1 Investor Presentation February 27, 2014 February 27, 2014 Investor Presentation TM Exhibit 99.1 *** *** *** *** *** *** *** *** *** *** |
2 Investor Presentation February 27, 2014 2 Forward Looking Statements and Non-GAAP Disclaimer This presentation 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”, “looking forward”, “guidance” 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 gross profit, tax rate, capital expenditures and cash flow, 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 our control, including the factors described in the company’s SEC filings that may cause our 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 SEC filings, which are available on the SEC’s website at www.sec.gov and on the company’s website, www.mrcglobal.com. Our filings and other important information are also available on the Investor Relations page of our 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. Statement Regarding Use of Non-GAAP Measures: The Non-GAAP financial measures contained in this presentation (Adjusted EBITDA and Adjusted Gross Profit) are not measures of financial performance calculated in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and should not be considered as alternatives to net income or gross profit. They should be viewed in addition to, and not as a substitute for, analysis of our results reported in accordance with GAAP. Management believes that these non-GAAP financial measures provide investors a view to measures similar to those used in evaluating our compliance with certain financial covenants under our credit facilities and provide meaningful comparisons between current and prior year period results. They are also used as a metric to determine certain components of performance-based compensation. They are not necessarily indicative of future results of operations that may be obtained by the Company. |
3 Investor Presentation February 27, 2014 By the Numbers Industry Sectors Product Categories 2014 Sales Guidance $5.65B Upstream Line Pipe / OCTG Locations 400+ Countries • Operations • Direct Sales 19 45+ Midstream Valves Customers 19,000+ Suppliers 20,000+ Downstream/ Industrial Fittings / Flanges SKU’s 200,000+ Company Snapshot MRC is the largest global distributor of pipe, valves and fittings (PVF) to the energy industry 1. Percentage of sales for the year ended December 31, 2013 2. MRO revenue generated from broad based contracts covering both ongoing capital and operating needs of customers. |
4 Investor Presentation February 27, 2014 MRC Revenue Diversification by Industry Sector Note: Percentage of sales for the year ended December 31, 2013. |
5 Investor Presentation February 27, 2014 By Product Line MRC Revenue Diversification Note: Percentage of sales for the year ended December 31, 2013. By Geography |
6 Investor Presentation February 27, 2014 Benefits of MRC • Supplier Registration / Preferred Supplier List • Global delivery footprint • Approximately $1B in global inventory • Global sourcing from 35+ countries Integrated Supply Chain Services • Cost Savings and Efficiencies • Technical Assistance / Product Recommendation • Warehouse and Logistics Management • Inventory Consignment / Just-in-Time Delivery • Customized IT Solutions Why Customers Choose Distribution & MRC Generating savings and efficiencies for our customers while enabling them to focus on their core competencies |
7 Investor Presentation February 27, 2014 MRC plays a vital role in the complex, technical, global energy supply chain Long-Term Supplier & Customer Relationships |
8 Investor Presentation February 27, 2014 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 |
9 Investor Presentation February 27, 2014 End Market Opportunities 1. Percentage of sales for the year ended December 31, 2013. 2. Source: Barclays 2014 E&P Spending Outlook. 3. Source: Pipeline Safety and Hazardous Materials Administration. Wall Street Journal article titled “Gas-Pipeline Operators Sweat Test”, September 8, 2011 for the 10 states with the most miles of natural-gas pipeline built before 1970. 4. Source: Industrial Info Resources: October 2013. |
10 Investor Presentation February 27, 2014 Where Our Customers Need Us To Be Leading industrial distributor of PVF globally to the energy sectors |
11 Investor Presentation February 27, 2014 Strategic Objectives Execute Global Preferred Supplier Contracts • 2013: • 2014: Rebalance Product Mix to Higher Margin Items Growth from Mergers & Acquisitions • Add product lines to complete global PVF offerings • 2013: Flow Control Products – Permian Basin • 2013: Flangefitt Stainless – UK • 2014: Stream AS – Norway Organic Growth • Target Accounts: develop the “next 75” customers 1. Percentage of sales for the year ended December 31, 2013. • Celanese – Global, PVF • NiSource – U.S., MRO, PVF • Williams – U.S., PVF, Midstream • Chevron Phillips Chemical – U.S., PVF, Downstream • BP – Global, PFF, Upstream, Projects • BP – N.A., Downstream valves, Europe Downstream • Chevron – Kazakhstan, PFF Future Growth Project, Thailand & Australia, MRO, PVF • ConocoPhilips – U.S., MRO, PVF • Focus on valve and valve automation • Strengthen offerings in stainless and alloy PFF |
12 Investor Presentation February 27, 2014 Strategic Expansion into Offshore • Top 4 largest offshore markets = $100 billion E&P spend • Norway is the largest • MRC revenue mix 1. Source: Rystad Energy, 2013 • Pre Stream acquisition – approx. 98% onshore, 2% offshore • Post Stream acquisition – approx. 93% onshore, 8% offshore |
13 Investor Presentation February 27, 2014 Note: Reflects reported revenues for the year of acquisition M&A - Track Record of Strategic Acquisitions • International branch platform for “super majors” E&P spend • Branch platforms/infrastructure for North American shale plays • Global valve and valve automation • Global stainless/alloys Acquisition Priorities |
14 Investor Presentation February 27, 2014 Financial Overview |
15 Investor Presentation February 27, 2014 Financial Metrics Sales Adjusted Gross Profit and % Margin Adjusted EBITDA and % Margin ($ in millions, except per share data) Longer term revenue growth and improving profitability Diluted EPS |
16 Investor Presentation February 27, 2014 Balance Sheet Metrics Total Debt Capital Structure Cash Flow from Operations Net Leverage ($ in millions) December 31, 2013 Pro forma1 December 31, 2013 Cash and Cash Equivalents $ 25 $ 25 Total Debt (including current portion): Term Loan B due 2019, net of discount 787 787 Global ABL Facility due 2017 200 446 Total Debt $ 987 $ 1,233 Total Equity $ 1,338 $ 1,338 Total Capitalization $ 2,325 $2,571 1. Pro forma to include debt incurred for the acquisition of Stream in January 2014. |
17 Investor Presentation February 27, 2014 Macro drivers • Growth in global energy consumption driving investment • Increased global production • Need for additional energy infrastructure • Expansion of downstream energy conversion businesses Investment Thesis Summary Leading global PVF distributor to the energy sector MRC attributes • Ability to capitalize on global energy investment across all sectors • Long term global customer & supplier relationships • Strong cash flow from operations • Strong balance sheet |
18 Investor Presentation February 27, 2014 Appendix |
19 Investor Presentation February 27, 2014 Adjusted EBITDA Reconciliation December 31 ($ in millions) 2013 2012 2011 Net income $ 152.1 $ 118.0 $ 29.0 Income tax expense 84.8 63.7 26.8 Interest expense 60.7 112.5 136.8 (Decrease) increase in LIFO reserve (20.2) (24.1) 73.7 Expenses associated with refinancing 5.1 1.7 9.5 Loss on early extinguishment of debt - 114.0 - Depreciation and amortization 22.3 18.6 17.0 Amortization of intangibles 52.1 49.5 50.7 Change in fair value of derivative instruments (4.7) (2.2) (7.0) Equity based compensation expense 15.5 8.5 8.4 Executive separation expense (cash portion) 0.8 - - Insurance charge 2.0 - - Foreign currency losses (gains) 12.9 (0.8) (0.6) Pension settlement - 4.4 - Legal and consulting expenses - - 9.9 Joint venture termination - - 1.7 Other expense (income) 3.0 (0.6) 4.6 Adjusted EBITDA $ 386.4 $ 463.2 $ 360.5 |
20 Investor Presentation February 27, 2014 Adjusted Gross Profit Reconciliation December 31 ($ in millions) 2013 2012 2011 Gross Profit $ 954.8 $ 1,013.7 $ 708.2 Depreciation and amortization 22.3 18.6 17.0 Amortization of intangibles 52.1 49.5 50.7 (Decrease) increase in LIFO reserve (20.2) (24.1) 73.7 Adjusted Gross Profit $1,009.0 $ 1,057.7 $ 849.6 |