663.2 Adjusted Gross Profit GAAP Reconciliation |